UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant x Filed by a Party other than the Registrant ¨
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| x | Definitive Proxy Statement | |
| ¨ | Definitive Additional Materials | |
| ¨ | Soliciting Material Pursuant to §240.14a-12 |
BB&T Corporation
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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March 17, 2014
Dear Shareholder:DEAR FELLOW SHAREHOLDER:
You are cordially invited to attend the Annual Meeting of Shareholders of BB&T Corporation scheduled forat 11:00 A.M. Eastern Daylight Timea.m. (EDT) on Tuesday, April 29, 2014,26, 2016, at the Embassy Suites, 460 North Cherry Street, Winston-Salem, NC 27101. The matters scheduled for consideration at the meeting are described in detail in the Notice of Annual Meeting of Shareholders and the2016 Proxy Statement. Shareholders as of the record date of February 19, 201417, 2016 are invited to attend the meeting.attend.
We are again providing proxy materials to our common stock shareholders primarily through the Internet. We have found this process significantly lowers the costscost of our annual proxy campaign. We encourageurge you to read this year’s proxy materials, which include our 20142016 Proxy Statement and our 2013 Annual Report on Form 10-K that was filed with the Securities and Exchange Commission on February 26, 2014.25, 2016. Also included is a copy of the 20132015 Annual Report that contains financial highlights, our letter to shareholders, and additional information about BB&T.
We encourage you to vote through the Internet or by telephone as soon as possible. If you received the proxy materials by mail you may complete, sign, and return the enclosed proxy card. Even if you plan to attend the meeting we strongly encouragerecommend that you to vote your shares in advance.
The agenda for this year’s Annual Meeting includes the following items:
Agenda Item | Board Recommendation | |||||
Election of 18 Directors named in the | FOR | |||||
| Ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for | FOR | |||||
| Advisory vote to approve BB&T’s executive compensation program | FOR | |||||
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Please refer to the proxy statement for further details on the proposals to be voted on at the Annual Meeting. We trust that this presentation will satisfy your informational needs, and, at the same time, provide you with a better understanding of both the financial performance and strategic direction of BB&T.
Sincerely,
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Kelly S. King | Jennifer S. Banner | |||||
| Chairman and Chief Executive Officer | Independent Lead Director |
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS OF
BB&T CORPORATION
200 West Second Street
Winston-Salem, North Carolina 27101
Notice of Annual Meeting of Shareholders
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| 11:00 a.m. EDT | Embassy Suites 460 North Cherry Street Winston-Salem, NC 27101 | ||
AGENDA:
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4. Amendment to BB&T’s Articles of Incorporation to implement a majority voting standard in uncontested director elections.
5. Shareholder proposal with respect to political contributions, if properly presented at the meeting.
6. Shareholder proposal with respect to recoupment of incentive compensation to senior executives, if properly presented at the meeting.
Shareholders may also transact such other business as may properly come before the meeting.
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A copy of our Annual Report on Form 10-K for the year ended December 31, 2013 accompanies these proxy materials.
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March 17, 2014
Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting To Be
Held on April 29, 2014
A copy of this Proxy Statement is available atwww.envisionreports.com/BBT. Also available at this website is the 2013 Annual Report, which highlights summary financial information about BB&T, and BB&T’s Annual Report on Form 10-K for the year ended December 31, 2013.
PROXY STATEMENT SUMMARY
This summary highlights information contained elsewhere in this Proxy Statement for BB&T Corporation (the “Corporation,” the “Company,” or “BB&T”). This summary does not contain all the information that you should consider, and you should read this entire Proxy Statement carefully before you vote. The page references in this summary will guide you to more complete information. Additional information regarding our 2013 performance can be found in our 2013 Annual Report on Form 10-K.
2014 Annual Meeting of Shareholders
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How to Vote Your Shares
Your vote matters! Shareholders of record as of February 19, 2014 are entitled to vote. Please cast your vote today. Here is how:
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If your shares are held in “street name,” please refer to the voting instructions received from your bank or broker. If you vote via the Internet or by telephone, please do not return your proxy card.
(i)
2013 Business Performance Highlights
BB&T produced record operating results in 2013 while meeting the challenges of 2013 with a steadfast commitment to our values and an unwavering dedication to help our clients, associates, communities and shareholders be successful. Several of our notable business accomplishments during 2013 were:
Record income before taxes of $3.1 billion, an 11.9% increase over the prior year.
Continued improvement in credit quality.
Growth in noninterest income was driven by record revenues in the insurance, investment banking and brokerage, bankcard fees and merchant discounts, and trust and investment advisory lines of business.
Continued improvement in deposit mix and average cost.
Strong growth in all regulatory capital ratios throughout 2013.
2013 Challenges
While 2013 was a year marked by record income before taxes and improved capital levels that were already among the best in the industry, BB&T faced several notable challenges. The following summary provides a brief description of two of 2013’s more significant challenges and the Compensation Committee’s view of these challenges for compensation purposes. See pages 32-33 for a more detailed discussion.
Tax Litigation Charges — In connection with ongoing tax litigation with the IRS, BB&T took charges to earnings of $281 million and $235 million in the first and third quarters of 2013, respectively.
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2013 Executive Compensation Overview
March 16, 2016
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ELEMENTSOF COMPENSATIONyear ended December 31, 2015.
For 2013, compensation to our NEOs consisted of the following principle components:
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(iii)
In designing the various elements of the total compensation program, the Compensation Committee has carefully selected performance-based metrics and established performance goals that, on the whole, encourage the achievement of short- and long-term shareholder value while enabling BB&T to retain its talented executives.
The compensation program for our NEOs is based on the financial performance of BB&T compared to both objective performance criteria and Peer Group performance. This practice links executive performance and compensation to the annual financial and operational results of BB&T and the long-term financial interests of the shareholders. The Compensation Committee believes that BB&T’s compensation philosophy and practice is consistent with our corporate culture and objectives and provides a key link between NEO pay and performance.
The charts below show the mix of actual compensation paid for 2013 for BB&T’s Chairman and Chief Executive Officer, Kelly S. King, and each of our other NEOs averaged together, in each case expressed as a percentage of total direct compensation. As these charts illustrate, with the exception of base salary, all CEO and NEO pay is variable and at-risk.
The following table shows actual NEO compensation paid for the 2013 performance year and illustrates how the Compensation Committee viewed NEO compensation for 2013. The table also shows total compensation for 2013 as compared to 2012. The principal differences between the table below and the Summary Compensation Table are that the Summary Compensation Table reports the grant date fair value of restricted stock unit awards, the change in pension value and nonqualified deferred compensation earnings as well as all other compensation. The components included below are considered by the Committee when making compensation determinations.
2013 COMPENSATION OVERVIEW TABLE
| 2013 Incentive Compensation Overview | ||||||||||||||||||||||||||||
| Annual Incentive | Option | Restricted Stock Unit | LTIP | |||||||||||||||||||||||||
Name | Salary(1) ($) | Award(2) ($) | Awards(3) ($) | Awards(3) ($) | (2011- 2013)(4) ($) | 2013 Total ($) | 2012 Total ($) | |||||||||||||||||||||
Kelly S. King | 996,250 | 2,002,861 | 557,897 | 2,231,575 | 2,055,726 | 7,844,309 | 8,555,426 | |||||||||||||||||||||
Christopher L. Henson | 661,250 | 759,644 | 231,437 | 925,742 | 953,876 | 3,531,949 | 3,721,286 | |||||||||||||||||||||
Ricky K. Brown | 661,250 | 759,644 | 231,437 | 925,742 | 953,876 | 3,531,949 | 3,718,036 | |||||||||||||||||||||
Clarke R. Starnes III | 557,500 | 640,456 | 176,166 | 704,654 | 715,784 | 2,794,560 | 2,951,224 | |||||||||||||||||||||
Daryl N. Bible | 557,500 | 640,456 | 176,166 | 704,654 | 715,784 | 2,794,560 | 2,951,224 | |||||||||||||||||||||
(iv)
Changes Effective for 2014
As part of its regular review of BB&T’s compensation program, the Compensation Committee has approved the following changes for 2014. The Compensation Committee expects to conduct a review of the BB&T compensation program relative to the Peer Group in 2014 and may make additional changes to the program (or awards) in furtherance of its commitment to provide a compensation program that is competitive, performance-based, risk balanced and shareholder aligned.
No base salary adjustments from 2013.
For the 2014 Annual Incentive Awards, the maximum level of achievement will be further reduced to generate a payout of 125% of target, as compared to 150% for the 2013 Annual Incentive Awards.
For the 2014-2016 LTIP award, the maximum payout percentage has been reduced so that maximum performance generates a payment of 125% of target (as compared to 150% for 2013-2015 LTIP).
No increase to target award opportunity for any of the compensation elements to offset the lost “upside” by the reductions to the maximum payout percentages for the Annual Incentive Award and LTIP.
Performance-based vesting was added to 2014 stock option awards, in addition to the 2014 RSU awards (in 2013, only RSUs had a performance-based vesting component). The performance-based vesting component of both the 2014 stock options and the 2014 RSUs provide that up to 100% of the unvested portion of the award is subject to forfeiture if the performance criteria is not met. The 2013 performance-based vesting component for RSUs applied only to 20% of the unvested portion of the award.
For additional details, please refer to our Current Report on Form 8-K filed on February 28, 2014.
Corporate Governance Highlights
The Board of Directors is committed to providing a sound corporate governance framework to ensure that BB&T meets or exceeds the requirements of applicable laws, regulations and rules. In this regard, our ultimate purpose is to create a strong, sound and profitable financial services company with long-term growth and value for its shareholders. Below are several notable features of BB&T’s corporate governance framework.
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(vii)
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| PROPOSAL 1 – ELECTION OF DIRECTORS | ||||
| CORPORATE GOVERNANCE MATTERS | ||||
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ETHICSAT BB&T | 23 | |||
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| STOCK OWNERSHIP INFORMATION | ||||
| PROPOSAL 2 – RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR | ||||
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| PROPOSAL 3 – VOTE ON AN ADVISORY RESOLUTION TO APPROVE BB&T’S EXECUTIVE COMPENSATION PROGRAM | ||||
| Proxy Statement Summary | |
PROXY STATEMENT
Questions and Answers About the Annual Meeting and VotingPROXY STATEMENT SUMMARY
Why am I being providedThis summary highlights information contained elsewhere in this proxy statement?statement for BB&T Corporation, which we sometimes refer to as the “Corporation” or “BB&T.” This summary does not contain all the information that you should consider, and you should read this entire proxy statement carefully before you vote. Additional information regarding our 2015 performance can be found in our Annual Report on Form 10-K.
2016 Annual Meeting of Shareholders
Time and Date | Location | Record Date | ||
April 26, 2016, at 11:00 a.m. EDT | Embassy Suites 460 North Cherry Street Winston-Salem, NC 27101 | February 17, 2016 |
Proposals and Voting
The enclosed proxy statement summarizes information you need in order to vote at the Annual Meeting of Shareholders to be held on April 29, 2014, at the Embassy Suites, 460 North Cherry Street, Winston-Salem, NC 27101, at 11:00 A.M. Eastern Daylight Time, and any adjournment or postponement thereof (the “Annual Meeting”). The proxy statement is being sent to you because the Board of Directors of BB&T Corporation is soliciting your proxy to vote your shares of common stock at the Annual Meeting. On or about March 17, 2014, the proxy statement and the accompanying proxy materials are being sent to shareholders of record on February 19, 2014.
Who may vote and what constitutes a quorum at the meeting?
Pursuant to the provisions of the North Carolina Business Corporation Act, February 19, 2014 has been fixed as the record date for the determination of holders of BB&T common stock entitled to notice of and to vote at the Annual Meeting.
In order to conduct the Annual Meeting, a majority of shares of BB&T common stock outstanding at the record date must be present in person or by proxy. This is called a quorum. Shareholders who deliver valid proxies or vote in person at the meeting will be considered part of the quorum. Once a share is represented for any purpose at the meeting, it is deemed present for quorum purposes for the remainder of the meeting and for any adjourned meeting. Abstentions and broker “non-votes” (which are explained below) are counted as present and entitled to vote for purposes of determining a quorum.
On what matters are the shareholders of record voting?
The shareholders of record will vote on the following sixthree proposals:
| Proposals | Votes Required | Board Recommendation | More Information | |||
| FOR | Page 5 | ||||
| Majority of votes cast | FOR | Page 31 | |||
| Majority of votes cast | FOR | ||||
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How many votes do I have?
Each share of BB&T common stock issuedA proxy that is signed and outstanding on February 19, 2014 is entitled to one vote on all proposals at the meeting, except that shares held in a fiduciary capacity by Branch Banking and Trust Company (“Branch Bank”) and certain other BB&T affiliates may onlydated, but which does not contain voting instructions will be voted in accordance with the instruments creating the fiduciary capacity. Asas recommended by our board of the close of business on February 19, 2014, there were 711,219,543 shares of BB&T common stock outstanding and entitled to vote.
How do I vote?
directors for each proposal.
There are four ways to vote:
|  Internet:You may access the proxy materials on the Internet athttp://www.envisionreports.com/BBT and follow the instructions on the proxy card or on the Notice of Internet Availability. Shareholders who hold shares in “street name,” should follow the instructions provided by their broker or bank. | ||||
|  Telephone:You may call toll-free 1-800-652-VOTE (8683), and follow the instructions on the proxy card or on the Notice of Internet Availability. | ||||
|  Mail:If you received your proxy materials by mail, you may vote by signing, dating and mailing the enclosed proxy card in the postage-paid envelope provided. | ||||
|  In | person:A shareholder may vote in person at the Annual Meeting by filling out a ballot. | |||
Shareholders who vote over the Internet may incur costs, such as telephone and Internet access charges, for which the shareholder is responsible. The Internet and telephone voting facilities for eligible shareholders of record will close at 11:59 P.M., Eastern Daylight Time, on April 28, 2014. The Internet and telephone voting procedures are designed to authenticate a shareholder’s identity and to allow a shareholder to vote his or her shares and confirm that his or her instructions have been properly recorded.
Shareholders who hold shares in “street name,” that is, through a broker, bank or other nominee, should instruct their nominee to vote their shares by following the instructions provided by the nominee. Your vote as a shareholder is important. Please vote as soon as possible to ensure that your vote is recorded.
We encourage shareholders to take advantage of the options to vote using theInternet or bytelephone. Voting in this manner will result in cost savings for BB&T. Three BB&T executives, Kelly S. King, Christopher L. Henson and Robert J. Johnson, Jr., have been designated as the proxies to cast the votes of our shareholders at the Annual Meeting.Corporation | 2016 Proxy Statement 1
What if I sign and date my proxy but do not provide voting instructions?
| Proxy Statement Summary |
A proxy that is signed and dated, but which does not contain voting instructions will be voted as follows:
“FOR” the election of each of the eighteen directors named in the Proxy Statement;
“FOR” the ratification of PricewatershouseCoopers LLP as BB&T’s auditors;
“FOR” the advisory vote to approve executive compensation;
“FOR” the amendment to BB&T’s Articles of Incorporation; and
“AGAINST” each of the shareholder proposals.
May I revoke my proxy?
The proxy may be revoked by a shareholder at any time before it is exercised by filing with the Corporate Secretary of BB&T an instrument revoking it, filing a duly executed proxy bearing a later date (including a proxy given over the Internet or by telephone), or by attending the meeting and electing to vote in person.Even if you plan to attend the Annual Meeting, you are encouraged to vote your shares by proxy.
What effect do broker non-votes and abstentions have?2015 Executive Compensation Overview
Strategic Accomplishments | ||
• Significant M&A activity, including the Susquehanna merger, drove meaningful growth in 2015 • Obtained regulatory approvals and completed transactions at a time when there was limited bank M&A activity due to regulatory uncertainty • Announced and received regulatory approval for National Penn acquisition (expected to close April 1, 2016) • Efficient use of capital by investing in strategic M&A transactions that will enhance future earnings • Continued to improve risk governance framework, including capital and liquidity management • Continued to invest in critical infrastructure projects, including cyber-security preparedness and new general ledger and commercial lending systems |
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A broker or other nominee may generally vote your shares
Corporate Performance |
We’ve been able to grow as a company without instruction on routine matters, but not on non-routine matters. A broker “non-vote” occurs when your broker submits a proxysacrificing our vision, mission and values. We remain dedicated to creating superior long-term economic rewards for your shares, but does not indicate a vote for a particular “non-routine” proposal (such as Proposals 1our shareholders. This can be seen in our peer-leading dividend yields and 3-6) because your broker does not have authoritynet interest margins. We remain committed to vote on that proposal and has not received specific voting instructions from you. Broker non-votes, as well as abstentions, are not counted as votes for or againstpaying healthy dividends to our shareholders, while net interest income constitutes the proposal in question, and therefore will not affect the outcomeprimary source of the vote.our revenue.
| Compensation Highlights |
Our executive compensation philosophy is based upon providing performance incentives to executive management to generate returns while maintaining a prudent risk management culture. Features of our compensation program include: • Compensation and reward systems that are designed to support and drive our long-term strategic goals and produce positive business results; • A pay-for-performance culture that, for target compensation in 2015, tied more than 86% of our CEO’s compensation and more than 79% of our other NEOs’ compensation directly to our performance, resulting in only a small percentage of compensation being fixed from year to year; • Objective performance metrics (EPS, ROA and ROCE) that tie to the financial health and stability of our company; • Prudent oversight by our Compensation Committee, which may adjust payouts downward for negative risk outcomes, based upon a risk scorecard analysis; and • Awards that feature a broad-reaching clawback policy. Assuring that we appropriately match executive compensation to our performance and to the long-term interests of our shareholders is extremely important to our CEO, Compensation Committee and the entire Board of Directors at BB&T. We encourage you to read our Compensation Discussion and Analysis, beginning on page 35 to learn more about out compensation programs. |
How are the proxy materials delivered?2 BB&T Corporation | 2016 Proxy Statement
| Proxy Statement Summary | |
This
| Notable Awards and Achievements |
We are extremely proud of our accomplishments over the past year. Our associates work hard to build a “best in class” organization and in 2015 their efforts were recognized in the following ways: •American Banker magazine named CEO Kelly S. King banker of the year for 2015 andSNL Financial named him one of its “Most Influential” in banking in 2015 & 2014. •Bloomberg Markets magazine rated BB&T as one of the top 15 strongest banks in the world and one of the three strongest in the United States. • Our merger with Susquehanna Bancshares was named the “M&A Deal of the Year (over $1B to $5B)” byTheM&A Advisor. • In our 7th annual Lighthouse Project in 2015, BB&T associates completed more than 1,000 community service projects, provided 57,000 volunteer hours, and helped change the lives of more than 1.7 million people. |
| Corporate Governance Highlights |
Our Board of Directors believes that maintaining a strong corporate governance framework is again following Securitiesessential to the continuing growth and Exchange Commission (“SEC”) rules that allow for the deliverysuccess of proxy materials toBB&T. Below are several notable features of our shareholders primarily through the Internet. In addition to reducing the amount of paper used in producing these materials, this method lowers the costs associated with mailing the proxy materials to shareholders. Shareholders who own shares directly in BB&T and not through a bank, broker or intermediary (“record holders”) will have proxy materials or the Notice of Internet Availability of Proxy Materials delivered directly to their mailing address or electronically if they have previously consented to that delivery method. Shareholders whose shares are held for them by banks, brokerages or other intermediaries (“beneficial holders”) will have the proxy materials or the Notice of Internet Availability of Proxy Materials forwarded to them by the intermediary that holds the shares.corporate governance framework:
| • | Active, Independent Board of Directors. Sixteen of our eighteen directors are independent, and our directors attended 99% of the Board and committee meetings held last year. |
If you received only a Notice of Internet Availability of Proxy Materials by mail, you will not receive a printed copy of the proxy materials unless you request a copy by following the instructions on the notice. The Notice of Internet Availability of Proxy Materials also contains instructions for accessing and reviewing the proxy materials over the Internet and provides directions for submitting your vote over the Internet.
| • | Independent Lead Director. Our Lead Director serves an important governance function by providing strong leadership for the non-management and independent directors. |
| • | Strategic Direction and Planning. Annually, the Board receives a detailed report on BB&T’s strategic plan, goals and initiatives for the upcoming year and beyond with a view towards providing oversight, guidance and direction as to BB&T’s long-term strategy. |
| • | New Compensation Consultant. As part of its responsibilities in maintaining strong governance practices in managing our compensation program, last year the Compensation Committee retained a new independent compensation consultant, Meridian Compensation Partners, to obtain a fresh perspective on our program. |
| • | Stock Ownership Guidelines. By requiring our CEO and directors to own stock equal to 5x their salary or annual retainer, as applicable, we effectively align their interests to those of our shareholders. |
| • | Pledging/Hedging of Shares. To reduce conflicts of interest, we have strong restrictions against pledging and hedging of our common stock by directors and Executive Management members. |
| • | Risk Oversight, Risk Aware Culture. We have developed a robust risk management organization with the purpose of providing independent oversight of our risk-taking activities. |
| • | Majority Voting for Director Elections. All director nominees in uncontested elections must be elected by an affirmative vote of the majority of votes cast. |
| • | Clawbacks and Executive Risk Scorecard. We make all awards (cash and equity) subject to recoupment and also may utilize our executive risk scorecard to adjust incentive compensation for negative risk outcomes. |
| • | Statement of Political Activity. We publish on our website a Statement of Political Activity, which describes our oversight process for political contributions and political activity. |
| • | Board Committees. We have five board committees, as indicated in the table below. Each committee has a written charter adopted by the Board that can be found on our website atwww.bbt.com. |
How can I receive the proxy materials electronically?BB&T Corporation | 2016 Proxy Statement 3
| Proxy Statement Summary |
We also provide shareholders the choice to receive our proxy materials electronically over the Internet instead of receiving paper copies through the mail. By choosing to have the proxy materials delivered electronically, you save BB&T the costs and environmental resources required in printing and mailing these materials. If you are a shareholder of record that received a paper copy of these proxy materials and would like to receive these materials electronically in the future, you may enroll for this service by following the instructions provided on the enclosed proxy card. If you received only a Notice of Internet Availability of Proxy Materials by mail, you may register for electronic delivery of future proxy materials by following the instructions provided when you vote online at the Internet site address listed on your notice. We encourage each shareholder to access the proxy materials electronically using the Internet.
Who pays the costs of soliciting proxies?
All expenses incurred in this solicitation will be paid by BB&T. In addition to soliciting proxies by mail, over the Internet and by telephone, our directors, officers and employees, who are also referred to as associates, may solicit proxies on behalf of BB&T without additional compensation. We have engaged AST Phoenix Advisors to act as our proxy solicitor and have agreed to pay it approximately $12,500 plus reasonable expenses for such services. Banks, brokerage houses and other institutions, nominees and fiduciaries are requested to forward the proxy materials to beneficial holders and to obtain authorization for the execution of proxies. Upon request, we will reimburse these parties for their reasonable expenses in forwarding proxy materials to beneficial owners.
How will voting results be reported?
After the Annual Meeting of Shareholders, BB&T will report final voting results in a Current ReportBOARDOF DIRECTORSAND COMMITTEES
| Independent | Audit | Compensation | Nominating and Corporate Governance | Executive | Risk | |||||||
Jennifer S. Banner± |  | | | |||||||||
K. David Boyer, Jr. |  | | | |||||||||
Anna R. Cablik** | | |  | |||||||||
James A. Faulkner*** | | | ||||||||||
I. Patricia Henry | | | ||||||||||
Eric C. Kendrick** | | | | |||||||||
Kelly S. King† | | | ||||||||||
Louis B. Lynn, Ph.D. | | | | |||||||||
Edward C. Milligan** | | | ||||||||||
Charles A. Patton | | |  | |||||||||
Nido R. Qubein | | | ||||||||||
William J. Reuter | | | | |||||||||
Tollie W. Rich, Jr.** | | | ||||||||||
Christine Sears | | | ||||||||||
Thomas E. Skains | | | | |||||||||
Thomas N. Thompson | | | | |||||||||
Edwin H. Welch, Ph.D. | | | | |||||||||
Stephen T. WilliamsA | | |
| † | Chairman of the Board of Directors |
| ± | Independent Lead Director |
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| A | Designated as the “Audit Committee Financial Expert” |
| ** | Serves on the Trust Committee of Branch Banking and Trust Company |
| *** | Chairman of the Trust Committee of Branch Banking and Trust Company |
Form 8-K4 BB&T Corporation filed with the SEC.| 2016 Proxy Statement
| Proposal 1—Election of Directors | |
PROPOSAL 1—ELECTION OFOF DIRECTORS
Our bylaws provide that the number of directors shall be not less than three nor more than twenty-five, as determined from timeWe are asking you to time by the Board of Directors. BB&T’s Board of Directors is currently fixed at nineteen individuals, and will be reduced to eighteen effective as of the date of the Annual Meeting and the retirement of Mr. Allison, discussed below. Eachreelect each of the eighteen director nominees listed below for election as a director of the Corporation currently servesto continue serving on theour Board of Directors. The nominees, if elected, will each serveDirectors for a one-year term expiring at the Annual Meeting of Shareholders in 2015.2017. Each director nominee will require the affirmative vote of the majority of votes cast to be elected.
The persons named as attorneys-in-fact in the accompanyingA properly executed proxy are expected to vote to electmarked “FOR” any one of the eighteen nominees listed below as directors, unless authority to so vote is withheld. for director will be voted for each nominee indicated. A properly executed proxy marked ‘AGAINST” a nominee will be voted against that nominee for director. Marking the proxy card “ABSTAIN” for any of the nominees will have no effect on the vote.
Although our Board of Directors expects that each of the nominees will be available for election, if a vacancy in the slate of nominees occurs, it is intended that shares of BB&T common stock represented by proxies will be voted for the election of a substitute nominee, designated by the Board, or the Board may reduce the number of persons to be elected by the number of persons unable to serve. Holders of BB&Tour common stock do not have cumulative voting rights in the election of directors.
A properly executed proxy marked “FOR ALL”The membership of our Board of Directors includes all of the eighteen nomineesboard members of Branch Banking and Trust Company (our banking subsidiary), and vice-versa, resulting in the two boards having identical memberships. Matching the membership of these two boards provides for director will be votedtransparency and information sharing between both boards, which allows for eachbetter risk management, provides for administrative efficiencies, and takes advantage of the nominees. Markingtalent and experience provided by the proxy card “WITHHOLD ALL” will withhold your vote as to all nominees for director. Markingmembers of each board. This structure is also in line with that of many of the proxy card “FOR ALL EXCEPT” will direct that your shares be voted for all nominees except that your shares will be withheld as to the nominee(s) that you specify.financial services companies found in our Peer Group.
A candidate for election as a director of BB&T is nominated to stand for election based on his or her professional experience, recognized achievement in his or her respective field, an ability to contribute to our business, his or her experience in risk management, and the willingness to make the commitment of time and effort required of a BB&T director over an extended period of time. Maturity ofSound judgment and community leadership are important characteristics that members of theour Board of Directors should possess. Each of the below-listedour nominees has been identified as possessing good judgment,business acumen, strength of character, and an independent mind, as well as a reputation for integrity and the highest personal and professional ethics. Each nominee also brings a strong and unique background and set of skills to theour Board of Directors, providing theour Board of Directors, as a whole,with competence and experience in a wide variety of areas.
A Word of Appreciation
We would like to offer a word of thanks to directors Ronald E. Deal and John P. Howe III, M.D., who retired from our Board of Directors effective December 31, 2015. Mr. Deal has been a BB&T director since 1986, guiding BB&T through its transformation from a local North Carolina bank into one of the largest financial services institutions in the nation. Dr. Howe has been a BB&T director since 2005, and his leadership has been instrumental in executing the company’s vision and mission in the face of meaningful obstacles during one of the most pivotal periods of the company’s history.
We thank Mr. Deal and Dr. Howe for their many valuable contributions to BB&T, and we wish them well in their future endeavors.
BB&T Corporation | 2016 Proxy Statement 5
| Proposal 1—Election of Directors |
Director Commitment and Skills
COMMITMENTTO BB&T
We are proud of our directors’ devotion to BB&T. Our Board invests a substantial amount of time, effort, and energy in planning and executing our vision, mission and values. While each Board member has other professional commitments, no Board member is part of more than one other publicly-traded company Board. We believe that this commitment to BB&T helps promote our vision to become “the Best of the Best.” The following skills matrix shows the diverse range of expertise our directors provide to BB&T.
| DIRECTOR SKILLS | ||||||||||||||||
| Qualifications | Experience | |||||||||||||||
Executive Leadership |
Public Company Director |
Audit Committee Financial Expert Qualified(1) |
Accounting |
Academia |
Corporate Governance and Supervision |
Financial Services | ||||||||||
Jennifer S. Banner |  | | | | | | ||||||||||
K. David Boyer, Jr. | | | | |||||||||||||
Anna R. Cablik | | | | | ||||||||||||
James A. Faulkner | | | | | ||||||||||||
I. Patricia Henry | | | ||||||||||||||
Eric C. Kendrick | | | | |||||||||||||
Kelly S. King | | | | | ||||||||||||
Louis B. Lynn, Ph.D. | | | | |||||||||||||
Edward C. Milligan | | | | | ||||||||||||
Charles A. Patton | | | | |||||||||||||
Nido R. Qubein | | | | | ||||||||||||
William J. Reuter | | | | |||||||||||||
Tollie W. Rich, Jr. | | | | |||||||||||||
Christine Sears | | | | | | |||||||||||
Thomas E. Skains | | | | |||||||||||||
Thomas N. Thompson | | | | |||||||||||||
Edwin H. Welch, Ph.D. | | | | |||||||||||||
Stephen T. Williams | | | | |||||||||||||
| (1) | Indicates directors who meet the criteria as an “Audit Committee Financial Expert’’ under applicable SEC rules. Stephen T. Williams has been designated by the Board of Directors as its Audit Committee Financial Expert. |
6 BB&T Corporation | 2016 Proxy Statement
| Proposal 1—Election of Directors | |
Nominees for Election as Directors for a One-Year Term Expiring in 2017
The names of the nominees for election to our Board of Directors, their principal occupations, and certain other information with respect to such nominees areeach nominee is set forth below.
ALLISON RETIREMENT
Recently, our former Chairman and Chief Executive Officer, John A. Allison IV, announced his retirement from BB&T’s Board of Directors, effective at the Annual Meeting. Mr. Allison presided over BB&T’s storied transformation into one of the largest—and highest performing—financial services companies in the nation. Under his leadership, BB&T grew to become the nation’s 14th largest financial holding company. Assets increased from approximately $275 million in 1971 when Mr. Allison’s career at BB&T began to $152 billion in 2008 when he retired as the chief executive officer. We thank Mr. Allison for his longstanding service and dedication to BB&T and wish him well in his future endeavors.
Nominees for Election as Directors for a One-Year Term Expiring in 2015
Jennifer S. Banner | Knoxville, TN | |||
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Lead Director Age:56 Tenure: BB&T since 2003 Branch Bank since 2013 Board Committees:
Risk Public Company Directorship: Communications Sales & Leasing, Inc. | Ms. Banner
Ms. Banner brings to BB&T experience as a Chief Executive Officer and skills in public accounting, as well as financial
Qualifications and Experience: Executive leadership, public company director, audit committee financial expert qualified, accounting, corporate governance and supervision, financial services | |||
K. David Boyer, Jr. Oakton, VA |
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Age:64 Tenure: BB&T since 2009 Branch Bank since 2013 Board Committees:
Risk | Mr. Boyer
Prior to his election to the BB&T Board, Mr. Boyer served for over 11 years on Branch Bank’s local advisory board in Washington, D.C. This experience provided Mr. Boyer with a thorough understanding of BB&T’s banking organization and its values and culture. Mr. Boyer has extensive experience with risk management, accounting and finance, as well as information technology services, information management, information assurance and anti-terrorism assistance services, and brings skills related to this experience to the BB&T Board.
Qualifications and Experience: Executive leadership, accounting, corporate governance and supervision | |||
BB&T Corporation | 2016 Proxy Statement 7
| Proposal 1—Election of Directors |
Anna R. Cablik Marietta, GA |
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Age:63 Tenure: BB&T since 2004 Branch Bank since 2013 Board Committees:
Nominating and Corporate Governance (Chair) Compensation Public Company Directorship:
Georgia Power Company
| Ms. Cablik
Ms. Cablik brings entrepreneurial and business-building skills and experience to BB&T, having successfully founded and grown several businesses. Her extensive career managing a diverse portfolio of projects provides risk assessment skills and experience to the BB&T Board. Additionally, as the owner and operator of a company, Ms. Cablik has over
Qualifications and Experience: Executive leadership, public company director, accounting, corporate governance and supervision | |||
James A. Faulkner Dahlonega, GA |
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Tenure: BB&T since 2013 Branch Bank since 2000 Board Committees:
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| Mr. Faulkner
Mr. Faulkner brings to BB&T significant financial services leadership, oversight and expertise stemming from his distinguished 49-year career in commercial banking, including serving as the top executive of Century South Banks from 1997 until it merged with BB&T in 2000. He has served as a director of four different public companies over a Qualifications and Experience: Executive leadership, audit committee financial expert qualified, corporate governance and supervision, financial services
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| Proposal 1—Election of Directors | |
I. Patricia Henry | Stone Mountain, GA | |||
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Age:68 Tenure: BB&T since 2013 Branch Bank since 1999 Board Committees: Audit
| Ms. Henry
Ms. Henry brings extensive risk management, strategic planning and organizational development experience and skills to the BB&T Board. At Miller Brewing, Ms. Henry became the first woman to hold a lead management
Qualifications and Experience: Executive leadership, corporate governance and supervision | |||
Eric C. Kendrick Arlington, VA |
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Age:69 Tenure: BB&T since 2013 Branch Bank since 2003 Board Committees: Compensation Nominating and Corporate Governance |
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| Mr. Kendrick
Mr. Kendrick brings to BB&T significant financial services industry experience and corporate governance perspective from his service on the boards of First Virginia Banks, Inc., where he served as a director from 1986 until it merged with BB&T in 2003, and Branch Bank, where he has served as director since 2003 and is currently a member of the Trust Committee. As a successful business leader, Mr. Kendrick also brings to the BB&T Board a high level of business acumen, as well as significant experience and valuable perspective from the construction and real estate development industries.
Qualifications and Experience: Executive leadership, corporate governance and supervision, financial services | |||
BB&T Corporation | 2016 Proxy Statement 9
| Proposal 1—Election of Directors |
Kelly S. King | Winston-Salem, NC | |||
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Tenure: BB&T since 2008 Branch Bank since 1995 Board Committees: Executive Risk | Mr. King
Mr. King has forged a lifetime of leadership experience with BB&T, devoting
Mr. King is credited with leading BB&T to continued profitability and financial stability through the economic downturn beginning in 2008. His unwavering commitment to the company’s vision, mission
Mr. King has served as the Fifth District representative on the Federal Advisory Council
Mr. King was named the Banker of the Year for 2015 byAmerican Banker magazine. His leadership steered the successful completion of our 2015 acquisition of Susquehanna Bancshares—a transaction that was named M&A Deal of the Year (Over $1B to $5B) byThe M&A Advisor. Mr. King was named bySNL Financial as one of its “Most Influential” in banking in 2015 & 2014. In 2011, Qualifications and Experience: Executive leadership, accounting, corporate governance and supervision, financial services
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10 BB&T Corporation | 2016 Proxy Statement
| Proposal 1—Election of Directors | |
Louis B. Lynn, Ph.D. Columbia, SC |
| |
Age:67 Tenure: BB&T since 2013 Branch Bank since 2006 Board Committees: Compensation Nominating and Corporate Governance | Dr. Lynn
Dr. Lynn possesses valuable oversight skills and experiences gained in serving as the top executive of ENVIRO AgScience. He also brings to the BB&T Board government and private sector design and construction experience of sustainable energy efficient facilities. Dr. Lynn serves as an Adjunct Professor of Horticulture at Clemson University and has served on
Qualifications and Experience: Executive leadership, academia, corporate governance and supervision | |
Edward C. Milligan Marietta, GA |
| |
| ||
BB&T since 2013 Branch Bank since 2007 Board Committees: Audit | Mr. Milligan
Qualifications and Experience: Executive leadership, audit committee financial expert qualified, corporate governance and supervision, financial services | |
BB&T Corporation | 2016 Proxy Statement 11
| Proposal 1—Election of Directors |
Charles A. Patton | Hopewell, VA | |||
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Age:59 Tenure: BB&T since 2013 Branch Bank since 1998 Board Committees: Executive Risk (Chair) | Mr. Patton
Over the course of his extensive banking career, Mr. Patton has served in a variety of leadership positions, including as the President and Chief Executive Officer of Virginia First Savings Bank. As the top executive of Virginia First, he gained leadership, oversight and risk management skills, as well as financial industry and banking operations expertise, which are valuable as a director of BB&T. His long tenure on the Branch Bank board has imparted him with significant institutional knowledge about BB&T, while also providing corporate governance expertise. Mr. Patton also is a leader in his community, holding leadership positions in a variety of social and civic organizations in the Richmond, Virginia area.
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Qualifications and Experience:
Executive leadership, corporate governance and supervision, financial services
Nido R. Qubein High Point, NC |
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Age:67 Tenure: BB&T since 1990 Branch Bank since 2013 Board Committees: Executive Risk Public Company
La-Z-Boy Incorporated
| Dr. Qubein,
Dr. Qubein has written a dozen books on leadership, sales, communication and marketing and serves as advisor to businesses and organizations throughout the country on how to position their enterprises and create successful leadership programs. He is a business coach to CEOs and top executives. During his Qualifications and Experience: Executive leadership, public company director, academia, corporate governance and supervision | |||
12 BB&T Corporation | 2016 Proxy Statement
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William J. Reuter Lititz, PA |
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Age:66 Tenure: BB&T since 2015 Branch Bank since 2015 Board Committees:
| Mr. He started his career with Susquehanna in 1973, when he joined one of its predecessor banks in Maryland. Mr. Reuter’s 35+ years in leadership roles within the banking industry, his experience as the CEO and Chairman of a large, publicly traded financial services organization and his risk management skill and expertise qualify him to serve as a member of our Board. Mr. Reuter joined our Board in August 2015 as a part of the Susquehanna merger. Mr. Reuter also qualifies as an “audit committee financial expert” under SEC guidelines. Mr. Reuter has held leadership roles in numerous community organizations throughout his career, including serving as campaign chairman for United Way campaigns in both Hagerstown, MD, and Lancaster, PA. Qualifications and Experience: Executive leadership, corporate governance and supervision, financial services | |||
Tollie W. Rich, Jr. Cape Coral, FL |
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Age:66 Tenure: BB&T since 2013 Branch Bank Board Committees: Audit | Mr. Rich brings valuable perspective to the BB&T Board by combining financial industry expertise with significant corporate governance and supervisory expertise. His banking career Qualifications and Experience: Executive leadership, corporate governance and supervision, financial services | |||
BB&T Corporation | 2016 Proxy Statement 13
| Proposal 1—Election of Directors |
Christine Sears Harrisburg, PA |
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Age:60 Tenure: BB&T since 2015 Branch Bank since 2015 Board Committees: Audit | Ms. Sears has served as the President and Chief Executive Officer of Penn National Insurance since January 1, 2015. Prior to being appointed Penn National’s President and Chief Executive Officer, Ms. Sears served as Penn National’s Executive Vice President and Chief Operating Officer since 2010 after serving as Penn National’s Chief Financial Officer from 1999 to 2010. Ms. Sears joined Penn National in 1980 as a financial analyst and held various positions of increasing leadership in the company prior to being named the President and Chief Executive Officer. Her deep understanding of the insurance industry is very valuable to our Board of Directors as BB&T’s insurance operations are our largest source of non-interest income. Ms. Sears joined our Board in August 2015 as a part of the Susquehanna merger. Ms. Sears qualifies as an “audit committee financial expert” under SEC guidelines. Ms. Sears is a Certified Public Accountant, holds the Chartered Property Casualty Underwriter designation from the American Institute for Chartered Property Casualty Underwriters, and has completed the Insurance Executive Development Course of the Wharton School of Business at the University of Pennsylvania. Qualifications and Experience: Executive leadership, audit committee financial expert qualified, accounting, corporate governance and supervision, financial services
| |||
Thomas E. Skains | Charlotte, NC | |||
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Age:59 Tenure: BB&T since 2009 Branch Bank since 2013 Board Committees: Executive (Chair) Risk Public Company
Piedmont Natural Gas Company, Inc.
| Mr. Skains
Mr. Skains brings extensive leadership and strategic planning experience to BB&T through his experience leading a major natural gas utility in the Southeast. Mr. Skains also brings a wealth of corporate governance and risk management expertise gained through his role as the Chairman of the Board of Piedmont Natural Gas, a publicly traded corporation. His experience in the highly regulated natural gas industry is especially valuable given the high degree of regulation in the financial services industry. Mr. Skains also has Qualifications and Experience: Executive leadership, public company director, corporate governance and supervision | |||
14 BB&T Corporation | 2016 Proxy Statement
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Thomas Thompson Owensboro, KY | ||||
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Age:67 Tenure: BB&T since 2008 Branch Bank since 2013 Board Committees:
Nominating and Corporate Governance | Mr. Thompson
As a member of the Kentucky legislature, including serving as the Chairman of the House Banking and Insurance Committee, Mr. Thompson provides BB&T with a unique perspective on risk management and the regulation of the financial services industry. Mr. Thompson also brings governance and community service skills and experience to the BB&T Board, having served as a director of various educational and community organizations.
Qualifications and Experience: Executive leadership, corporate governance and supervision, financial services | |||
Edwin H. Welch, Ph.D.
| ||||
Age:71 Tenure: BB&T since 2011 Branch Bank since 2013 Board Committees: Compensation (Chair) Nominating and Corporate Governance | Dr. Welch
He brings his vast knowledge of economics, political science and education to the BB&T Board. He understands the need for an organization to grow and evolve, as well as the related challenges in implementing such growth. As President of the University of Charleston, he has led the institution through unprecedented growth and fundraising, doubling full-time student enrollment, redefining the university’s mission, transforming its academic program and adding graduate schools of pharmacy and business. Dr. Welch also led the creation of a central administrative computing company, Independent College Enterprise, Inc., which serves eight colleges and universities. In 2006, he received the inaugural Charles L. Foreman Award for Innovation in Private Higher Education from the Foundation for Independent Higher Education. Dr. Welch was given the 2007 YMCA Spirit of the Valley Award in recognition of his exemplary community service.
Qualifications and Experience: Executive leadership, academia, corporate governance and supervision | |||
BB&T Corporation | 2016 Proxy Statement 15
| Proposal 1—Election of Directors |
Stephen T. Williams Winston-Salem, NC |
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Age:56 Tenure: BB&T since 2007 Branch Bank since 2013 Board Committees: Audit (Chair) | Mr. Williams
In addition to the management and oversight skills and experiences gained in serving as the top executive of A.T. Williams Oil Company and WilcoHess, Mr. Williams has a unique perspective on the needs of customers within BB&T’s footprint through his experience with the daily operations of a chain of over 400 gas stations, convenience stores, restaurants and travel centers in Alabama, Georgia, Tennessee, Virginia, Pennsylvania, and the Carolinas. In addition, Mr. Williams has gained experience in building ties between business and the local community through his involvement with community-oriented organizations such as the Winston-Salem Alliance. Mr. Williams
Qualifications and Experience: Executive leadership, audit committee financial expert, corporate governance and supervision | |||
THEOUR BOARD OF DIRECTORS OF THE CORPORATION RECOMMENDS A VOTE “FORALL” EACH OF THE DIRECTOR NOMINEES NAMED ABOVE.
16 BB&T Corporation | 2016 Proxy Statement
| Corporate Governance Matters | |
The Board of Directors periodically reviews BB&T’s corporate governance policies, practices and procedures to ensuresee that we meet or exceed the requirements of applicable laws, regulations and rules. In this regard, ourOur ultimate purpose is to create a strong, sound, and profitable financial services company with long-term growth and value for its shareholders.
Corporate Governance Guidelines
Our Corporate Governance Guidelines provide the framework for fulfillment of the Board’s corporate governance duties and responsibilities, taking into consideration corporate governance best practices and applicable laws and regulations. The Corporate Governance Guidelines address a number of matters applicable to directors, including director qualification standards and director independence requirements, share ownership guidelines, Board responsibilities, role of the independent Lead Director, retirement, meetings of non-management directors, and Board compensation. A link to our Corporate Governance Guidelines can be found in the section below entitled “Corporate Governance Materials.”
As a part of its listing standards,In determining director independence, our Board considers the New York Stock ExchangeExchange’s (“NYSE”) has adopted certain bright-line criteria that our Board of Directors considers when determining director independence. Under theindependence criteria. Consistent with NYSE rules, theour Board of Directors also broadly considers all other relevant facts and circumstances that bear on the materiality of each director’s relationship with BB&T, including the potential for conflicts of interest, when determining director independence. To assist it in making independence determinations, of independence, our Board of Directors has adopted categorical standards relating to director independence, which are contained in our Corporate Governance Guidelines. These standards for director nomination and qualification standards reflect, among other items, the NYSE independence requirements, other applicable laws and regulations related to director independence, and discussaddress certain relationships that the Board has determined do not affect a director’s independence. A link to our Corporate Governance Guidelines can be found in the section below entitled “Corporate Governance Materials.”
To assist theour Board in its determination of director independence, the Nominating and Corporate Governance Committee annually evaluates each prospective and incumbent director using the foregoing standards and such other factors as the Nominating and Corporate Governance Committee deems appropriate, and makes a recommendation to the Board regarding the independence or non-independence of each such person. As a part of this evaluation process, the Nominating and Corporate Governance Committee considers each director’s occupation, other publicly held company directorships, personal and affiliate loan and non-loan transactions with BB&T and its subsidiaries, certain charitable contributions, relationships considered by the Nominating and Corporate Governance Committee in accordance with our Related Person Transactions Policy and Procedures, and other relevant relationships, direct orand indirect relationships that may affect the prospective or incumbent director’s independence. Banking relationships with BB&T or any of its subsidiaries (including deposit, investment, lending and fiduciary) that are conducted in the ordinary course of business on substantially the same terms and conditions as are otherwise available to nonaffiliated customers for comparable transactions are not considered material in determining independence.
After duly considering all such information, our Board of Directors has affirmatively determined that of the eighteen members of the Board, the following fifteensixteen directors have no disqualifying material relationships with BB&T or its subsidiaries and are independent: Messrs. Boyer, Deal, Howe,Faulkner, Kendrick, Lynn, Milligan, Patton, Reuter, Rich, Skains, Thompson, Welch and Williams, and Mmes. Banner, Cablik, Henry and Henry.Sears. The following threetwo directors were deemed not independent due to certain disqualifying relationships with BB&T: Messrs. Faulkner, King and Qubein.
BB&T Corporation | 2016 Proxy Statement 17
| Corporate Governance Matters |
In assessing the independence of Thomas Skains, the Board considered his occupation as the Chairman, President and Chief Executive Officer of Piedmont Natural Gas Company, Inc. Branch Bank paid Piedmont Natural Gas approximately $228,000 in 2015, $280,000 in 2014 and $247,000 in 2013 $159,000 in 2012 and $221,000 in 2011 for natural gas. Branch Bank also paid Georgia Natural Gas approximately $950 in 2013, $17,000 in 2012Under Securities and $46,000 in 2011 for natural gas. Piedmont Natural Gas owns a 15% security interest in South Star Energy, which does business as Georgia Natural Gas. Under SECExchange Commission (“SEC”) rules, these transactions do not constitute Related Person Transactions because they involve the rendering of services by a public utility, at rates or charges fixed in conformity with law or governmental authority.
In assessing the independence of Edward Milligan, the Board considered that Mr. Milligan’s son is currently employed as a land broker for NAI Brannen Goddard (“NAI”) in Atlanta, Georgia. In 2013, NAI provided real estate brokerage services for commercial real estate owned by Branch Bank in connection with the sale of a single foreclosed property, and Mr. Milligan’s son, as the listing agent, shared in the $28,800 commission received by NAI. The other Branch Bank property listings with NAI have been transferred to other brokerage firms.
On January 1, 2013, the membershipOur Board currently consists of the BB&T Board was expanded to include all of Branch Bank’s board members as of that date, and vice-versa, resulting in the two boards having identical memberships. The decision was made to match the membership of these two boards to provide for transparency and information sharing between both boards, allowing for better risk management, provide for administrative efficiencies, and to take advantage of the talent and experience provided by the new members of each board. This structure is also in line with that of many of the financial services companies found in BB&T’s Peer Group.
As a consequence of matching boards, BB&T’s board increased in size to eighteen directors. While that number of boardBoard members is greater than the number we have maintained historically, we believe the addition of these directors provideBoard’s current size provides us with certain advantages. Over the last several years, financial institutions have been subjectfaced increased regulatory and economic pressure. This has led to increased pressure, both economic and regulatory. The escalated requirements from regulators require an increasing demandadditional demands resulting in a greater time commitment on the timepart of our directors and executive officers and board members.officers. In response, we have expanded the number of boardBoard committees in recent years while also increasingand increased the responsibilities of each committee. The relatively large size of our boardBoard has provided usproved to be an advantage when assigning an appropriate number of members to each committee in order to properly analyze and respond to increasingly complex developments, whether regulatory, economic, or otherwise. The larger Board and committee size also allowallows for more effective challenge to proposals from management and directors and increases the diversity of views available to consider. TheIn addition, the number of independent directors from Branch Bank also aids in maintaining the requisite independence standards of the Audit, Compensation, and Nominating and Corporate Governance committees. The Board believes that its current size and structure enables each director to effectively represent the interests of BB&T’s shareholders.
CHAIRMANOFTHE BOARDAND CHIEF EXECUTIVE OFFICER
TheOur Board of Directors is led by the Chairman. BB&T’sUnder our bylaws, provide that the Chairman will presideis elected by the Board and presides over each Board meeting and will performperforms such other duties as may be incident to the office of Chairman, such as establishing the agenda for Board meetings. The bylaws also provide that it is the responsibility of the Board of Directors to elect the Chairman. BB&T’s bylaws and Corporate Governance Guidelines each provide that the Chairman may also hold the position of Chief Executive Officer. BB&T’s Chairman and/or Chief Executive Officer is not permitted to serve as a member of any standing Board committee, other than the Executive Committee and the Risk Committee. BB&T’s Corporate Governance Guidelines provide that when the position of Chairman of the Board is not held by an independent director, the Board will appoint an independent Lead Director.
Kelly S. King, the Chief Executive Officer of BB&T, has served as Chairman of the Board of Directors since January 1, 2010. Mr. King succeeded John A. Allison IV as BB&T’s Chief Executive Officer on January 1, 2009, upon Mr. Allison’s retirement from BB&T. Prior to his retirement, Mr. Allison served as BB&T’s Chairman and Chief Executive Officer for nearly 20 years.
It is the Board’s current belief that having a unified Chairman and Chief Executive Officer is appropriate and in the best interests of BB&T and itsour shareholders. The Board believes that combining the Chairman and Chief Executive Officer roles provides the following advantages to BB&T:us:
theour Chief Executive Officer is the director most familiar with BB&T’s business and industry and is best situated to lead discussions on important matters affecting the business of BB&T;
combining the Chief Executive Officer and Chairman positions creates a firm link between management and the Board and promotes the development and implementation of corporate strategy; and
combining the roles of Chief Executive Officer and Chairman contributes to a more efficient and effective Board and does not undermine the independence of the Board.
The Board also believes that 18 BB&T’s strong performance under Messrs. Allison and King, especially in light of the financial crisis, demonstrates the effectiveness of its leadership approach. The Board evaluates its leadership structure as a part of its annual self-evaluation.&T Corporation | 2016 Proxy Statement
| Corporate Governance Matters | |
INDEPENDENT LEAD DIRECTOR
BB&T’s Corporate Governance Guidelines provide that when the Chairman is not independent, the Board will appoint a “Lead Director,” who is required to be an independent director. The role of the Lead Director is to assist the Chairman and the remainder of the Board in assuring effective governance in overseeing the direction and management of BB&T. The Lead Director serves a two-year term, subject to election to the Board each year by theour shareholders, and may serve for multiple successive termsone subsequent one-year term at the discretion of the Board. As enumerated in BB&T’sour Corporate Governance Guidelines, several of the Lead Director’s specific responsibilities are to:
organize and preside over executive sessions;
set the agenda for and lead executive sessions;
preside at all Board meetings at which the Chairman is not present (including executive sessions);
take responsibility for feedback to/engagement with the Chief Executive Officer on executive sessions;
suggest matters and issues for inclusion on the Board agenda;
work with the Chairman and committee chairs to ensure that there is sufficient time for discussion of all agenda items; and
facilitate teamwork and communication among the independent directors and the Chairman.
TheIn addition, if the Chairman of the Board should be unable to continue his or her responsibilities due to death, disability or other event, then the Lead Director shall call a special Board meeting within one week of the determination that the Chairman of the Board cannot continue his or her responsibilities, to elect a successor Chairman of the Board. Our Board believes that the Lead Director serves an important corporate governance function by providing separate leadership for the non-management and independent directors. During 2013 and continuing in 2014, Ronald E. Deal has servedJennifer S. Banner serves as the Board’s Lead Director. The Board believes that each director, irrespective of that person’s independence status, committee service or other leadership responsibilities, effectively represents the interests of BB&T’s shareholders.
EXECUTIVE SESSIONSOFTHE BOARD
Under ourOur Corporate Governance Guidelines require that non-management directors are required to meet in regular executive sessions of the Board of Directors at least three times per year and at such other times as it deems necessary or advisable. The Corporate Governance Guidelines also require independent directors to meet in executive session (without nonindependentnon-independent directors present) at least once a year. It is theannually. The Lead Director’s responsibility to presideDirector presides over the non-management and independent director executive sessions.
BOARD COMMITTEE OVERSIGHTStrategic Direction and Planning
One of the Board’s most important and vital functions is to provide oversight, guidance and direction as to BB&T’s long-term strategy. Accordingly, each January management provides to the Board a detailed report on BB&T’s strategic plan, goals and initiatives for the upcoming year and beyond. The process includes an independent risk assessment to ensure all strategic activities are consistent with the board approved risk appetite parameters. Before it is approved, the Board hasengages in thorough and detailed discussions and deliberations over the following five committees: Executive, Risk, Audit, Compensation, and Nominating and Corporate Governance. Each committee hasstrategic plan. The plan also includes reporting on management’s success in executing on the authorityprior year’s strategic plan to as it deems appropriate, independently engage outside legal, accounting or other advisors or consultants without consulting in advance, or obtaining the approval of, any BB&T officer or, in the case of a committee, the Board. Regularly scheduled executive sessions for only non-management directors are held for all committees. Additionally, each committee annually conducts a review and evaluation of its performance. The current charter of each committee is reviewed and reassessed annually by the applicable committee to determine its adequacy in light of any changes to applicable rules and regulations.ensure accountability.
Board Committees, Membership and Attendance
Pursuant toUnder our Corporate Governance Guidelines, directors are expected to attend Board meetings, meetings of assigned committees, and annual meetings of shareholders. Each director is required to be sufficiently familiar with the business of BB&T, including itsour strategy, financial statements, capital structure, business risks and competition, to facilitate active and effective participation in such meetings. In addition, eachDuring 2015, the full Board of Directors held ten meetings. Each of the directors attended more than 75% of the Board of Directors’ meetings and assigned committee meetings held in 2015 during the period for which he or she has been a director. All of our directors serving at that time attended the Annual Meeting of Shareholders in 2015, with the exception of one director, who could not attend due to health-related reasons.
BB&T Corporation | 2016 Proxy Statement 19
| Corporate Governance Matters |
Each member of the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee has been determined by the Board to be “independent” in accordance with the requirements of the NYSE (including the specific SEC and NYSE independence requirements for audit committee members and the specific NYSE independence requirements for compensation committee members) and BB&T’s Corporate Governance Guidelines. See “Director Independence” above.
During 2013, the full Board of Directors held twelve meetings. Each of the directors attended more than 75% of the Board of Directors’ meetings and assigned committee meetings held in 2013 during the period for which he or she has been a director. All of our directors attended the Annual Meeting of Shareholders in 2013.
It is also anticipated that the Board committees will perform additional duties that are not specifically set out in their respective charters as may be necessary or advisable in order for BB&Tus to comply with certain laws, regulations or corporate governance standards, as the same may be adopted, amended or revised from time to time. The current director nominees serving onmembers of each committee, the principal functions of each committee and the number of meetings held in 20132015 are shown below. On February 25, 2014, Mr. Allison announced his retirement from the BB&T Board. During 2013, Mr. Allison served on the Executive and Risk Committees, and will continue to do so until the Annual Meeting, the effective date of his retirement. Please refer to “Corporate Governance Materials” below for the location of the committee charters.
Audit Committee
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Faulkner, I. Patricia Henry, Edward C. Milligan, Tollie W. Rich, Jr., Christine Sears
| • Assists the Board in its oversight of the integrity of • Assists in oversight of BB&T’s internal control processes. • Monitors financial risks and exposures and reviews with management and the auditors the steps management has taken to monitor, minimize or control such risks or exposures. • Responsible for the appointment, compensation, retention and oversight of the work of the independent auditor for the purpose of preparing or issuing an audit report or performing other audit, review or attest • Evaluates the qualifications, performance and independence of, the independent registered public accounting firm. • Oversees BB&T’s internal audit function and receives regular reports from the internal auditor. | ||
Compensation Committee
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Edwin H. Welch Chair Met 9 Times in 2015 | Committee Members: Anna R. Cablik, Eric C. Kendrick, Louis B. Lynn, Thomas N. Thompson • Manages the duties of the Board related to executive compensation. • Reviews and approves BB&T’s compensation philosophy and practices. • Determines the compensation of the CEO and the highest levels of BB • Recommends Board compensation and benefits for directors. • Engages an independent compensation consultant to make recommendations relating to overall compensation philosophy, the peer financial group to be used for external comparison purposes, short-term and long-term incentive compensation plans, and related compensation matters. •
• Responsible for oversight and review of | ||
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Executive Committee
Thomas E. Skains Chair Met
| Committee Members: Jennifer S. Banner, K. David Boyer, Jr., Kelly S. King, Charles A. Patton, Nido R. Qubein, William J. Reuter • Authorized to exercise all powers and authority of the Board in management of the business and affairs of the Corporation between Board meetings. | |
Nominating and Corporate Governance Committee
Anna R. Cablik
| Committee Members: Eric C. Kendrick, Louis B. Lynn, Thomas N. Thompson, Edwin H. Welch • Reviews and recommends the composition and structure of the Board and its committees and evaluates the qualifications and independence of members of the Board on a periodic basis. • Considers the performance of incumbent directors in determining nominations for re-election. • • Administers BB&T’s Related Person Transactions Policy and Procedures. • Oversees annual self-assessments for board members. • Oversees Board Committee composition and executive management succession planning processes. | ||
Risk Committee
Charles A. Patton Chair
Met 11 Times in 2015 | Committee Members: Jennifer S. Banner, K. David Boyer, Jr., Kelly S. King, Nido R. Qubein, William J. Reuter, Thomas E. Skains • Reviews processes for identifying, assessing, monitoring and managing regulatory, credit, liquidity, market, operational, reputational and strategic risks. • Assesses the adequacy of BB&T’s risk management policies and procedures. • Receives periodic reports on our risks, approves BB&T’s risk management framework and periodically reviews and evaluates the adequacy and effectiveness of the risk management framework. • Discusses with management, including the Chief Risk Officer, our major risk exposures and reviews the steps management has taken to identify, monitor and control such exposures. • Approves statements defining BB&T’s risk appetite, monitors our risk profile and provides input to management regarding our risk appetite and risk profile. • Oversees management’s implementation and management of, and conformance with, BB&T’s significant risk management policies, procedures, limits and tolerances. | |
Corporate Governance GuidelinesBB&T Corporation | 2016 Proxy Statement 21
| Corporate Governance Matters |
The Board of Directors has adopted written Corporate Governance Guidelines, which provide the framework for fulfillment of the Board’s corporate governance duties and responsibilities, taking into consideration corporate governance best practices and applicable laws and regulations. The Corporate Governance Guidelines address a number of matters applicable to directors, including director qualification standards and director independence requirements, share ownership guidelines, board responsibilities, role of the independent lead director, retirement, meetings of non-management directors and board compensation.
Last year our shareholders approved a non-binding shareholder sponsored proposal to amend our articles of incorporation to provide that director nominees be elected by the affirmative vote of the majority of votes cast at an annual meeting of shareholders, with a plurality vote standard retained for contested director elections. After considering the results of this shareholder vote, and after obtaining feedback from some of our largest shareholders on this issue, our Board of Directors has concluded that it is in the best interests of BB&T and its shareholders to amend our articles of incorporation to provide for majority voting in uncontested director elections, while retaining a plurality vote standard for contested elections. Proposal 4 contains BB&T’s proposal to adopt a majority voting standard and more details about the proposal can be found on page 74. If approved, BB&T intends to implement this standard beginning at the 2015 Annual Meeting of Shareholders.
Our articles of incorporation generally require each director to be elected by the majority of the votes cast at a meeting of shareholders. Under the current Director Resignation Policy, any director nominee who receives a greater number of votes “withheld”“withhold” than votes “for” such election shall tender his or her resignation to the Board. The Nominating and Corporate Governance Committee will then consider all of the relevant facts and circumstances and recommend to the Board whether to accept, reject or otherwise act with respect to such resignation. The Board will act on the Committee’s recommendation within 130 days following certification of the shareholder vote and will publicly disclose its decision within this 130 day130-day timeframe. A director whose resignation is under consideration will abstain from participating in any recommendation or decision regarding that resignation. If a director’s resignation is not accepted, the director will continue to serve for the remainder of his or her term.
Currently, pursuant to North Carolina law and BB&T’sour bylaws, an incumbent director who is not re-elected remains in office until the director’s successor is elected and qualified or until his or her earlier resignation or removal. For this reason, if Proposal 4 (Majority Voting for Directors) is approved by shareholders,Under our current majority voting standard, the Board will retainretained its current Director Resignation Policy to address thethis “holdover” issue, so that any director thatwho does not receive the requisite affirmative majority of the votes cast for his or her re-election must tender his or her resignation to the Board pursuant to this Policy.
We are very proud of our culture at BB&T, which has been deliberately developed and consistently articulated over the last 40-plus years. In a rapidly changing and unpredictable world, we believe individuals and organizations need a clear set of fundamental principles to guide their actions. At BB&T, we know our business will, and should, experience constant change. Change is necessary for progress. In any context, our vision, mission and values, are unchanging because these principles are based on basic truths.
We are a mission-driven organization with a clearly defined set of values. We encourage our associates to have a strong sense of purpose, a high level of self-esteem and the capacity to think clearly and logically. We believe a competitive advantage is largely in the minds of our associates and their capacity to turn rational ideas into actions that help us accomplish of our mission to make the world a better place to live by:
| • | Helping ourclients achieve economic success and financial security; |
| • | Creating a place where ourassociates can learn, grow and be fulfilled in their work; |
| • | Making thecommunities in which we work better places to be; and |
| • | Thereby optimizing the long-term return to ourshareholders, while providing a safe and sound investment. |
We realize our vision—“to create the best financial institution possible”—by meeting our responsibilities to our clients, associates, shareholders and communities. Our 10 values represent our over-arching beliefs. Our values are consistent with one another and integrated into a sound framework of character, judgment, success and happiness. Our focus on values grows from a belief that ideas matter and that an individual’s character is of critical significance. Executive Management continually reinforces the BB&T culture (mission, vision and values) through a quarterly video, annual regional in-person visits and other internal communication channels. | BB&T Values
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Ethics matter at BB&T. We believe that the ultimate success of BB&T is directly related to the extent that each one of our associates lives and works every day by adhering to our BB&T values. Our collective beliefs, behaviors, and results define our BB&T culture—a Culture of Ethics. We are keenly focused on always doing what is right in all interactions with our stakeholders—our clients, associates, senior leaders, directors, communities and shareholders. We also value and respect the opinions and insights of associates at all levels throughout the organization. Accordingly, we encourage associates to raise concerns with their managers, but we also provide other channels such as regional associate relations managers, a BB&T Ethics Hotline and our “Raise a Concern” web reporting form. We appointed a Chief Ethics Officer in 2015 in furtherance of our commitment to, and focus on ethics.
We maintain athree separate Board-approved Codes of Ethics that apply to our associates, senior financial officers and Directors. BB&T’s Code of Ethics for Associates which has been approved by the Boardhelps each of Directors, so that each associate of the Corporation and its subsidiaries understandsour associates understand the basic principles that govern BB&T’sour corporate conduct and the conduct of itsour associates generally. We similarly maintain a Code of Ethics for Directors, also approved by the Board of Directors, which governs the conduct of BB&T’sour directors generally. The Board also has adopted the Code of Ethics for Senior Financial Officers, which incorporates both the Code of Ethics for Associates and also considers the Codeimportance of Ethics for Directors.these individuals to our financial and regulatory reporting. For a copy of BB&T’sour Codes of Ethics, please refer to “Corporate Governance Materials” below. Any future waivers or substantive amendments of the Codes of Ethics applicable to BB&T’s directorsour Directors and certain of our executive officers will be disclosed on our website.
Communications with the Board of Directors
Any shareholder or other interested party desiring to contact the Board of Directors or any individual director serving on the Board (including any specific non-management director or the non-management directors as a group) may do so by written communication mailed to: Board of Directors, (Attention: name of director(s), as applicable), care of the Corporate Secretary, BB&T Corporation, 200 West Second Street, Winston-Salem, North Carolina 27101. Any proper communication so received will be processed by the Corporate Secretary as agent for the Board or thean individually named director. Unless, in the judgment of the Corporate Secretary, the matter is not intended or appropriate for the Board (and subject to any applicable regulatory requirements), the Corporate Secretary will prepare a summary of the communication for prompt delivery to each member of the Board or, as appropriate, to the member(s) of the Board named in the communication. The Corporate Secretary may elect not to forward summaries or copies of communications that the Corporate Secretary believes are business solicitations, resumes, abusive, frivolous or similarly inappropriate. Directors may at any time review a log of all correspondence received by BB&T that is addressed to members of the Board and request copies of any such correspondence. Any director may request the Corporate Secretary to produce the original of such communication for his or her review.
Shareholder Engagement Program
BB&T’sOur shareholder engagement program is a formal and coherent system for engaging with BB&T’s shareholders, which includes building and maintaining relationships with its largest shareholders by percentage ownership of the Corporation. Each year, BB&T engagesour shareholders. Since 2009, we’ve engaged in a recurring dialogue with a number of theseour larger shareholders and generally focuses onconcerning corporate governance and executive compensation issues. BB&T believes that it is most productiveIn 2015, we expanded our shareholder engagement program and contacted 37 of our 50 largest shareholders, representing 38% of our outstanding shares. Our Compensation Committee Chair led meetings with four of our largest shareholders. We also reached out to discuss governance and compensation issues well in advanceeach of the months leading up tothree shareholders that had submitted proposals at our 2013, 2014 and 2015 annual meetings. In addition, we met with certain of the Annual Meeting, whichproxy advisory firms followed by some of our largest shareholders.
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The conversations centered on our executive compensation philosophy and design, including the Merger Completion Incentive Program announced last year. We also discussed corporate governance matters such as political contributions disclosure, sustainability reporting and proxy access. Overall, we received feedback that was generally supportive of our executive compensation programs and corporate governance practices. The feedback we received during these sessions was considered in our compensation decisions.
We believe that our shareholder engagement program allows Executive Management and the Board to gather information about investor concerns and make educated and deliberate decisions that are balanced and appropriate for BB&T’sour diverse
shareholder base and in the best interests of the Corporation. BB&T believes that its shareholder engagement program allows it to better address the concerns of its shareholders&T. For additional information regarding our outreach efforts in 2015, please see “Shareholder Engagement” within our Compensation Discussion and bring issues to the attention of Executive Management and the Board.Analysis section.
For example, following the 2013 Annual Meeting, after a shareholder proposal regarding majority votingEnvironmental, Social, and Governance Report
We understand that it is important to our shareholders that we minimize our environmental impact, promote positive social efforts, and implement transparent governance practices. In order to emphasize our commitment to these areas, we expect to issue an annual Environmental, Social, and Governance report beginning in uncontested director elections received a majority2016. This publication will highlight our endeavors to act as good stewards of the votes cast,natural resources entrusted to us and to promote the Board instructed management to use the shareholder engagement program to obtain the input of BB&T’s largest shareholders on this important corporate governance issue. After factoring in shareholder input and carefully considering the Corporation’s and the shareholders’ best interests, the Board approved changes to BB&T’s Articles of Incorporation, pending shareholder approval, to provide for majority voting in uncontested director elections. See Proposal 4.
Somewell-being of our shareholders have also voiced concern recently over the ability of BB&T directors to pledge their shares of the Corporation’s stock. After careful deliberation, the Board approved changes to limit future share pledges by directorsassociates and members of Executive Management to those shares in excess of the individuals’ stock ownership requirements.
Additionally, the Board has responded to shareholder feedback on the subject of political contributions. Through our shareholder engagement efforts last year, we found that many of our shareholders would support website disclosure of our political contributions policy which clarifies the Board’s oversight role in this area, as an alternative to the recent shareholder proposals requesting detailed political disclosures. Accordingly, the Board approved our Statement of Political Activity, which is posted on our website and is described in more detail below.communities.
Statement of Political Activity
The Board of Directors oversees BB&T’s political strategy, political contributions and lobbying expenses. BB&T periodically participates in policy debates on issues to support BB&T’sour interests and sponsors employee political action committees, or PACs, which allow associates to voluntarily pool their financial resources to support federal and state candidates who support effective legislation important to BB&T, itsus, and our shareholders, clients and communities. However, itAll PAC expenditures are a matter of public record and are available for review on the websites of the Federal Election Commission and various state election offices. It is BB&T’sour policy not to use corporate funds to make contributions to political candidates, political parties or committees or political committees organized for the advancement of political candidates, including Super PACs or independent expenditure committees. In response to feedback we received during our shareholder engagement program in 2013, we have posted on our website a Statement of Political Activity which describes our Board and management oversight process for political contributions and political activity by the Corporation, including the activities of our Government Affairs Group. Please refer to “Corporate Governance Materials” below for its location.
Board SkillsandSkills and Training Program
In 2013, the Board approved theThe Board Skills and Training Program (the “Training Program”). The Training Program formalizes and updates board training that has been provided to our directors for many years. The purpose of the Training Program is to provide provides a formal framework designed to support the directors’ performance of their responsibilities as members of the Board and Board Committees.committees. The Training Program is based on knowledge, skills and resources standards matricescurricula developed for the Board and each Board Committee. These matrices identify basiccommittee and advanced skills necessary or desirableindividual learning plans are created for service on the Board and Committees.each director. Courses of general application are offered to the full Board while others are tailored to the specific requirements of the various Board Committees.committees. The directors’ participation is considered by the Nominating and Corporate Governance Committee in its annual evaluation of directors’ performance.
Policy for Accounting and Legal Complaints
The Audit Committee has adoptedoversees a policy that governs the reporting of (a) associate complaints regarding accounting, internal accounting controls, or auditing matters and (b) evidence of (i) a material violation by the Corporation or any of its officers, directors, associates or agents, of federal or state securities laws, (ii) a material
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breach of fiduciary duty arising under federal or state law, or (iii) a similar material violation when such evidence is
obtained by an attorney authorized to appear or practice before the SEC. We have engaged an independent service provider to receive and track all such complaints. Most of those verified complaints will beare referred to BB&T’s General Counsel, who will beis responsible for reviewing those complaints in accordance with the BB&T’s whistleblower procedures and reporting all relevant information regarding the nature of the complaint to the Audit Committee. Our General Counsel will investigateinvestigates or causecauses to be investigated all matters referred pursuant to this policy and will maintainmaintains a record of such complaints that includes the tracking of the receipt of their referral, investigation and resolution. Generally, if such a complaint is raised by an attorney in our legal department, then the complaint will be referred to the Corporation’s General Auditor, who will assume the responsibility for investigating, recording and tracking the matter.our Chief Executive Officer. The General Counsel (or the General Auditor,Chief Executive Officer, as the case may be) will periodically prepareprepares a summary report of such complaints for the Audit Committee, which will overseeoversees the consideration of all reported complaints covered by this policy. The telephone number for reporting complaints as described in this section is 800-462-8392.800-432-1911. Please refer to “Corporate Governance Materials” below for the location of BB&T’s Policy and Procedures for Accounting, Securities and Legal Violations.Violations Policy.
As noted above, one of the primary responsibilities of the Nominating and Corporate Governance Committee is to assist the Board of Directors in identifying and reviewing qualifications of prospective directors for the Corporation. The Nominating and Corporate Governance Committee is charged withresponsible for selecting individuals who demonstrate the highest personal and professional integrity, have demonstrated exceptional ability and judgment and who are expected to be the most effective in serving the long-term interests of BB&T and its shareholders.
A candidate for election as a director of BB&Tcandidate is nominated to stand for election based on his or her professional experience, recognized achievement in his or her respective field, an ability to contribute to some aspect of BB&T’sour business, his or her experience in risk management, and the willingness to make the commitment of time and effort required of a BB&T director over an extended period of time. A director must be “financially literate,” as requireddefined by the Board, and should understand the intricacies of a public company. A director should possess good judgment, strength of character, and an independent mind, as well as a reputation for integrity and the highest personal and professional ethics. Other factors will be taken into consideration to assure that the overall composition of the BB&Tour Board is appropriate, such as occupational and geographic diversity and age. The Board has aAn important goal which is pursued through the Nominating and Corporate Governance Committee, to include members with diverse backgrounds, skills, and characteristics that, taken as a whole, will help ensure a strong and effective governing body. The Nominating and Corporate Governance Committee annually assesses the effectiveness of these factors in the director selection and nomination process.
Director nominees are recommended to the Board of Directors annually by the Nominating and Corporate Governance Committee for election by the shareholders. The Nominating and Corporate Governance Committee considers candidates submitted by directors, as well as self-nominations and, from time to time, it may consider candidates submitted by a third-party search firm hired for the purpose of identifying director candidates. The Nominating and Corporate Governance Committee conducts an extensive due diligence process to review potential director candidates and their individual qualifications, and all such candidates, including those submitted by shareholders, will be evaluated by the Nominating and Corporate Governance Committee using the Board membership criteria described above.
The Nominating and Corporate Governance Committee also will consider qualified director nominees recommended by shareholders when such recommendations are submitted in accordance with Article II, Section 10 of the Corporation’s bylaws and policies regarding director nominations. Shareholders may submit, in writing, the names and qualifications of potential director nominees to the Corporate Secretary, BB&T Corporation, 200 West Second Street, Winston-Salem, North Carolina 27101, for delivery to the Chair of the Nominating and Corporate Governance Committee for consideration. The written notice must include the following information about the nominee: (i) the nominee’s full name and residential address; (ii) the nominee’s age; (iii) the nominee’s principal occupation(s) during the past five years; (iv) the nominee’s previous and/or current memberships on all public
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company boards of directors; (v) the number and types of securities of the Corporation beneficially owned, if any, by the nominee; (vi) any agreements, understandings or arrangements between the nominee and any other person or persons with respect to the nominee’s nomination or service on the Board of Directors or the capital stock or business of BB&T; (vii) any bankruptcy filings of the nominee or any affiliate of the nominee; (viii) any criminal convictions of the nominee or any affiliate of the nominee; (ix) any civil actions or actions by the Securities and Exchange Commission or other regulatory agency against the nominee or an affiliate of the nominee whereby they were found to have violated any Federal or State securities law; and (x) a signed statement by the nominee consenting to serve as a director if elected. The written notice also must be submitted in accordance with the general procedures for shareholder nominations (including deadlines for the notice to be received by the Corporate Secretary), which are summarized under the caption “Other Matters—ProposalsMatters-Proposals for 20152017 Annual Meeting”Meeting of Shareholders” below. Any shareholder desiring to
recommend a nominee for consideration by the Nominating and Corporate Governance Committee prior to the 20152017 Annual Meeting must do so in accordance with our policies and bylaws.
In addition to potential director nominees submitted by shareholders, the Nominating and Corporate Governance Committee considers candidates submitted by directors, as well as self-nominations by directors and, from time to time, it may consider candidates submitted by a third-party search firm hired for the purpose of identifying director candidates. The Nominating and Corporate Governance Committee conducts an extensive due diligence process to review potential director candidates and their individual qualifications, and all such candidates, including those submitted by shareholders, will be evaluated by the Nominating and Corporate Governance Committee using the board membership criteria described above.
Once a director nominee has been recommended, whether by a shareholder or otherwise, the Nominating and Corporate Governance Committee, in accordance with BB&T’sour Corporate Governance Guidelines, reviews the background and qualifications of the nominee. The Nominating and Corporate Governance Committee reports to the Board, in writing, its recommendations concerning each director nominee to the Board.nominee. The Board then considers the Nominating and Corporate Governance Committee’s recommendations and finally selects those director nominees to be submitted by BB&T to shareholders for approval at the next annual meeting of shareholders. The Board may, as a part of its consideration, request that the Nominating and Corporate Governance Committee provide it with such information or materials pertaining to a director nominee as the Board deems appropriate to fully evaluate the qualifications of the nominee.
BB&T’s vision, mission and values are the foundation for BB&T’s risk management framework. The management of risk has always been an enterprise-wide initiative at BB&T. The Board oversees the risk management framework. Executiveframework utilized at BB&T and therefore serve as the basis on which the risk appetite and risk strategy are built. In keeping with the belief that consistent values drive long-term behaviors, the Risk Management Organization (RMO) has its own risk values that establish the guiding principles of our day-to-day activities:
We believe managing risk is accountable to the Boardresponsibility of every associate.
Our business units and shareholderscorporate support groups are responsible for proactively identifying risk and managing the inherent risks of their business.
We manage risk with a balanced approach which includes quality, profitability, and growth.
We ensure the appropriate return for the designrisk taken.
We utilize accurate and consistent risk management practices.
We thoroughly analyze risk quantitatively and qualitatively with judgments clearly identified.
We believe high quality risk management results in lower cost of thecapital.
We measure what we want to manage and we manage what we measure.
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As illustrated below, BB&T executes on its risk framework and risk outcomes. The Chief Risk Officer is designated by the Board and Executive Management to develop and overseevalues through a fully integrated risk management framework while the stand-alone, Board-level Risk Committee enhances the Board’s risk oversight function.based on a “three lines of defense” model:
The risk framework is organized into three lines of defense. Within these three lines of defense, every associate has a responsibility for managing risk. The first line of defense in the framework are the lines of business, which take risk. Those who are responsible for making the decisions concerning the operation of the functional groups within the lines of business are also responsible for management of the risk associated with the business operations. The managers of the various lines of business proactively identify and manage the inherent risk of their businesses. The second line of defense includes the risk oversight functions. The risk oversight and control functions identify, assess, measure, control, monitor and report on risks throughout the organization. The third line of defense is performed by the independent internal audit function. The third line of defense evaluates the design and effectiveness of the risk framework and the adherence of the Corporation to its risk-related policies, standards and procedures.
| • | First Line of Defense: Risk management begins with the business units and corporate support groups, the point at which risk is originated and where risks must be managed. Business unit managers in the first line identify, assess, control, and report their respective group’s risk profile. |
BB&T has established management-level enterprise wide risk committees that regularly review all risks and establish policies and risk principles for each risk. These risk committees provide management with a fully integrated view of all risk types, allowing Executive Management to manage and monitor the most significant risks at the committee level and provide ongoing risk reporting to the Board.
| • | Second Line of Defense: The RMO provides independent oversight and guidance of risk-taking across the enterprise. The RMO aggregates, integrates, and correlates risk information into a holistic picture of the corporation’s risk profile and concentrations. |
| • | Third Line of Defense: Audit Services (BB&T’s internal audit function) evaluates the design and effectiveness of the risk management framework and its results. |
BB&T places significant emphasis on risk management and has a stand-alone Board-level Risk Committee which oversees risk reporting to the Board of Directors and functions as a significant part of our risk management framework. This committee was split off from the Executive Committee in 2013 and met twelve times last year, more than any other Board committee. Among other things, the Risk Committee approves statements defining the Corporation’s risk appetite statements, monitors the Corporation’s risk profile, and provides input to management regarding the Corporation’s risk appetite and risk profile. The other key functions of the Risk Committee are listed in the section above entitled, “Board Committees, Membership and Attendance.”
Further, the Risk Committee receives fromThe RMO is led by the Chief Risk Officer (CRO) and is responsible for facilitating effective risk management oversight, measurement, monitoring, reporting, and consistency. The CRO has direct access to the Enterprise Risk Manager,Corporation’s Board of Directors and other members of Executive Management officersto communicate any risk issues (current or associates,emerging) as appropriate, periodic reports on, and reviewswell as the performance of
our the risk management framework, risk appetite, risk profile and risk management programs and their results.activities throughout the enterprise. The Risk Committee isCRO also responsible forchairs the following:
Receiving periodic reports on the Credit Risk Review function of the Enterprise Risk Management Department.
Overseeing Executive Management’s implementationCommittee (RMC), which provides oversight on a fully integrated view of risks across BB&T, including strategic, compliance, credit, liquidity, market, operational, and management of, and conformance with, our significant risk management policies, procedures, limits and tolerances.reputation risks.
At least annually, approving significant changes, additions or deletions to our Risk Management Policy and recommending any such changes, additions or deletions to the Board for its review and approval.
Receiving and reviewing reports on, and reviewing and approving significant policies in, the following areas, which list is not intended to be exhaustive:
Funds management;
Capital planning and management;
Investment portfolios;
Liquidity management;
Loan and credit policies;
Loan portfolio performance and concentrations;
Asset/Liability management and market functions; and
Complex structured finance transactions.
Receiving such other reports, or reviewing and approving such other significant policies, as may be requested by the Board.
The BB&T Risk Management OrganizationRMO is further expanded and strengthened through the designation of fourfive Senior Risk Officers, or SROs. The Chief Commercial Credit Risk Officer, the Chief Retail Credit Risk Officer, the Chief Market and Liquidity Risk Officer, the Deputy Chief Risk Officer, and the Chief OperationalRegulatory and Compliance Risk Officer, together are responsible for ongoing aggregation, integration, correlation and reporting of the risks across our organization. Key to this effort is a bottoms-up risk identification and disclosure process that begins with the first line of defense. This business risk assessment process allows the SROs to report risks horizontally across various lines of business to identify emerging risk themes and evaluate strategies to mitigate, reduce, or avoid identified inherent risks. SROs communicate risks on a regular basis to enterprise level risk committees.
The Risk Committee will discuss with management, including the Chief Risk Officer, BB&T’s major risk exposures and review the steps management has taken to identify, monitor and control such exposures.&T Corporation | 2016 Proxy Statement 27
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In addition to the Risk Committee’s role in the risk management process, the Audit Committee reviews, and discusses with the Chief Risk Officer, BB&T’s risk management policies. These discussions are designed to inform the Audit Committee about specific risk information and considerations as it fulfills its governance and oversight responsibilities. Such responsibilities include BB&T’s overall risk appetite evaluation process, which take into account quantitative information from stress testing and economic capital, informed judgments made using key performance indicators and key risk indicators, as well as a review of risks on the horizon.
COMPENSATION HOLDBACK/CLAWBACK
We maintain a pay-for-performance philosophy which governs our incentive compensation programs. Our Compensation Committee administers all aspects of the executive compensation program as applicable to Executive Management, including with respect to risk management. For additional detail, please refer to “Risk Management” within Section 4 of the Compensation Discussion and Analysis.
At the direction of the Compensation Committee, management has established the management compensation committee as well as processes and controls for the design and evaluation of incentive plans
utilized for associates outside of Executive Management. The management compensation committee is responsible for exercising authority to modify payments and impose or release “holdbacks” from incentive compensation arrangements, based on a risk review or regulatory requirements. The management compensation committee also has the authority to prescribe prospective changes to incentive compensation arrangements to ensure their balance, consistent with the BB&T’s safety and soundness. Risk and control functions are involved in the design, oversight, and administration of the incentive compensation programs used by the Corporation.
For many years, weWe have employed risk balancing in the design of incentive programs. In 2011, we further strengthened the risk balancing of incentive program designs by permitting,For instance, our Compensation Committee, at ourits sole discretion, the increase (only for associates outside of Executive Management) or reduction ofmay reduce incentives and bonuses based on risk outcomes. See “Compensation Clawbacks” and “Risk“Executive Risk Scorecard” within Section 3, and “Compensation Clawbacks” within Section 4 of the Compensation Discussion and Analysis.
Management Succession Planning
Management succession planning has for years beenis a priority of the Board of Directors. BB&T’sOur Corporate Governance Guidelines provide that the Board of Directors is responsible for ensuring that BB&T haswe have developed an Executive Management succession plan, including procedures for CEOChief Executive Officer selection in the event of an emergency or the retirement of the CEO. This plan is reviewed and evaluated by the Board at least annually. The Lead Director leads the Board’s review and evaluation of BB&T’s Executive Management succession plan. As part of the plan, Mr.our Chairman and Chief Executive Officer, Kelly S. King, makes available his recommendations and evaluations of potential successors, along with a review of any development plans of such individuals.This process establishes procedures for planning and responding to events involving an absenceofabsence of the CEO, whether for short- or long-term, and allows the Board toexerciseto exercise its judgmentandjudgment and discretion with regard to the selection of a new CEO.
Corporate Governance Materials
Description | Available on BB&T’s Website | |
| Corporate Governance Guidelines | http:// | |
| Board Committees and Charters | http:// | |
| Codes of Ethics | http:// | |
| Statement of Political Activity | http:// | |
| Accounting, Securities and Legal Violations Policy | http://bbt.investorroom.com/corporate-governance |
A shareholder may also may request a copy of any of these documents by contacting the Corporate Secretary, BB&T Corporation, 200 West Second Street, Winston-Salem, North Carolina 27101.
28 BB&T Corporation | 2016 Proxy Statement
| Stock Ownership Information | |
The table below sets forth the beneficial ownership of BB&T common stock by all directors, the NEOs, all directors and executive officers of BB&T as a group and each person who is known to be the beneficial owner of more than five percent of our common stock as of February 19, 2014.17, 2016. Unless otherwise indicated, all persons listed below have sole voting and investment powers over all shares beneficially owned and the address of each person is care of the Corporate Secretary, BB&T Corporation, 200 West Second Street, Winston-Salem, North Carolina 27101.owned. Applicable percentage ownership is based on 711,041,464780,470,501 shares of BB&T common stock outstanding as of February 19, 2014.17, 2016.
Name of Beneficial Owner/Number of Persons in Group | Shares of Common Stock Beneficially Owned(1) | Shares of Common Stock Subject to a Right to Acquire(2) | Percentage of Common Stock | Shares of Common Stock Beneficially Owned(1) | Shares of Common Stock Subject to a Right to Acquire(2) | Percentage of Stock | |||||||||||||||||||
| Directors and Executive Officers | |||||||||||||||||||||||||
John A. Allison IV (3) | 647,811(3) | 951,634 | * | ||||||||||||||||||||||
Jennifer S. Banner | 15,942 | 30,204 | * | 22,746 | 27,489 | * | |||||||||||||||||||
K. David Boyer, Jr. | 6,368 | 8,512 | * | 11,550 | 9,203 | * | |||||||||||||||||||
Anna R. Cablik | 8,992 | 34,661 | * | 16,432 | 33,166 | * | |||||||||||||||||||
Ronald E. Deal | 42,414(4) | 43,324 | * | ||||||||||||||||||||||
James A. Faulkner | 31,523(5) | 581 | * | 36,827 | (3) | 1,115 | * | ||||||||||||||||||
I. Patricia Henry | 9,199 | 581 | * | 13,933 | 1,115 | * | |||||||||||||||||||
John P. Howe III, M.D. | 8,450(6) | 36,381 | * | ||||||||||||||||||||||
Eric C. Kendrick | 163,334(7) | 581 | * | 164,743 | (4) | 1,115 | * | ||||||||||||||||||
Kelly S. King | 213,944(8) | 1,152,151 | * | 388,366 | (5) | 1,232,173 | * | ||||||||||||||||||
Louis B. Lynn | 336 | 581 | * | ||||||||||||||||||||||
Louis B. Lynn, Ph.D. | 4,717 | 1,115 | * | ||||||||||||||||||||||
Edward C. Milligan | 53,101 | 581 | * | 57,445 | 1,115 | * | |||||||||||||||||||
Charles A. Patton | 63,481 | 581 | * | 67,939 | 1,115 | * | |||||||||||||||||||
Nido R. Qubein | 119,172(9) | 42,550 | * | 95,690 | (6) | 33,666 | * | ||||||||||||||||||
William J. Reuter | 41,488 | 35,280 | * | ||||||||||||||||||||||
Tollie W. Rich, Jr. | 111,522 | 581 | * | 115,615 | (7) | 1,115 | * | ||||||||||||||||||
Christine Sears | 9,018 | 1,058 | * | ||||||||||||||||||||||
Thomas E. Skains | 7,419(10) | 8,512 | * | 14,263 | (8) | 9,203 | * | ||||||||||||||||||
Thomas N. Thompson | 544,569(11) | 22,387 | * | 551,451 | (9) | 22,722 | * | ||||||||||||||||||
Edwin H. Welch, Ph.D. | 10,796(12) | 1,163 | * | 20,050 | (10) | 1,697 | * | ||||||||||||||||||
Stephen T. Williams | 373,430(13) | 22,387 | * | 381,342 | (11) | 22,722 | * | ||||||||||||||||||
Daryl N. Bible | 11,261 | 264,920 | * | 82,257 | 299,614 | * | |||||||||||||||||||
Ricky K. Brown | 59,187(14) | 445,329 | * | 159,839 | (12) | 490,212 | * | ||||||||||||||||||
Christopher L. Henson | 75,275(15) | 448,830 | * | 165,972 | (13) | 491,025 | * | ||||||||||||||||||
Clarke R. Starnes III | 32,341 | 277,597 | * | 82,723 | 218,830 | * | |||||||||||||||||||
Directors and Executive Officers as a group (30 persons) | 2,736,638(16) | 5,259,249 | 1.12 | % | 2,804,377 | (14) | 4,098,300 | * | |||||||||||||||||
Beneficial Owners Holding More Than 5% | |||||||||||||||||||||||||
Blackrock, Inc. (17) 40 East 52nd Street New York, NY 10022 | 40,768,079 | — | 5.73 | % | |||||||||||||||||||||
BlackRock, Inc.(15) 55 East 52nd Street New York, NY 10022 | 42,031,540 | - | 5.40% | ||||||||||||||||||||||
The Vanguard Group, Inc.(16) 100 Vanguard Blvd. Malvern, PA 19355 | 44,752,781 | - | 5.73% | ||||||||||||||||||||||
BB&T Corporation | 2016 Proxy Statement 29
| Stock Ownership Information |
| * | Less than 1%. |
| (1) | As reported to BB&T by the directors |
| (2) | Amount includes options to acquire shares of BB&T |
| (3) | Amount includes |
| (4) | Amount includes |
| (5) | Amount includes 57,700 shares held by spouse with sole investment and voting powers. |
| (6) | Amount includes |
| Amount includes |
| (8) | Amount includes 11,763 shares jointly owned with spouse with shared investment and voting powers. |
| Amount includes 3,814 shares held by his son. Amount also includes |
| Amount includes |
| Amount includes |
| Amount includes 287 shares held by spouse with sole investment and voting powers. |
| Amount includes |
| Amount includes an aggregate of |
| Based upon information contained in the Schedule 13G/A filed by BlackRock, Inc. (“BlackRock”) with the SEC on |
| (16) | Based upon information contained in the Schedule 13G filed by The Vanguard Group, Inc. (“Vanguard”) with the SEC on February 10, 2016, Vanguard beneficially owned 44,752,781 shares of common stock as of December 31, 2015, with sole voting power over 1,436,840 shares, shared voting power over 76,147 shares, sole dispositive power over 43,232,893 shares and shared dispositive power over 1,519,888 shares. |
Section 16(a) Beneficial Ownership Reporting Compliance
Under the federal securities laws, our directors and certain of our executive officers are required to report their beneficial ownership of BB&T common stock and any changes in that ownership to the SEC. Specific datesdeadlines for such reporting have been established by the SEC. We are required to report in this Proxy Statement any failure to timely file these reports that occurred in 2013. During 2013, there were four late filings for executive officers and directors of the Corporation: one for Cynthia A. Williams, one for William Rufus Yates, one for Ronald E. Deal, and one for Nido R. Qubein, each reporting a single transaction.2015. To the best of our knowledge, during 2015, all of the filing requirements were otherwise satisfied bysatisfiedby our directors and executive officers subject to Section 16 of the Securities Exchange Act of 1934, as amended.amended (“Exchange Act”). In making this statement, we have relied on the written representations of itsour directors and executive officers subject to Section 16 and copies of the reports that have been filed with the SEC.
30 BB&T Corporation | 2016 Proxy Statement
| Proposal 2—Ratification of the Appointment of PricewaterhouseCoopers LLP as Independent Registered Public Accounting Firm For 2016 | |
PROPOSAL 2—RATIFICATIONOFTHE APPOINTMENTOF PRICEWATERHOUSECOOPERSRICEWATERHOUSECOOPERS LLPAS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 20142016
The Audit Committee is directly responsible for the appointment, compensation, retention and oversight of our independent registered public accounting firm. To execute on this responsibility, the Committee engages in a comprehensive annual evaluation of the independent registered public accounting firm’s qualifications, performance and independence. The Audit Committee has engagedcarefully considered the selection of PricewaterhouseCoopers LLP (“PwC”) as its independent registered public accounting firm to examineaudit and report on the consolidated financial statements of BB&T and certainthe effectiveness of our subsidiaries forinternal control over financial reporting.
In accordance with SEC rules, audit partners are subject to rotation requirements to limit the year 2014,number of consecutive years of service an individual partner may provide us with audit services. For lead and concurring audit partners, the maximum number of consecutive years of service in that capacity is five years. In connection with this mandated rotation, the Audit Committee is directly involved in the selection of any new lead engagement partner. The current lead PwC engagement partner was designated commencing with the 2015 audit and is eligible to report onserve in that capacity through the consolidated balance sheets, statementsend of income and other related statements of BB&T and its subsidiaries. the 2019 audit.
Our shareholders are being asked to ratify the appointment of PricewaterhouseCoopers LLPPwC for 20142016 because we value our shareholders’ views on BB&T’s independent registered public accounting firm and as a matter of good corporate governance. Representatives of PricewaterhouseCoopers LLP willPwC are expected to be present at the Annual Meeting, of Shareholders, will have an opportunity to make a statement if they so desire and willare expected to be available to respond to questions posed by the shareholders. If shareholders do not ratify the decision of the Audit Committee to reappoint PricewaterhouseCoopers LLPPwC as our independent registered public accounting firm for 2014,2016, the Audit Committee will reconsider its decision.
THE BOARD OF DIRECTORS OF THE CORPORATION RECOMMENDS A VOTE “FOR” PROPOSAL 2—RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS BB&T’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2014.2016.
FEESTO AUDITORSFees to Auditors
The following table shows the aggregate fees billed toincurred by the Corporation for professional services by PricewaterhouseCoopers LLPPwC for fiscal years 20132015 and 2012:2014:
| 2013 ($) | 2012 | 2015 ($) | 2014 ($) | |||||||
Audit Fees | 7,494,000 | 6,865,000 | 9,146,000 | 8,185,000 | ||||||
Audit-Related Fees | 4,759,000 | 2,212,000 | 3,558,000 | 4,447,000 | ||||||
Tax Fees | 737,000 | 690,000 | 176,000 | 431,000 | ||||||
All Other Fees | 5,185,000 | 289,000 | 4,578,000 | 4,883,000 | ||||||
|
| |||||||||
Total | 18,175,000 | 10,056,000 | 17,458,000 | 17,946,000 | ||||||
|
| |||||||||
Audit FeesFees.. This category includes fees billed for professional services for the integrated audits of the Corporation’s consolidated financial statements, including the audits of the effectiveness of our internal control over financial reporting, reviews of the financial statements included in the Corporation’sour quarterly reports on Form 10-Q, statutory audits or other financial statement audits of subsidiaries, and comfort letters and consents related to SEC registration statements.
BB&T Corporation | 2016 Proxy Statement 31
| Proposal 2—Ratification of the Appointment of PricewaterhouseCoopers LLP as Independent Registered Public Accounting Firm For 2016 |
Audit-Related FeesFees.. This category includes fees billed for assurance and related services that are reasonably related to the performance of the audit of the Corporation’sour consolidated financial statements and effectiveness of internal controlcontrols and are not reported under the audit fees itemscategory above. These services consist of fees for service organization control reports, other attestation engagements traditionally performed by the independent accounting firm, pre-implementation assessments of internal controls for a new enterprise resource planning system and related business processes, controls assessments as part of the Corporation’sour regulatory reporting initiatives, due diligence services related to proposed acquisitions, and audits of the Corporation’sour employee benefit plans.
Tax FeesFees.. This category includes fees billed for professionaltax-related services rendered, including tax compliance, tax planning, and tax advice.
All Other FeesFees.. This category includes fees billed for professional advisory services provided in conjunction with the Corporation’s regulatory reporting initiatives, andmortgage advisory services, advisory services related to the Company’s plannedour adoption of a new enterprise resource planning system which were major new projects for 2013.and other advisory services.
The Audit Committee considered the compatibility of the non-audit-relatednon-audit services performed by, and fees paid to, PricewaterhouseCoopers LLPPwC in 20132015 and the proposed non-audit-related services and fees for 2014 and
determined that such services and fees are compatible with the independence of PricewaterhouseCoopers LLP. During 2013 and 2012, PricewaterhouseCoopers LLP did not use any leased personnel in connection with the audit.PwC.
AUDIT COMMITTEE PRE-APPROVAL POLICYAudit Committee Pre-Approval Policy
Under the terms of its charter, the Audit Committee must pre-approve all services (including the fees and terms of such services) to be performed for us by our independent registered public accounting firm, subject to ade minimis exception for permitted non-audit services that are approved by the Audit Committee prior to the completion of the audit and otherwise in accordance with the terms of applicable SEC rules. The Audit Committee may delegate authority to subcommittees consisting of one or more members when appropriate, including the authority to grant pre-approvals of audit and permitted non-audit services, as long as the decisions of such subcommittee(s) to grant pre-approvals are presented to the full Audit Committee at its next scheduled meeting. In 2013,2015, all of the non-audit services provided by our independent registered public accounting firm were reviewed and approved by the Audit Committee.
32 BB&T Corporation | 2016 Proxy Statement
| Audit Committee Report | |
AUDIT COMMITTEE REPORTAudit Committee Report
The Audit Committee of the Board of Directors is currently composed of fivesix independent directors each of whom is independent, and operates under a charter adopted by the Audit Committee on January 28, 2014.The26, 2016. The SEC and the NYSE have established standards relating to audit committee membership and functions. With regard to such membership standards, the Board has determined that Jennifer S. Banner and Stephen T. Williams each meetmeets the requirements of an “audit committee financial expert” as defined by the SEC and has the requisite financial literacy and accounting or related financial management expertise required generally of an audit committee member under the applicable standards of the SEC and the NYSE. Jennifer S. Banner has been designated by the Board as the Corporation’s “audit committee financial expert.”
The primary duties and responsibilities of the Audit Committee are to monitor: (i) the integrity of the financial statements of the Corporation; (ii) the independent registered public accounting firm’s qualifications and independence; (iii) the performance of the Corporation’s internal audit function and independent auditors; and (iv) the compliance by the Corporation with legal and regulatory requirements. While the Audit Committee has the duties and responsibilities set forth above and those set forth in its charter, our management is responsible for the internal controls and the financial reporting process and the independent registered public accounting firm is responsible for performing an independentintegrated audit of our financial statements and of the effectiveness of our internal control over financial reporting in accordance with generally accepted auditing standards established by the Public Company Accounting Oversight Board and issuing a report thereon.
In the performance of its oversight function, the Audit Committee has performed the duties required by its charter, including meeting and holding discussions with management, the independent registered public accounting firm, and the internal auditor, and has reviewed and discussed the audited consolidated financial statements with management and the independent registered public accounting firm. The Audit Committee has also discussed with the independent registered public accounting firm its views on fraud risks and how it demonstrates its independence and skepticism. Finally, the Audit Committee also has discussed with the independent registered public accounting firm the matters required to be discussed by the Public Company Accounting Oversight Board’s AU Section 380Auditing Standard No. 16 (Communications with Audit Committees).
The Audit Committee has received the written disclosures and the letterletters from the independent registered public accounting firm required by applicable requirements of the Public Company Accounting Oversight Board, as currently in effect, regarding the independent registered public accounting firm’s communications with the Audit Committee, and the Audit Committee has discussed with the independent registered public accounting firm its independence. The Audit Committee also has considered whether the provision of any non-audit services by our independent registered public accounting firm is compatible with maintaining the independence of the auditors.
Based upon a review of the reports by, and discussions with, management and the independent registered public accounting firm, and the Audit Committee’s review of the representations of management and the Report of Independent Registered Public Accounting Firm, the Audit 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, 2013,2015, filed with the SEC on February 26, 2014.25, 2016.
Submitted by the Audit Committee of the Board of Directors, whose current members are:
| I. Patricia Henry | Christine Sears |
BB&T Corporation | 2016 Proxy Statement 33
| Proposal 3—Vote on an Advisory Resolution to Approve BB&T’s Executive Compensation Program |
PROPOSAL 3—VOTEONAN ADVISORY RESOLUTIONTO APPROVE BB&T’S
EXECUTIVE COMPENSATION PROGRAM
Since 2011, the Board has provided an annual shareholder advisory vote to approve the compensation of BB&T’s named executive officers (commonly known as a “say on pay” proposal). Every year, shareholders have overwhelmingly approved BB&T’s say on pay proposal, with over 90% of the votes cast in favor each year. This year, BB&T iswe are again providing shareholders the opportunity to cast an advisory vote to approve BB&T’sour pay-for-performance executive compensation program. The large majority of our shareholders have approved this proposal each year since 2011, when we first asked shareholders to vote on this item.
The Compensation Committee and the Board believe that BB&T’sour executive compensation program, as described in the Compensation Discussion and Analysis and other sections of this Proxy Statement,proxy statement, reflects a pay-for-performance culture at BB&T that is rooted in our values. The Compensation Committee and the Board believe that the executive compensation program is well thought out, well designed, and effective in that it alignsaligning the interests of the executives with both the short-term and long-term interests of BB&T’sour shareholders, while reducing incentives for unnecessary and excessive risk taking.
In making a decision on whether to approve of BB&T’sour pay practices for our named executive officers, the Board asks that shareholders consider the following:
In 2013, we saw record income before taxes of $3.1 billion, an 11.9% increase over the prior year.
We continue to monitor and modify our variable compensation components for NEOs, and in 2013 introduced several important changes:
For 2013, the maximum level of achievement under the Annual Incentive Awards would generate a payout of 150% of the target award opportunity, as opposed to 200% in 2012.
For 2013 LTIP awards, the maximum level of achievement over the three-year performance period would generate a payout of 150% of the target award opportunity, as opposed to 200% in 2012.
Incentive stock awards now consist of a greater mix of restricted stock units (80%) relative to nonqualified stock options (20%), as compared to 60% and 40%, respectively for 2012.
2013 restricted stock unit awards have a new performance-based vesting component in addition to vesting ratably over a three year period.
Our executive compensation program is incentive-based and reflects a pay-for-performance culture. Approximately 87%86% of our CEO’s totaltarget compensation paid for 20132015 was variable and tied to BB&T’s performance (including stock price performance).
The NEOs’ base salaries increased approximately 2%, in lineperformance measures we use (EPS, ROA and ROCE) are objective criteria established as key drivers of sustained and longer-term shareholder value and reflect our philosophy of closely linking pay with the salary pool provided for associates across the entire company.performance.
For 2013, we adopted aIn reviewing compensation, the Compensation Committee utilizes an executive risk scorecard which the Compensation Committee can usebe used to adjust downward, if necessary, the short-term and long-term incentive compensation of each member of Executive Management in connection with negative risk outcomes.
We have broad language regarding compensation clawbacks, in effect making all awards subject to recoupment to the extent determined by the plan administrator.
We have long-standing stock ownership requirements infor our Corporate Governance Guidelines,NEOs, effectively aligning thetheir interests with those of our NEOs with our shareholders and giving themexecutives a greater financial interest in our company.
We value shareholder engagement. We have, and will continue to, incorporate feedback we receive into our programs.
We encourage you to review the complete description of our executive compensation programs provided on the following pages in this Proxy Statement, including the “Compensation Discussion and Analysis” that begins on page 30 andAnalysis,” the compensation tables and accompanying narratives.
The Board strongly supports BB&T’sour executive pay practices and asks shareholders to support its executive compensation program through the following resolution:
“Resolved, that the shareholders approve BB&T’s overall executive compensation program, as described in the Compensation Discussion and Analysis, the compensation tables and the related narratives and other materials in this Proxy Statement.”
In accordance with applicable law,Your vote on this voteproposal, which is required by Section 14A of the Exchange Act, is “advisory,” meaning itand will serve as a non-binding recommendation to the Board, but will not be binding.Board. The Compensation Committee will seriously consider the outcome of this vote when determining future executive compensation arrangements. Unless the Board determines otherwise, the next advisory vote to approve the compensation of our named executive officers will be held at our 2017 Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” PROPOSAL 3—VOTE ON AN ADVISORY RESOLUTION TO APPROVE BB&T’S EXECUTIVE COMPENSATION PROGRAM.
34 BB&T Corporation | 2016 Proxy Statement
| Compensation Discussion and Analysis | |
COMPENSATION DISCUSSIONAND ANALYSIS
In this Compensation Discussion and Analysis we describe our pay for performanceperformance-based executive compensation program and philosophy in the context of the 20132015 compensation decisions related to the Chief Executive Officer and each of the other executive officers named in the 20132015 Summary Compensation Table (each, an “NEO”(the named executive officers or “NEOs”). Each NEO is a member of our 13 person “Executive Management” team that manages and leads BB&T’s NEOs are:operations:
Name | Title | Years of | ||
Kelly S. King | Chairman and Chief Executive Officer | |||
Christopher L. Henson | Chief Operating Officer | |||
Ricky K. Brown | Senior Executive Vice President and President, Community Banking | |||
Clarke R. Starnes III | Senior Executive Vice President and Chief Risk Officer | |||
Daryl N. Bible | Senior Executive Vice President and Chief Financial Officer |
The Compensation Discussion and Analysis is organized into four sections:
Section 1—Executive Summary Section 2—2015 Executive |
You should read this Compensation DiscussionProgram and Analysis in conjunction with “ProposalPay Decisions (page 42)
Section 3—Vote on an Advisory Resolution to Approve BB&T’s Executive Compensation Program.”Process (page 58)
Section 4—Other Aspects of BB&T’s Executive Compensation Program (page 62)
About BB&T Performance and Executive Compensation
BB&T is strong, profitable and moreremains committed than ever to helping its shareholders, clients, communities and associates achieve economic success and financial security. We are the 9th largest U.S. financial services holding company by deposits in the U.S. with $183.0 billion in assets and market capitalization of $26.4 billion as of December 31, 2013. By staying true to the vision, mission and values that have guided BB&T for over 140 years, we are well positioned for future opportunities. Led by our CEO, Kelly S. King, in 2015 we met substantially all of our strategic objectives and performed well in a challenging year for the opportunitiesfinancial services industry. We believe the financial and strategic accomplishments made in 20142015, as well as our continued significant investment in important infrastructure projects, will benefit the Corporation and beyond.our shareholders in the coming years.
Business Overview | ||
• 9th largest U.S. financial services holding company by deposits • Founded in 1872, providing over 140 years of stability in the communities we serve • Fortune 500 company • Named one of the World’s Strongest Banks byBloomberg Markets magazine—one of the top three in the U.S. and in the top 15 globally • Non-negotiable values • Stable, seasoned Executive Management team (average age = 56 years old; average BB&T service = 29 years) | BB&T Values
| |
BB&T Corporation | 2016 Proxy Statement 35
| Compensation Discussion and Analysis |
Our 2015 Achievements | ||
M&A | Strategic | |
• Completed the Susquehanna merger • Completed The Bank of Kentucky merger • Completed the acquisition of 41 Texas Branches from a competitor • Announced the acquisition of National Penn • Obtained regulatory approvals and completed transactions at a time when there was limited bank M&A activity due to regulatory uncertainty • Quickly and successfully integrated acquisitions into BB&T | • Drove revenue growth both organically and through strategic opportunities • Continued to improve risk governance framework, including capital and liquidity management • Continued investment in critical infrastructure improvements, including cyber-security preparedness and new general ledger and commercial lending systems • Launched U by BB&T, our new digital banking platform • Efficiently used capital by investing in strategic M&A transactions that will enhance future earnings | |
Driving Long–Term Shareholder Value | ||
| 2015: A Highly Successful Year…But Not at the Risk of Long-Term Sustained Performance | ||
• Net Income available to common shareholders of $1.9 billion • Asset growth of 12.4% year-over-year v. peer average of 5.0% • Average deposits increased 7.3% year-over-year v. peer average of 6.5% • Record fee income of $4.0 billion | • Strong capital and liquidity ratios • Debt ratings that are among the highest in our industry • Total shareholder return exceeded peer average and S&P Financial Index for the 1, 5, 10, 15, and 20 year periods | |
| Increased quarterly dividend in 2015 by 12.5% and #1 Dividend Yield: | Strong tangible book value per share ratio demonstrates the solid, enduring value of our company: | |
 |  | |
| Source: SNL Financial | Source: SNL Financial | |
| #1 Net Interest Margin (“NIM”) demonstrates the strength of our core lending and deposit taking activities and was bolstered by our 2015 M&A transactions. Net interest income is our primary source of income: | ||
 | ||
Source: SNL Financial *Please refer to Annex A for additional information on Price/Tangible Book. | ||
36 BB&T Corporation | 2016 Proxy Statement
| Compensation Discussion and Analysis | |
Performance Philosophy
COMPENSATION COMMITTEE’S APPROACH
The Compensation Committee’s key guiding principle is to align and reward executives commensurate with performance. The Compensation Committee is committed to providing total compensation opportunities that are competitive with the median of our Peer Group and where actual pay varies based on BB&T’s performance relative to our strategic goals and relative to our industry peers. The Compensation Committee believes that above median pay should be provided when BB&T produced record operating resultsexceeds our goals and peer performance, and conversely, average or below average performance should result in 2013 while meeting the challenges of 2013average or below average compensation. The Compensation Committee intends for our compensation program to be competitive with peer financial services institutions, with a steadfast commitment to our valuesfocus on performance and an unwavering dedication to help our clients, associates, communities and shareholders be successful. Several of our notable business accomplishments during 2013 were:rewards.
Record income before taxes of $3.1 billion, an 11.9% increase over the prior year.
Strong total shareholder returns (“TSR”) of 32.5% and 15.5%, respectively, for the one- and three-year periods ending December 31, 2013.
Continued improvementIn keeping with these responsibilities in credit quality.
Growth in noninterest income driven by record revenues in the insurance, investment banking and brokerage, bankcard fees and merchant discounts, and trust and investment advisory lines of business.
Continued improvement in deposit mix and average cost.
Strong growth in all regulatory capital ratios throughout 2013.
Below are the Company performance metricsmanaging our compensation program, last year the Compensation Committee uses inretained a new independent compensation consultant, Meridian Compensation Partners, to obtain a fresh perspective on our compensation plans. As the chart below indicates, in 2013, we have shown improvements in each of these key metrics used by the Committee to assess Company performance, as compared to 2012.program.
| 2012 | 2013 | |||||||||
EPS | $ | 2.76 | $ | 2.88 | ||||||
ROA | 1.16 | % | 1.24 | % | ||||||
Average 3-year ROCE | 7.74 | % | 9.63 | % | ||||||
NEO TARGET PAY MIXAND OVERALLCOMPOSITEOMPENSATION
BB&T’s compensation practices for Executive Management, place an emphasis on variable and at-risk pay linked to the Corporation’s performance. Our CEO, and twelve of our other most senior executives responsible for setting policy and direction for the corporation, are referred to as “Executive Management.” EachAs part of the NEOsCompensation Committee’s pay-for-performance philosophy, the majority of target pay is a member of Executive Management.based on performance. The following graphs show the mix of 2015 target total compensation elements actually paid for 2013 to Mr. King and to the other NEOs averaged together. As illustrated in the charts below, for 2013, performance-based compensation or compensation that is variable and at-risk represented 87% of Mr. King’s pay and an average of 81% of the pay of our other NEOs.
| * | Above percentages |
BB&T Corporation | 2016 Proxy Statement 37
| Compensation Discussion and Analysis |
2015 Pay Highlights and Performance Alignment
EMPHASISXECUTIVE PAY—ALIGNEDONWITH LPONGERFORMANCE-T
2015 was a solid and profitable year with many notable strategic and differentiating accomplishments, including BB&T’s successful integration of several significant acquisitions and infrastructure investments. We continued our strong performance relative to our peers, but performance was down from 2014 on some of the metrics that drive our executive incentive programs. Accordingly, the payout percentages for our variable pay awards (short and long-term) were lower for 2015 than in 2014. A significant portion of our pay continues to be at risk based on our future performance. Below is a summary of the most notable 2015 pay outcomes and decisions:
2015 PERMAY IHNCENTIVESIGHLIGHTS
| Highlight | Considerations | |
| 2015 Annual Incentive Award paid at 76.3% of target award opportunity v. 92.3% for 2014(see page 47) | The decrease was driven by 2015 earnings per share of $2.73 v. $2.90 in 2014. Our return on assets for 2015 was in the 88th percentile relative to our peers (above the maximum ROA performance level of 75%). The Compensation Committee excluded Susquehanna earnings in light of the Merger Incentive, further reducing EPS performance to $2.66 for Executive Management. The intent is to avoid the perception of Executive Management being twice rewarded for the Susquehanna merger. | |
| 2013-2015 LTIP paid at 123% of target award opportunity v. 150% for 2012-2014 LTIP(see page 50) | BB&T again performed well against the Peer Group generating payouts above target. The payout percentage decrease was driven by three-year average return on common equity for 2013-2015 at the 61st percentile of the Peer Group v. 72nd percentile for the prior period. | |
| Increases in base salary and Annual Incentive Award target opportunities(see page 45) | After reviewing market data and considering salaries were unchanged since 2013, salaries were increased modestly in 2015. Annual Incentive target award opportunities were increased to remain competitive and in consideration of reduced maximum award opportunities in response to regulatory feedback. | |
| Expanded shareholder engagement program(see page 23) | Feedback from shareholders was considered in a number of Compensation Committee decisions. | |
A special, one-time Merger Incentive was provided to recognize the strategically significant Susquehanna merger and incentivize a successful integration(see page 52) | Special, one-time award not expected to be used again. Based on shareholder feedback, Compensation Committee paid award 50% in cash and 50% in RSUs, which are subject to a 3-year vesting period and can be forfeited in the event of a negative risk outcome or annual operating loss. |
38 BB&T Corporation | 2016 Proxy Statement
| Compensation Discussion and Analysis | |
PERFORMANCE METRICS
The Compensation Committee regularly considers a variety of financial metrics when evaluating performance and making compensation decisions, as indicated below. By assessing different metrics over short, medium and long-term periods, the Compensation Committee is able to obtain a broad and accurate assessment of our performance against specific compensation goals and relative to the Peer Group.
| Growth Metrics | Return Metrics | Capital Metrics | ||
| Deposits | Net Interest Margin | Net Charge-Offs /Average Loans | ||
Earnings Per Share* Loans | Return on Assets* Return on Common Equity* | Non-Performing Assets / Loans & Other Real Estate Owned | ||
| Total Shareholder Return | Common Equity Tier 1 Ratio |
| * | Metric used in BB&T’s pay-for-performance compensation plans. |
Three of these metrics are used directly in BB&T’s executive incentive plans: return on assets (“ROA”), earnings per share (“EPS”), and return on common equity (“ROCE”). EPS and ROA are used in the Annual Incentive Award and three-year average ROCE is used for Long-Term Incentive Plan (“LTIP”) awards. The Compensation Committee believes these metrics are key drivers of sustained and longer-term shareholder value. The Compensation Committee also grants a meaningful portion of compensation through equity awards and maintains rigorous stock ownership guidelines to ensure executives are closely aligned with our stock performance.
Total Shareholder Return (“TSR”), a metric that has become increasingly popular with institutional shareholders and proxy advisory firms in recent years, is evaluated by the Compensation Committee. TSR measures stock price appreciation plus common stock dividend payments over a particular time period. The Compensation Committee monitors and considers TSR in assessing our performance, but does not include it as a direct measure in our incentive plans because one- and three-year TSR reflect shorter-term horizons, are volatile, are influenced by situations outside the control of executives (such as global market conditions), and may not reflect our core performance. The Compensation Committee believes that TSR is more useful as a longer-term performance metric as the market is most effective at differentiating the performance of companies over the long-run. Our consistent superior financial performance over time has increased long-term value for our shareholders, as shown below.
| 1 | For periods ended December 31, 2015 |
| Source: Bloomberg |
BB&T Corporation | 2016 Proxy Statement 39
| Compensation Discussion and Analysis |
Sound Compensation and Governance Practices
The Compensation Committee has implemented strong governance practices that reinforce our principles, support sound risk management and are shareholder aligned:
| What we do | What we don’t do | |||||
| ü | pay for performance; over 86% of CEO, and approximately 79% of the other NEOs’ total target compensation for 2015 is based on BB&T’s performance (EPS, ROA, ROCE, stock price) | × | we don’t offer incentives that would provide payouts for negative returns | |||
| ü | award both cash and stock incentive awards, with an emphasis on performance-based awards | × | we don’t reprice stock options | |||
| ü | provide for adjustments of payouts for negative risk outcomes based on the executive risk scorecard evaluation | × | we don’t provide dividends on unvested equity awards | |||
| ü | utilize a broad-reaching clawback policy | × | we don’t offer broad-based perquisites such as personal club memberships, corporate housing, and personal use of company aircraft | |||
| ü | decrease overall emphasis on stock option grants | × | we don’t gross-up payments for excise taxes | |||
| ü | maintain stock ownership requirements | × | we don’t permit hedging or speculative trading of BB&T common stock | |||
| ü | restrictions on pledging of BB&T common stock | |||||
| ü | review tally sheets for each executive as part of the process of setting compensation | |||||
| ü | retain an independent compensation consultant who performs services solely for the Compensation Committee | |||||
Shareholder and Regulatory Feedback
SHAREHOLDER ENGAGEMENT
For the past several years we have conducted a formal shareholder engagement program to help us identify issues of importance to our shareholders, with a focus on corporate governance and executive compensation. Historically, shareholders have indicated strong support of our compensation programs through their “say on pay” voting results, but at our 2015 Annual Meeting, we received a lower level of shareholder support than in the past for that proposal. In response, we expanded our shareholder engagement program by reaching out to 37 of our 50 largest shareholders, representing 38% of our outstanding shares, as well as to the shareholder proponents who made proposals at the 2015 Annual Meeting. We also met with certain of the proxy advisory firms followed by some of our largest shareholders. The Compensation Committee Chair led the meetings with four of our largest institutional shareholders.
The feedback received on our executive compensation programs and philosophy was generally very favorable. As to executive compensation, the general sentiment was that our program is appropriate and well designed. Several governance and compensation points were raised by shareholders and this feedback proved influential in a number of subsequent decisions and actions, as outlined below and on page 55.
40 BB&T Corporation | 2016 Proxy Statement
| Compensation Discussion and Analysis | |
| What we heard | What we did | |
| Even though we are above the median of the Peer Group in terms of size, compensation opportunities generally should not be targeted above the median of the Peer Group. | The Compensation Committee is committed to implementing a strategy in 2016 to provide target compensation opportunities that are aligned with the median of the Peer Group. | |
| If we are in the top quartile of the Peer Group in terms of size, we should consider adding larger banks to the group. | The Compensation Committee reevaluated the Peer Group for 2016 and decided to add one bank larger than us (Wells Fargo) and one bank closer in size (Citizens Financial). The nature of the market limits the number of larger peers with a reasonably comparable business model so we will, for the near term, continue to be one of the larger banks in our Peer Group. | |
| Shareholders are supportive of proxy access, which allows director nominees of shareholders to be included with the Corporation’s proxy materials under certain circumstances. | The Nominating and Corporate Governance Committee is closely monitoring this corporate governance issue. | |
Shareholders encouraged detailed proxy disclosure of the Merger Incentive and the Committee’s deliberations. After hearing our explanation of the rationale for the award, shareholders were generally supportive of the Merger Incentive and expressed that the amounts seemed reasonable. | We provided a detailed discussion of the Merger Incentive beginning on page 52, including additional feedback we received from our shareholders regarding this award. |
We are committed to ongoing shareholder engagement and expect to continue our shareholder engagement program. Consistent with the recommendation of our Board of Directors and the preference of our shareholders, BB&T believes that it is appropriate to conduct annual say on pay votes regarding our executive compensation programs.
REGULATORY CONSIDERATIONSIN SETTING COMPENSATION
Banking regulators continue to regularly provide input on and influence the compensation practices and incentive compensation at the largest financial institutions in the United States, focusing on the risks intrinsic to the design and implementation of compensation plans as well as the reasonableness of each element of compensation. While we have, for many years, focused our compensation philosophy on performance-based compensation, certain changes were made to our compensation programs over the last few years primarily as a result of regulatory guidance. Regulators influenced the following modifications of our compensation program:
Our NEOs are evaluated on individual risk performance, which has been integrated into the NEO’s annual performance evaluation through use of the executive risk scorecard.
Our NEO performance-based incentive plans have changed in response to regulatory requests including:
reduced maximum payout levels for Annual Incentive Awards from 200% to 125%,
reduced maximum payout levels for LTIP awards from 200% to 125%,
reduced emphasis on stock options, and
added risk-based performance condition(s) for vesting of stock options and RSUs granted to NEOs.
The Compensation Committee continues to assess our pay practices to balance risks with our commitment to linking NEO pay to BB&T’s performance while maintaining compensation programs that are market competitive and shareholder aligned.
BB&T Corporation | 2016 Proxy Statement 41
| Compensation Discussion and Analysis |
Compensation Actions for 2016
As part of its regular review, the Compensation Committee has taken the following actions for 2016 in regards to NEO compensation. These actions are all in furtherance of the Compensation Committee’s commitment to implementing a strategy to provide target compensation opportunities that are aligned with the median of the Peer Group.
No base salary increases;
No change in compensation award opportunities or payout levels;
No special awards; and
Added Wells Fargo and Citizens Financial to the 2016 Peer Group to better reflect our growth in recent years.
The Compensation Committee recognizes that executive compensation practices in the banking industry are continuing to evolve due to feedback from regulators and shareholders. The Compensation Committee intends to closely monitor changes in market compensation practices as well as feedback on our programs from our shareholders and regulators. Accordingly, the Committee may make additional changes to our program in furtherance of its commitment to provide a compensation program that is competitive, performance-based, risk-balanced and aligned with the goals of our shareholders and regulatory expectations.
Section 2—2015 Executive Compensation Program and Pay Decisions
Compensation Philosophy
The Compensation Committee structures BB&T’s overall compensation program for Executive Management with an emphasis on long-term, performance-based compensation. The table below shows the short-term and long-term variable and at-risk compensation elements:
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The table below sets out the 2013 target award opportunities for the 2013 incentive awards (expressed as a percentage of base salary), and demonstrates the emphasis placed on long-term incentives:
| Short-Term Incentives(1) | Long-Term Incentives(2) | |||||||||
Kelly S. King | 175% | 440% | ||||||||
Christopher L. Henson | 100% | 275% | ||||||||
Ricky K. Brown | 100% | 275% | ||||||||
Clarke R. Starnes III | 100% | 248% | ||||||||
Daryl N. Bible | 100% | 248% | ||||||||
2013 PERFORMANCE PAYOUTS
The following table summarizes the payouts generated under the compensation elements for performance periods that ended in 2013. Each of these elements is discussed in greater detail below in “Section 2—Components of Executive Compensation.”
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PERFORMANCE ADJUSTMENTSAND CONSIDERATIONS
The Compensation Committee monitors BB&T’s performance throughout the applicable performance period relative to BB&T’s outstanding performance-based awards. In early February, the Compensation Committee receives preliminary performance information in advance of its month-end meeting to certify BB&T’s performance for the most recently completed compensation plan year (or years, in the case of long-term plans). In doing so, the Compensation Committee historically has made adjustments to BB&T’s reported results, such as net income, (presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”)) to ensure that the applicable compensatory plans fairly compensate participants for core BB&T performance. The Compensation Committee similarly retains discretion to make adjustments to the reported performance of Peer Group members for awards that measure BB&T’s performance relative to the Peer Group. For a reconciliation of adjustments that the Compensation Committee made for the purposes of certifying 2013 performance under BB&T’s compensation plans, please refer to Annex A to this proxy statement. Unless otherwise indicated, discussions of 2013 performance for compensation purposes in this Proxy Statement include these adjustments made by the Compensation Committee.
Tax Litigation Charges
In connection with ongoing tax litigation with the IRS, BB&T took after-tax charges to earnings of $281 million and $235 million in the first and third quarters of 2013, respectively. The primary driver of the charges is a transaction referred to as “STARS,” which BB&T entered into in 2002. Several other financial services institutions entered into their own STARS transactions around this time. The Compensation Committee reviewed the historical impact of the STARS transaction on the compensation of Executive Management dating back to 2002 and determined that no current or former member of Executive Management received material financial benefits from the STARS transaction. Further, Mr. King is the only NEO who was a member of Executive Management in 2002. The Compensation Committee also considered that BB&T has appealed the court’s decision in its STARS case and that a different financial services institution obtained a favorable ruling in its STARS case against the IRS (a case with substantially similar facts and circumstances).
In light of these findings, the Compensation Committee authorized an adjustment to BB&T’s GAAP results in the amount of approximately $516 million to account for the impact of the tax litigation charges on earnings. After careful deliberation, the Compensation Committee determined that this type of adjustment was consistent with BB&T’s compensation philosophy of focusing NEO compensation on the Corporation’s core performance. The Compensation Committee typically makes adjustments to BB&T’s GAAP results so that the participants are compensated for BB&T’s core performance and are neither penalized nor rewarded for one-time charges, unusual gains, or similar non-core events. In authorizing the adjustment, the Compensation Committee noted that any future positive financial impact from the tax litigation (in the event BB&T is successful in its appeals) would be
adjusted out for future performance periods to avoid an unfair windfall to compensation plan participants. For a presentation of adjustments that the Compensation Committee made for the purposes of certifying performance under BB&T’s compensation plans, please refer to Annex A to this proxy statement.
CCAR
The Compensation Committee also reviewed the Federal Reserve’s objection to BB&T’s CCAR capital plan in March 2013. The Committee considered that while the Federal Reserve objected to certain qualitative elements of its capital plan, the quantitative elements of the Corporation’s capital plan, including the Corporation’s capital strength, earnings, capital levels and financial condition, were not factors involved in the Federal Reserve’s objection. The Committee further considered that BB&T increased its dividend from $0.20 to $0.23 in January 2013, a 15% increase, and paid five dividends in 2013. The Committee also took into account that the Federal Reserve did not object to the continuation of BB&T’s dividend of $0.23 per share for 2013. Furthermore, the results of the Dodd-Frank stress test released by the Federal Reserve showed BB&T to have the strongest capital, lowest total loan losses and second highest pretax income among traditional banks. Also considered was the Federal Reserve’s non-objection of our revised capital plan submitted in June 2013. Based on this review, no adjustments were made to the NEOs’ compensation for 2013 by the Compensation Committee.
KEY CHANGESTO BB&T’S 2013 EXECUTIVE COMPENSATION PROGRAM
In each of the last three years, more than 90% of the votes cast by BB&T’s shareholders approved BB&T’s executive compensation program. Based on the results of these say on pay votes, interactions with shareholders through the shareholder engagement program and the Compensation Committee’s view that the program is achieving its goals, we believe our overall executive compensation program is performing effectively. Nonetheless, the Compensation Committee, in consultation with its independent compensation advisor, proactively made adjustments to the overall compensation program for 2013 to continue to improve upon the performance of our executive compensation program. The following are the key changes made in 2013:
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Compensation Philosophy
BB&T operates in the highly competitive financial services industry where the attraction and retention of talented executives is critical to its future success. For this reason, BB&T’s Compensation Committee has designed a total compensation program that is intended to be competitive with peer financial services institutions.
BB&T’sOur executive compensation philosophy is based on the following guiding principles:
compensationCompensation and reward systems are management toolsdesigned to achievesupport and drive our strategic goals and produce positive business results;
totalTotal compensation is aligned with shareholder interests when it is paid based uponby providing a significant percentage of compensation in equity and setting stock ownership requirements for Executive Management;
Significant amounts of compensation are linked to the achievement of financial goals that BB&T has attained for the performance period;goals;
totalTotal compensation opportunities are established relative to organizations with which BB&T competeswe compete for both talent and shareholder investment and at levels that enable BB&Tus to attract and retain executives critical to itsour long-term success; and
compensationCompensation is compatible with effective controls and risk management and is supported by strong corporate governance.
42 BB&T Corporation | 2016 Proxy Statement
| Compensation Discussion and Analysis | |
Sound Compensation Governance PracticesProgram Elements
Our executive total compensation is heavily performance-based. Below is a summary of our regular pay components, their purpose and key program features.
| Incentive Type | Compensation Element | What the Element Rewards | Key Features & Purpose | |||
FIXED | Base Salary | Scope of leadership responsibilities, years of experience, performance and contributions to BB&T. | Plays a relatively modest role in the overall pay package because we believe the significant majority of executive compensation should be variable and based on performance. Provides the only element of certain compensation for our NEOs. | |||
| PERFORMANCE-BASED INCENTIVES | Annual Incentive Awards | BB&T’s financial performance in 2015 based on achievement of specific earnings per share (weighted at 60%) and relative return on assets (weighted at 40%) performance. | Rewards annual performance based on financial results that are expected to have a meaningful bearing on long-term shareholder value. Payments are based solely on corporate performance, reinforcing our team culture. Performance levels (threshold, target, maximum) are established relative to Board approved internal forecast EPS expectations and our ROA performance relative to our Peer Group. | |||
| Incentive Stock Awards (20% stock options and 80% restricted stock units) | Sustainable, long-term appreciation of BB&T’s stock price. | Designed to align NEO compensation with the shareholder goal of stock price appreciation. Stock options and RSUs vest ratably over three years. The award vesting is subject to BB&T exceeding a performance hurdle and adjustments for any negative risk outcomes. Prior to vesting, 100% of the unvested award is subject to forfeiture if the performance criteria are not met. Dividends are not paid on unvested RSUs. | ||||
| LTIP Awards | Achievement of superior three-year average return on common equity performance. LTIP Awards are typically paid in cash. | LTIP awards are designed to measure relative performance over three-year cycles. Each year begins a new three-year cycle. Payments are based on BB&T performance relative to its Peer Group. | ||||
BB&T Corporation | 2016 Proxy Statement 43
| Compensation Discussion and Analysis |
Analysis of Overall Compensation
The table below summarizes the actual NEO compensation paid for the 2015 performance year and illustrates how the Compensation Committee viewed NEO compensation in 2015. The table also compares total compensation for 2015 to 2014.
2015 COMPENSATION OVERVIEW TABLE
| Name | Salary(1) ($) | Annual Incentive Awards(2) ($) | Option Awards(3)(4) ($) | Restricted Stock Unit Awards(3)(4) ($) | LTIP (2013- 2015)(5) ($) | 2015 ($) | 2015 Total with ($) | 2014 ($) | ||||||||||||||||||||
| Kelly S. King | 1,056,250 | 1,572,160 | 591,499 | 2,365,971 | 2,009,603 | 7,595,483 | 8,625,483 | 7,200,244 | ||||||||||||||||||||
| Christopher L. Henson | 691,250 | 685,921 | 241,938 | 967,730 | 830,134 | 3,416,973 | 3,866,973 | 3,179,536 | ||||||||||||||||||||
| Ricky K. Brown | 691,250 | 685,921 | 241,938 | 967,730 | 830,134 | 3,416,973 | 3,866,973 | 3,179,536 | ||||||||||||||||||||
| Clarke R. Starnes III | 582,500 | 511,316 | 184,069 | 736,270 | 629,544 | 2,643,699 | 2,978,699 | 2,516,515 | ||||||||||||||||||||
| Daryl N. Bible | 582,500 | 511,316 | 184,069 | 736,270 | 629,544 | 2,643,699 | 2,978,699 | 2,516,515 | ||||||||||||||||||||
| (1) | Reflects base salary actually received in 2015. |
| (2) | Amounts reflect the value of the 2015 Annual Incentive Award, paid in March 2016. |
| (3) | Amounts reflect the value the Compensation Committee sought to deliver through the restricted stock unit and stock option awards granted in February 2015. No amounts are immediately available to the officer as the options and units vest over time. The exercise price of the options was equal to the stock price on the date of grant, and therefore, there was no intrinsic value on the date of grant. The recipient will only be able to realize future value for the stock options if BB&T’s stock price increases. |
| (4) | The principal differences between this table and the Summary Compensation Table are that the Summary Compensation Table includes information on the grant date fair value of restricted stock unit awards, the change in pension value and nonqualified deferred compensation earnings as well as all other compensation. The components included in the table above are considered by the Compensation Committee when making compensation determinations. |
| (5) | Amounts reflect value of 2013-2015 LTIP awards, paid in March 2016. |
| (6) | Merger Incentive amounts: King - $1,030,000;Henson - $450,000;Brown - $450,000; Starnes - $335,000; Bible - $335,000. Paid 50% in cash and 50% in RSUs. |
In 2015 we continued to perform well against our Peer Group, however, our overall performance results were not as strong under the Annual Incentive Award and LTIP as compared to 2014. As a result, the payout percentages for these plans were lower for 2015 than for 2014. Increases in 2015 total compensation paid under our regular compensation program resulted primarily from payments under the 2013-2015 LTIP (the LTIP target award opportunities were increased in 2013 relative to the 2012 levels).
| 2014 | 2015(1) | |||||||||||||||
| Absolute Performance | Relative to Peer Group | Absolute Performance | Relative to Peer group | |||||||||||||
| EPS (Annual Incentive) | $2.90 | N/A | $2.73 | (2) | N/A | |||||||||||
| ROA (Annual Incentive) | 1.22 | % | 84th Percentile | 1.14 | % | 88th Percentile | ||||||||||
| Average 3-year ROCE (LTIP) | 10.31 | % | 72nd Percentile | 9.73 | % | 61st Percentile | ||||||||||
| (1) | The EPS, ROA and ROCE performance presented herein includes adjustments to BB&T’s GAAP net income approved by the Compensation Committee. For additional detail regarding these adjustments and a GAAP reconciliation, please refer to Annex A. |
| (2) | In light of the Merger Incentive, EPS performance was further reduced to $2.66 to exclude the estimated impact attributable to the legacy Susquehanna operations. |
A special, one-time Merger Incentive was provided to recognize the strategically significant Susquehanna merger and incentivize a successful integration. The Merger Incentive is not a part of our regular compensation program and is not expected to be used again. Based on shareholder feedback, the Compensation Committee
44 BB&T Corporation | 2016 Proxy Statement
| Compensation Discussion and Analysis | |
paid the award 50% in RSUs and 50% in cash. As a result of approving the Merger Incentive, the Compensation Committee removed estimated Susquehanna earnings from the EPS component of the Annual Incentive Award, reducing EPS performance to $2.66. See the Merger Incentive discussion beginning on page 52.
Base Salary
The following table shows base salaries for each of our NEOs for 2015 as compared to 2014:
| Name | 2015 Base Salary ($)(1) | 2014 Base Salary ($) | Increase ($) | Percentage Increase | ||||||||||
| Kelly S. King | 1,075,000 | 1,000,000 | 75,000 | 7.50% | ||||||||||
| Christopher L. Henson | 700,000 | 665,000 | 35,000 | 5.26% | ||||||||||
| Ricky K. Brown | 700,000 | 665,000 | 35,000 | 5.26% | ||||||||||
| Clarke R. Starnes III | 590,000 | 560,000 | 30,000 | 5.36% | ||||||||||
| Daryl N. Bible | 590,000 | 560,000 | 30,000 | 5.36% | ||||||||||
| (1) | Effective as a April 1, 2015. |
In its deliberations on the 2015 base salary increases, the Compensation Committee considered the competitive analyses provided by its independent compensation consultant that base salaries for our NEOs had remained unchanged since 2013.
Annual Incentive
Our Annual Incentive Award is a cash incentive based on the achievement of corporate performance goals established annually by the Compensation Committee.
The amount paid under the Annual Incentive Award is determined by a formula based on our: (1) EPS (against preset performance goals) and (2) ROA (as compared to our Peer Group).
In 2015, EPS was weighted at 60%, while ROA was weighted at 40%.
While EPS and ROA are independent and permit payouts under each measure ranging from 0% to 150% of the target award opportunity, when both metrics are combined under the formula, the maximum amount that may be paid under the Annual Incentive Award is 125% of the target award opportunity. If the EPS threshold was not achieved or exceeded, the executives could still receive a payment based solely on our ROA performance and vice versa.
The EPS performance level was adjusted downward (from $2.73 to $2.66) in light of the Merger Incentive and to avoid the appearance that NEOs were being rewarded twice for the Susquehanna merger.
The 2015 Annual Incentive Award paid out at approximately 76% of the target award opportunity based on our EPS and ROA performance and reflecting the downward adjustment to the EPS performance measure.
We have historically used EPS and ROA as the performance measures for Annual Incentive Awards because the Compensation Committee believes EPS and ROA have a meaningful bearing on long-term increases in shareholder value and are valuable barometers for our performance. EPS and ROA have a strong long-term correlation with shareholder returns. These measures also reflect the fundamental risk level and financial soundness of the business.
BB&T Corporation | 2016 Proxy Statement 45
| Compensation Discussion and Analysis |
Each executive has a target award opportunity (expressed as a percentage of base salary) which represents the amount of the Annual Incentive Award if we achieve the performance goals at the target performance level. The table below summarizes the Annual Incentive award opportunity for 2015 versus 2014.
| Name | 2015 Target Annual Incentive Opportunity | 2014 Target Annual Incentive Opportunity | ||
| Kelly S. King | 195% | 175% | ||
| Christopher L. Henson | 130% | 100% | ||
| Ricky K. Brown | 130% | 100% | ||
| Clarke R. Starnes III | 115% | 100% | ||
| Daryl N. Bible | 115% | 100% |
The Compensation Committee increased the 2015 target award opportunities to provide competitive pay to these seasoned executives and to align total target compensation with the median level of the members of the Peer Group most aligned with us in terms of asset size and market capitalization. This increase was also intended to offset some of the lost upside caused by the maximum award opportunities for the Annual Incentive Award and LTIP being reduced below the median peer practice for comparable awards as a result of regulatory feedback.
Additional changes were made to the structure of the 2015 Annual Incentive versus 2014, as outlined below.
| 2015 Annual Incentive Change | Rationale | |
| The weighting of the ROA component was increased to 40% from 33% in 2014. | Given the economic environment, the Compensation Committee wanted to place greater emphasis on our performance relative to the Peer Group. | |
| For 2015, the performance matrix for each of EPS and ROA extends to 150% of target, but the aggregate payment is capped at 125% of target. In 2014, each performance measure was capped at 125%. | The Compensation Committee wanted to reward superior performance by allowing excellent EPS or ROA performance to raise the Annual Incentive’s overall payout percentage, subject to the aggregate payment cap of 125%. |
ANNUAL INCENTIVE AWARD PERFORMANCEAND EPS DOWNWARD ADJUSTMENT
EPS for 2015 was $2.73. In approving the Merger Incentive payment, the Compensation Committee decided that the estimated earnings attributable to the legacy Susquehanna operations following the merger (which occurred on August 1, 2015) should be removed from the Annual Incentive’s EPS performance measure. The Compensation Committee felt this adjustment was important to avoid the perception that Executive Management was being rewarded twice for the Susquehanna merger. However, the Compensation Committee also determined that the Susquehanna merger was a differentiating event where we outperformed our peers, and accordingly, believe it was fair to include our full earnings for the compensation elements that measure our performance relative to the Peer Group. See the Merger Incentive discussion beginning on page 52.
The tables below summarize the performance matrix and payout levels under the Annual Incentive Award.
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| Compensation Discussion and Analysis | |
EPS PERFORMANCE (60%OF ANNUAL INCENTIVE AWARD)
| Level of Achievement | EPS Performance Measure | Payout as % of Participant’s Target Award Opportunity | Method for Setting the Payout % | |||
Below Threshold | Less than $2.65 | 0% | ||||
Threshold | $2.65 | 25% | 10% below target | |||
Target | $2.95 | 100% | Internal profit plan | |||
Maximum | $3.10 | 150%1 | 5% above target | |||
Actual | $2.73 | 45.83% | ||||
Excluding SUSQ earnings | $2.66 | 27.22% |
| (1) | Annual Incentive Award combines EPS and ROA performance, with the final payout capped at 125% of the target award opportunity. |
ROA PERFORMANCE (40%OF ANNUAL INCENTIVE AWARD)
| Level of Achievement | Percentile Performance BB&T ROA Relative to Peer Group ROA | Payout as % of Participant’s Target Award Opportunity | ||
Below Threshold | Less than 25th Percentile | 0% | ||
Threshold | 25th Percentile | 50% | ||
Target | 50th Percentile | 100% | ||
Maximum | 75th Percentile | 150%(1) | ||
Actual | 88th Percentile | 150%(1) |
| (1) | Annual Incentive Award combines EPS and ROA performance, with final payout capped at 125% of target opportunity. |
2015 ANNUAL INCENTIVE AWARD RESULTS
The 2015 Annual Incentive Awards paid out at approximately 76.33% of the target award opportunity, based on BB&T’s 2015 EPS and ROA results as summarized below:
2015 ANNUAL INCENTIVE PAYOUT CALCULATION
| Performance Level | Payout Ratio | Item Weight | Annual Incentive Award Payout | |||||
EPS | $2.66 | 27.22% | 60% | 16.33% | ||||
ROA | 1.14% | 150% | 40% | 60% | ||||
Total | 76.33%(1) |
| (1) | The EPS and ROA performance presented herein includes adjustments to BB&T’s GAAP net income by the Compensation Committee. EPS performance excludes estimated earnings attributable to the legacy Susquehanna operations. For additional detail regarding these adjustments, please refer to Annex A. |
BB&T Corporation | 2016 Proxy Statement 47
| Compensation Discussion and Analysis |
Based on these results, executives received the following Annual Incentive Award payouts.
2015 ANNUAL INCENTIVE AWARD PAYMENTS
| Name(1) | Threshold 2015 ($) | Targeted 2015 ($) | Maximum 2015 ($) | Actual 2015 Annual ($) | ||||
Kelly S. King | 308,953 | 2,059,688 | 2,574,610 | 1,572,160 | ||||
Christopher L. Henson | 134,794 | 898,625 | 1,123,281 | 685,921 | ||||
Ricky K. Brown | 134,794 | 898,625 | 1,123,281 | 685,921 | ||||
Clarke R. Starnes III | 100,481 | 669,875 | 837,344 | 511,316 | ||||
Daryl N. Bible | 100,481 | 669,875 | 837,344 | 511,316 |
| (1) | The Annual Incentive Awards for the officers covered by Section 162(m) of the Code were paid from a pool based on BB&T’s 2015 income before taxes (pre-tax income). For a more detailed discussion of the Annual Incentive Award 162(m) Pool, please refer to “Tax Considerations” in Section 4. |
Long-Term Incentives
BB&T’s long-term incentive program provides compensation awarded under the shareholder-approved BB&T Corporation 2012 Incentive Plan (the “2012 Incentive Plan”). These awards are a mix of cash and equity and include the following components:
| • | Incentive Stock: Consists of stock options and restricted stock units (“RSUs”) that align executives with shareholder interests, reward stock price appreciation, and encourage retention. Stock options represent a limited component, based on feedback from regulators and shareholders. |
RSUs—represents 80% of incentive stock award
Stock Options—represents 20% of incentive stock award
| • | Long-Term Incentive Plan (“LTIP”): Provides rewards based on our ROCE performance relative to the Peer Group over the applicable three-year period. |
Executives have a defined target award opportunity for each long-term component, expressed as a percentage of base salary. None of the long-term incentive award opportunities increased for 2015.
| Long-Term Incentives | ||||||
| Name | LTIP | RSUs | Stock Options | |||
Kelly S. King | 160% | 224% | 56% | |||
Christopher L. Henson | 100% | 140% | 35% | |||
Ricky K. Brown | 100% | 140% | 35% | |||
Clarke R. Starnes III | 90% | 126% | 32% | |||
Daryl N. Bible | 90% | 126% | 32% | |||
INCENTIVE STOCK PROGRAM SUMMARY
2015 Incentive Stock Awards for each NEO include nonqualified stock options (20% of award) and RSUs (80% of award).
Stock options and RSUs vest ratably over three years.
Award vesting is subject to BB&T exceeding a performance hurdle and adjustments for any negative risk outcomes.
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Up to 100% of unvested RSUs and stock options are subject to forfeiture if the Compensation Committee determines that there has been a significant negative risk outcome as a result of a corporate or individual action, or BB&T has incurred an annual operating loss for the year.
Restricted Stock Units
RSU awards are granted as a contingent share of BB&T common stock that is not earned or issued until specific conditions are met. RSUs vest 33 1/3% per year following each of the first three anniversaries of the date of grant, subject to the Compensation Committee’s performance review. For retirement eligible individuals, RSU vesting is generally accelerated upon retirement. No dividends are paid on the shares underlying the RSUs until the units vest and shares are issued. The Compensation Committee determined that the three-year vesting schedule is generally consistent with Peer Group practices. The Compensation Committee believes that the retentive features and perceived value of RSUs are enhanced in a volatile stock market, which the financial services industry has experienced.
Stock Options
Stock options historically have been an important part of our equity program. The Compensation Committee believes that stock options are inherently performance-based and effectively align the interests of the recipients with those of the shareholders because stock options only have value if our stock price increases relative to the stock price on the date of the award. Stock option awards vest 33 1/3% per year following each of the first three anniversaries of the date of grant, subject to attainment of the performance criteria, and expire on the ten year anniversary of the date of grant. For retirement eligible individuals, stock option vesting is generally accelerated upon retirement. The exercise price for each stock option grant in 2015, including each award to the NEOs, was the market closing price on the date of grant. The Compensation Committee determined that the three-year vesting schedule and ten year term is generally consistent with Peer Group practices.
2015 INCENTIVE STOCK AWARDS
The 2015 Incentive Stock Awards are detailed in the following table:
| Name | Non- Qualified | Delivered Value of Stock | RSUs (#) | Delivered Value of RSUs ($)(2)(3) | Total Delivered Value of Options and RSUs ($) | |||||
| Kelly S. King | 120,714 | 591,499 | 61,904 | 2,365,971 | 2,957,470 | |||||
| Christopher L. Henson | 49,375 | 241,938 | 25,320 | 967,730 | 1,209,668 | |||||
| Ricky K. Brown | 49,375 | 241,938 | 25,320 | 967,730 | 1,209,668 | |||||
| Clarke R. Starnes III | 37,565 | 184,069 | 19,264 | 736,270 | 920,339 | |||||
| Daryl N. Bible | 37,565 | 184,069 | 19,264 | 736,270 | 920,339 |
| (1) | The option exercise price for the 2015 awards is $38.22 per share, which was the closing price on February 24, 2015, the date of the grant. For additional detail, please refer to “Compensation of Executive Officers—2015 Outstanding Equity Awards at Fiscal Year-End.” |
| (2) | The table reflects the value the Compensation Committee seeks to deliver in making the award. The 2015 stock option and restricted stock unit awards were granted on February 24, 2015. In the case of both stock options and restricted stock units, the number of options or units granted was determined by dividing the target amount of compensation by the estimated value of each equity award. For stock options, the award was valued based on the Black-Scholes value of the options ($4.90). For restricted stock units, the number of units awarded was based on the closing price of BB&T’s common stock on the grant date ($38.22). |
| (3) | In accordance with SEC rules, the value of the awards reported in the 2015 Summary Compensation Table is the fair value of the awards on the grant date. For stock options, the grant date fair value was the same as the value used by the Compensation Committee to determine stock option awards ($4.90). For restricted stock units, the grant date fair value of $34.36 was calculated by discounting the closing price of BB&T’s common stock on the grant date by the present value of the dividends that are expected to be forgone during the three-year vesting period. For the grant date fair value of the awards and a discussion of how we compute the fair value, please refer to columns (d) and (e) of the 2015 Summary Compensation Table included in the “Compensation of Executive Officers” section below. |
BB&T Corporation | 2016 Proxy Statement 49
| Compensation Discussion and Analysis |
LTIP PROGRAM SUMMARY
LTIP awards reward performance measured by our ROCE relative to our Peer Group over a three year performance cycle. Each year begins a new three-year performance cycle, and at the beginning of the cycle, the Compensation Committee establishes the performance measures and payout range. The Compensation Committee believes that measuring ROCE over a three-year period relative to the Peer Group provides a valuable measure of company performance over time.
LTIP awards are payable, in the Compensation Committee’s discretion, in the form of shares of BB&T common stock, cash or a combination of both. LTIP awards have historically been paid in cash. The Compensation Committee believes that with approximately 64% of the NEOs’ long-term incentive compensation currently consisting of equity, it is appropriate to pay the LTIP awards in cash, rather than additional equity, especially in light of the substantial BB&T common stock holdings of each of the NEOs.
The LTIP award is calculated as follows:
Target Award Opportunity | X | 3-Year Average Salary | X | Performance Scale Payout % |
2013-2015 LTIP Cycle (Paid in March 2016)
The performance matrix for the 2013-2015 LTIP award follows. Under the matrix, our actual ROCE performance relative to the Peer Group translates to a corresponding payout percentage on a simple interpolation basis.
2013-2015 LTIP CYCLE PERFORMANCE MATRIX
| Level of Achievement | Percentile Performance of to Peer Group ROCE | Payout Percent of Participant’s Target Award Opportunity | ||
Threshold | 25th | 50% | ||
| 30th | 60% | |||
| 35th | 70% | |||
| 40th | 80% | |||
| 45th | 90% | |||
Target | 50th | 100% | ||
| 55th | 110% | |||
| 60th | 120% | |||
| 65th | 130% | |||
| 70th | 140% | |||
Maximum | 75th or greater | 150% |
Our average ROCE performance for 2013-2015 was 9.73%, which placed us in the 61st percentile of the Peer Group and generated a payout of 123% of the target award opportunity. Our ROCE performance includes adjustments to our GAAP net income approved by the Compensation Committee. Please refer to Annex A for a GAAP reconciliation.
50 BB&T Corporation | 2016 Proxy Statement
| Compensation Discussion and Analysis | |
Based on these results, executives received the following 2013-2015 LTIP payouts:
2013-2015 LTIP CYCLE PAYMENTS
| Name | Threshold($)(1) | Target($) | Maximum($) | Actual LTIP Payment, Based on 2013-2015 Performance($)(2) | ||||||||
Kelly S. King | 814,000 | 1,628,000 | 2,442,000 | 2,009,603 | ||||||||
Christopher L. Henson | 336,250 | 672,500 | 1,008,750 | 830,134 | ||||||||
Ricky K. Brown | 336,250 | 672,500 | 1,008,750 | 830,134 | ||||||||
Clarke R. Starnes III | 255,000 | 510,000 | 765,000 | 629,544 | ||||||||
Daryl N. Bible | 255,000 | 510,000 | 765,000 | 629,544 | ||||||||
| (1) | The threshold payments represented above show the minimum amount to be received if threshold performance is met. |
| (2) | Under the approved formula, the actual payment is based on the actual average salary paid over the three-year performance cycle. |
2015-2017 LTIP Cycle (Payable in 2018)
Our 2015-2017 LTIP awards use a ROCE performance hurdle in addition to assessing our average ROCE performance relative to the Peer Group. If our average ROCE performance is not at least 3%, then the hurdle is not cleared and no payout is earned. If the ROCE hurdle is cleared, then our ROCE performance relative to the Peer Group is measured per the performance matrix below. In establishing the ROCE performance hurdle, the Compensation Committee determined that 3% average three-year ROCE was the minimum level of performance where a payout would be justified, irrespective of our relative Peer Group performance.
Also consistent with LTIP awards made in 2014, the maximum payout level for the 2015-2017 LTIP awards is 125% of the target award opportunity.
2015-2017 LTIP CYCLE PERFORMANCE MATRIX
| Level of Achievement | Percentile Performance of BB&T ROCE Relative to Peer Group ROCE | Payout Percent of Participant’s Target Award Opportunity | ||
Threshold | 25th | 50% | ||
| 30th | 60% | |||
| 35th | 70% | |||
| 40th | 80% | |||
| 45th | 90% | |||
Target | 50th | 100% | ||
| 55th | 110% | |||
| 60th | 120% | |||
Maximum | 62 1/2 or greater | 125% |
BB&T Corporation | 2016 Proxy Statement 51
| Compensation Discussion and Analysis |
Merger Incentive
On June 23, 2015, the Compensation Committee adopted the Merger Completion Incentive Program (the “Merger Incentive”), a unique, one-time incentive opportunity to reward significant strategic achievements related to the successful acquisition and conversion of Susquehanna, an $18.3 billion asset bank headquartered in Central Pennsylvania. At the time the Merger Incentive was approved, the Susquehanna merger had not yet closed as regulatory approval was still pending. Successfully closing and converting the Susquehanna merger were seen as critical strategic goals representing a significant investment in BB&T’s future growth and success.
While the operational conversion in November 2015 triggered the ability to pay the incentive, the Compensation Committee considered a broad review of performance and strategic considerations before approving the payout on December 31, 2015. Below we summarize the objectives, incentive features, payout considerations and resulting awards. |  |
Objective and Purpose of Merger Incentive
| • | Provide opportunity for aone-time, specialrecognition of significant achievements related to the successful integration and conversion of Susquehanna (BB&T’s largest merger to date) |
| • | Reinforce thestrategic importanceof the acquisition to BB&T’s future success and long-term shareholder value |
| • | Recognize thedifficulty of completing significant transactions in recent years (at the time, BB&T was the only bank in its peer group to complete an acquisition of this size in three years, as bank M&A was limited largely due to uncertainty regarding the ability to obtain regulatory approval) |
Award Features
One-time, special incentive, not intended to be a regular component of our compensation program
Full Compensation Committee discretion to choose the form of payment (cash and/or equity) and to reduce payments (including to zero) based on its assessment of BB&T’s overall performance
Award opportunities reflect a modest component of executives’ total 2015 compensation (Merger Incentive award opportunity was set at approximately 50% of each NEO’s Annual Incentive Award target award opportunity)
Award contingent on successful operational conversion, defined as the time BB&T’s computer systems became the current and primary systems of record for Susquehanna’s transactional and accounting data (conversion is also when Susquehanna’s bank and ATM signage change to BB&T and legacy Susquehanna customers begin operating within the BB&T environment)
Award contingent on conversion occurring before June 23, 2016
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| Compensation Discussion and Analysis | |
Payout Considerations
During December 2015, the Compensation Committee conducted a thorough evaluation of the conversion results as well as BB&T’s overall performance. The following factors were considered:
Successful and Well-Executed Conversion
The Compensation Committee considered in-depth reports detailing the conversion results, including but not limited to:
Conversion of nearly 900,000 deposit accounts and 140,000 loans
Conversion of 245 bank branches and 300 ATMs
Dissolution or merger of thirty-three subsidiaries and non-consolidated legal entities
Establishment of new call center in Lititz, Pennsylvania
Limited client issues that were resolved quickly
On track to achieve targeted cost savings from the merger
Based on its review of the conversion, the Compensation Committee determined that the Susquehanna conversion was successful and well executed.
Evaluation of BB&T’s Overall Performance
The Compensation Committee also considered our financial performance and strategic initiatives, including, but not limited to, the following:
BB&T’s financial strength and ability to obtain regulatory approval for several acquisitions reinforced the positive impact from significant investments in people, processes, systems, capital, liquidity and risk management
• We closed multiple bank acquisitions during 2015 and announced another sizable acquisition (National Penn), which is scheduled to close in 2016 • The Bank of Kentucky and Susquehanna transactions were the first acquisitions by a “systemically important” acquirer to be approved by the Federal Reserve in over two years |  |
The Susquehanna and National Penn regulatory approvals took only eight months and four months, respectively, from announcement, in an environment where other banks experienced significant delays (multi-year, in the instance of one peer) in achieving approval for acquisitions
Management was able to achieve virtually all strategic objectives with no delays in ongoing strategic projects (including key infrastructure investments) and strategies, or compromise of BB&T’s vision, mission or values
BB&T increased its quarterly common stock dividend by 12.5% in 2015
BB&T Corporation | 2016 Proxy Statement 53
| Compensation Discussion and Analysis |
Overall, our TSR performance relative to the Peer Group improved as of December 31, 2015 versus 2014
BB&T successfully rolled out U by BB&T, a groundbreaking mobile and online banking platform
Historical Compensation Factors
As context for the granting of this one-time incentive and the determination of whether to make payments under the incentive, the Compensation Committee considered several historical compensation issues involving Executive Management that stemmed from regulatory feedback:
In 2013, BB&T reduced the maximum payout level for the 2014 annual incentive plan from 150% to 125% (which followed a reduction to the 2013 annual incentive’s maximum payout level from 200% to 150% as a result of similar regulatory feedback). A subsequent peer review made clear that the overwhelming majority of our peers all retained substantially higher payout opportunities, and that this compensation element was below market practice. Additionally, an unintended plan design feature caused reduced payouts under our 2014 annual incentive plan for Executive Management (such reductions were not applied to non-Executive Management associates).
Also in 2013, the maximum payout level for the 2014-2016 LTIP was reduced from 150% to 125% (which followed a reduction to the maximum payout level for the 2012-2014 LTIP from 200% to 150% as a result of similar regulatory feedback). A subsequent peer review made clear that the overwhelming majority of our peers granted long-term incentives with substantially higher payout opportunities, and that this compensation element was below market.
Further, the 2012-2014 LTIP used, for the first time, a performance band structure. However, the structure unintentionally did not provide interpolation between performance band levels. As a result, BB&T’s ROCE performance (72nd percentile relative to peers) missed the 75th percentile maximum payout by only three percentage points, but yielded a target level payout instead of a nearly maximum payout.
Prior to its consideration of whether to establish the Merger Incentive, the Compensation Committee considered all three of these issues and debated a simple special cash bonus, as BB&T’s culture strongly supports doing what is right and fair, especially in regard to compensation matters. The Compensation Committee believed that such payments would have been consistent with BB&T’s corporate values of justice, but ultimately refrained from doing so because such award would not be performance based and, therefore, would have been at odds with the Compensation Committee’s pay-for-performance philosophy.
Accordingly, the most important contextual point is that this special, one-time Merger Incentive is not a part of our normal compensation philosophy and is not expected to be used again, and in considering whether to payout the Merger Incentive, the Compensation Committee was mindful of these historical compensation matters.
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| Compensation Discussion and Analysis | |
Shareholder Feedback
At the Compensation Committee’s direction, we conducted an expanded shareholder engagement program in the fall of 2015. The Chair of the Compensation Committee led a number of the shareholder meetings. One of the topics for discussion was the Merger Incentive. After hearing our explanation of the rationale for the Merger Incentive, shareholders were generally supportive of the award and expressed that the amounts seemed reasonable.
| Shareholder Feedback | Compensation Committee Response | |
Shareholders generally expressed that incentives like the Merger Incentive should not become a regular feature of BB&T’s compensation program as M&A is part of BB&T’s ordinary course historical practice. | The Compensation Committee agrees. The Merger Incentive is a one-time event that was designed to reward differentiating performance and is not expected to be repeated. We have never before provided an incentive tied to M&A activity. | |
Some shareholders suggested that awards under the Merger Incentive be in the form of equity, preferably with a vesting or performance component. | Based on this shareholder feedback, the Compensation Committee elected to pay awards under the Merger Incentive 50% in RSUs that vest over a three-year period and 50% in cash. The RSUs include performance features and are subject to forfeiture for any significant negative risk outcomes, which include any arising out of the Susquehanna merger. Additionally, RSU awards do not count toward pension benefits. | |
Several shareholders noted that the Merger Incentive could lead to a perception that Executive Management would be paid twice for Susquehanna in that the merger is accretive to BB&T’s earnings and would therefore flow through BB&T’s regular compensation program. | The Compensation Committee excluded the Susquehanna results from the EPS component of the 2015 Annual Incentive Award for Executive Management. The Committee also felt that the Susquehanna merger was a differentiating strategic event and, accordingly, felt it was fair to include our full earnings for the compensation elements that measure our performance relative to the Peer Group. | |
Other Considerations
In addition, the Committee recognized several accolades about BB&T and the acquisition.Bloomberg Markets magazine rated BB&T as one of the top 15 strongest banks in the world and one of the three strongest in the United States.American Banker magazine named CEO Kelly S. King banker of the year for 2015 for steering BB&T “…through an extended period of industry adversity, while providing a blueprint for large-scale M&A.” In addition, SNL Financial named Mr. King one of its “Most Influential” in banking in 2015 and 2014.
Payouts
On December 31, 2015, after considering the above factors and reviewing year-end information, including final 2015 TSR, the Compensation Committee determined that the Susquehanna conversion was successful and BB&T’s overall performance for 2015 was solid and, accordingly, decided to pay the full award opportunity under the Merger Incentive. Based on shareholder feedback and a desire to ensure that payouts would be subject to the continued success of the acquisition and BB&T as a whole, the Committee determined to pay the awards in a combination of RSUs and cash. RSU awards are subject to forfeiture if BB&T experiences a negative operating loss or a significant negative risk outcome (including any arising out of the Susquehanna merger) during the vesting period.
BB&T Corporation | 2016 Proxy Statement 55
| Compensation Discussion and Analysis |
The following table outlines the award opportunities and final payouts:
| Name | Total Award ($) | Cash Awarded ($) | RSUs Awarded ($) | RSUs Awarded1(#) | ||||||||||||
Kelly S. King | 1,030,000 | 515,000 | 515,000 | 13,620 | ||||||||||||
Christopher L. Henson | 450,000 | 225,000 | 225,000 | 5,950 | ||||||||||||
Ricky K. Brown | 450,000 | 225,000 | 225,000 | 5,950 | ||||||||||||
Clarke R. Starnes | 335,000 | 167,500 | 167,500 | 4,430 | ||||||||||||
Daryl N. Bible | 335,000 | 167,500 | 167,500 | 4,430 | ||||||||||||
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Total: | $ | 2,600,000 | $ | 1,300,000 | $ | 1,300,000 | 34,380 | |||||||||
| 1 | The number of RSUs awarded was calculated by dividing the “RSUs Awarded ($)” by the closing price of BB&T Stock on December 31, 2015 of $37.81. The RSUs ratably vest in 3 equal annual installments beginning on February 15, 2017. See “Incentive Stock Program Summary” for a discussion of other terms of our RSU awards. |
Performance Adjustments and Considerations
The Compensation Committee administers BB&T’sretains discretion to make adjustments to our performance, as well as the reported results from members of our Peer Group, for purposes of making performance-based compensation program for each of the NEOs. The Committee selects compensation elements that are performance-based and uses a variety of performance metrics that, on the whole, encourage the achievement of short-term and long-term shareholder value while enabling BB&T to retain its talented executives. The Committee also has implemented a number of sound governance practices into the compensation program that align the interests of the NEOs with shareholders. Notable items include:awards.
over 87%In February, the Compensation Committee receives preliminary performance information for the prior year, and historically has made adjustments to our reported results (e.g., net income) to ensure that the applicable compensatory plans fairly compensate participants for core BB&T performance.
The Compensation Committee may also make adjustments to the reported performance of Kelly King’s, and approximately 81%Peer Group members for awards that measure our performance relative to the Peer Group.
Reconciliation of adjustments that the Compensation Committee made for the purposes of certifying 2015 performance are included in Annex A to this proxy statement.
Unless otherwise indicated, discussions of 2015 performance for compensation purposes in this proxy statement include these adjustments made by the Compensation Committee.
Pension Plan
We provide the BB&T Corporation Pension Plan, a tax-qualified defined benefit retirement plan for eligible associates (the “Pension Plan”). We are among the few remaining companies that offers a traditional pension plan.
We also provide an excess benefit plan, the BB&T Corporation Non-Qualified Defined Benefit Plan (the “Excess Plan”), to augment the benefits payable under the Pension Plan to the extent that such benefits are curtailed by application of certain tax limitations. The Compensation Committee believes that the benefits provided by the Excess Plan assure that we will receive the executive retention benefits of the Pension Plan.
The Pension Plan and the Excess Plan are broad-based benefits and the NEOs participate in the Pension Plan and the Excess Plan on the same basis as other NEOs’similarly situated associates.
The Pension Plan and the Excess Plan provide retirement benefits based on length of service and salary level prior to retirement with benefits increasing substantially as a participant approaches retirement.
Four of the five NEOs have spent substantially all of their professional careers at BB&T and have built up significant benefits under the Pension Plan. Three of the five NEOs are retirement eligible.
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| Compensation Discussion and Analysis | |
We believe the retirement benefits provided by the Pension Plan are meaningful to all associates, but especially to those who devote substantial service to BB&T. Moreover, we view the Pension Plan and the Excess Plan as important retention tools for the NEOs and other highly compensated associates in the later stages of their careers because these retirement benefits could not easily be replicated upon the associate’s departure from the Corporation prior to retirement. The Compensation Committee believes that while the overall retirement benefits provided to the NEOs are in line with those provided by its Peer Group, the Pension Plan and Excess Plan provide us with a competitive advantage in attracting and retaining talent in light of the high number of companies that have frozen or abandoned traditional pension plans in recent years.
Perquisites Practices
The NEOs receive limited perquisites and other personal benefits that the Compensation Committee believes are reasonable and consistent with our overall compensation program. Executive Management, including the NEOs, do not receive perquisites such as personal club memberships, corporate housing or personal travel on the company’s airplane.
Other Employee Benefits
During 2015, we maintained various employee benefit plans that constitute a portion of the total compensation paid for 2013package available to the NEOs and all eligible associates of BB&T. These plans consist of the following:
the BB&T Corporation 401(k) Savings Plan, which in 2015 permitted associates to contribute up to 50% of their cash compensation, on a tax-deferred basis, within certain IRS compensation deferral amount limits applicable to tax-qualified retirement plans, with BB&T matching deferrals up to 6% of their compensation;
the BB&T Corporation Non-Qualified Defined Contribution Plan, which is variable and tieddesigned to augment the benefits under the BB&T’s performance (including stock price performance)&T Corporation 401(k) Savings Plan to the extent such benefits are curtailed by the application of certain limits imposed by the Code (during 2015, eligible participants in the Non-Qualified Defined Contribution Plan were permitted to defer up to 50% of their cash compensation with certain participants eligible to receive a matching contribution of up to 6% of their compensation);
cash and stock incentive award, with emphasis on stock-based awards;
reduced payout levels under the LTIP and Annual Incentive Award soa medical plan that maximum performance generates a payment of 150% of the target award opportunity;
performance-based RSU grants;
decreased emphasis on stock option grants;
refusing to provide incentives that would provide payoutsprovides coverage for negative returns;
no stock option repricings;
no dividends on unvested equity awards;
broad-reaching clawback policy, including use of the risk scorecard to adjust compensation for negative risk outcomes;
limited and restricted perquisites;
stock ownership requirements and prohibitions on hedging or speculative trading;
restrictions on the pledging of future shares of BB&T common stock by Executive Management and directors;
mandatory reduction of payments in connection with a change in control to the extent necessary to avoid any such payments being considered “excess parachute payments” under the tax code;all eligible associates; and
no gross-upcertain other welfare benefits (such as sick leave, vacation, dental and vision coverage, etc.).
We also provide disability insurance for the benefit of our associates (including each of the NEOs) which, in the event of disability, pays an associate 50% of the associate’s monthly compensation, subject to a cap of $35,000 per month. Under this program, associates may select greater disability coverage with a benefit that pays 60% of their monthly compensation; however, associates are required to pay the additional premium (over that already paid by us to receive the standard 50% coverage) to receive this heightened level of coverage. If a member of Executive Management, including a NEO, became disabled and the insurance benefit was limited due to the monthly cap, we would provide supplemental payments to the member of Executive Management to bring the monthly payment up to the selected coverage level.
The employee benefits for excise taxes.the NEOs discussed in this subsection are determined by the same criteria applicable to all of our associates. In general, benefits are designed to provide a safety net of protection against the financial catastrophes that can result from illness, disability or death, and to provide a reasonable level of retirement income based on years of service with BB&T. These benefits help keep us competitive in attracting and retaining associates. We believe that our employee benefits are generally on par with benefits provided by the Peer Group and consistent with industry standards.
BB&T Corporation | 2016 Proxy Statement 57
| Compensation Discussion and Analysis |
Section 3—BB&T’s Executive Compensation Process
Role of Compensation Committee
The Compensation Committee administers BB&T’s compensation program for Executive Management, including each of the NEOs. The Compensation Committee’s authority and responsibilities are set forth in its charter and include, but are not limited to:
reviewing and approving the compensation for the Chief Executive Officer, the remaining NEOs and other members of Executive Management;
selecting and approving the performance metrics and goals for all Executive Management compensation programs and evaluating performance at the end of each performance period; and
approving Annual Incentive Award opportunities, Incentive Stock Awards and LTIP award opportunities.
In making compensation decisions, the Compensation Committee uses several resources and tools, including the services of its independent compensation consultant, Compensation Advisory Partners an independent compensation consultant that was retained by, and, reports to, theas of October 2015, Meridian Compensation Committee.Partners LLC. The Committee also considers summary analyses of total compensation delineating each compensation element (“tally sheets”), executive risk scorecards provided by our Chief Risk Officer, competitive benchmarking and other analyses, as further described below.
Performance Metrics and Compensation
The Compensation Committee regularly considers a variety of BB&T performance metrics when evaluating compensation. The performance metrics generally fall into three categories: (1) growth metrics, (2) profitability metrics and (3) capital metrics. By assessing a variety of different metrics over short, medium and long-term periods, the Compensation Committee is able to obtain an overall and accurate assessment of BB&T’s performance against the Peer Group. Below are the metrics that the Compensation Committee regularly evaluates.
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Among the return metrics the Compensation Committee evaluates is total shareholder return (“TSR”). TSR measures increases in stock price plus common stock dividend payments over a period of time and is a metric that has become increasingly popular with large shareholders in recent years. While the Compensation Committee considers TSR in assessing performance, the Compensation Committee believes that any evaluation of BB&T’s more recent TSR relative to the Peer Group should be considered in context. During the financial crisis, the stock price of lower performing banks was much more adversely impacted than that of stronger banks, like BB&T which retained more value for shareholders. Accordingly, the Compensation Committee believes that one- and three-year TSR metrics understate the performance of the better performing banks that have seen less decrease in share price as compared to those institutions that rebounded from a relatively lower share price than a stronger bank like BB&T.
After reviewing the various performance metrics presented above, the Compensation Committee determined that BB&T’s overall performance-based compensation program is appropriately compensating the NEOs relative to BB&T’s overall performance against the Peer Group.
Regulatory Considerations in Setting Compensation
For the past several years, the Federal Reserve has undertaken a horizontal review of compensation practices and incentive compensation at the largest financial institutions in the United States, including BB&T and its peers. In connection with this review, we have undertaken a thorough analysis of our compensation practices and plans. This analysis has looked at the risks intrinsic to the design and implementation of these plans as well as the reasonableness of each element of compensation. While BB&T has, for many years, focused its compensation philosophy on performance-based compensation, certain changes were made to current BB&T compensation programs primarily as a result of regulatory guidance in this area and efforts to balance risk. For example, NEOs are now evaluated on individual risk performance, which has been integrated into the NEO’s annual performance evaluation. In addition, changes to performance-based awards include reductions to maximum payout levels for the Annual Incentive Awards and LTIP awards, reduced emphasis on stock options, and adding a performance condition for vesting of RSUs granted to NEOs. The Compensation Committee believes these changes fit well within our compensation philosophy, and intends to continue to assess our pay practices to balance risks with our commitment to linking NEO pay to BB&T performance.
Compensation Program Changes for 2014
As part of its regular review of BB&T’s compensation program, the Compensation Committee has approved the following changes for 2014. The Compensation Committee expects to conduct a review of the BB&T compensation program relative to the Peer Group in 2014 and may make additional changes to the program (or awards) in furtherance of its commitment to provide a compensation program that is competitive, performance-based, risk balanced and shareholder aligned.
No base salary adjustments from 2013.
For the 2014 Annual Incentive Awards, the maximum level of achievement will be further reduced to generate a payout of 125% of the target award opportunity, as compared to 150% for the 2013 Annual Incentive Awards.
For the 2014-2016 LTIP award, the maximum payout percentage has been reduced so that maximum performance generates a payment of 125% of the target award opportunity (as compared to 150% for 2013-2015).
No increase to award opportunities for any of the compensation elements to offset the lost “upside” by the reductions to the maximum payout percentages for the Annual Incentive Award and LTIP.
Performance-based vesting was added to 2014 stock options awards, in addition to the 2014 RSU awards (in 2013, only RSUs had a performance-based vesting component). The performance-based vesting component of both the 2014 stock options and the 2014 RSUs provide that up to 100% of the unvested portion of the award is subject to forfeiture if the performance criteria is not met. The 2013 performance-based vesting component for RSUs applied only to 20% of the unvested portion of the award.
For additional details, please refer to our Current Report on Form 8-K filed on February 28, 2014.
Section 2—Components of Executive Compensation
Elements of Compensation
BB&T’s total annual compensation for the NEOs is comprised of base salary, Annual Incentive Awards, Incentive Stock Awards and LTIP awards. BB&T also provides pension and other broad-based retirement benefits, which are discussed in greater detail in “Section 4—Other Aspects of BB&T’s Executive Compensation Program.” The table below provides a summary of the principle components of BB&T’s executive compensation program.
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Overall Compensation
The table below shows actual NEO compensation paid for the 2013 performance year and illustrates how the Compensation Committee viewed NEO compensation in 2013. The table also shows total compensation for 2013 as compared to 2012. The principal differences between this table and the Summary Compensation Table are that the Summary Compensation Table reports the grant date fair value of restricted stock unit awards, the change in pension value and nonqualified deferred compensation earnings as well as all other compensation. The components included below are considered by the Committee when making compensation determinations.
2013 COMPENSATION OVERVIEW TABLE
| 2013 Incentive Compensation Overview | ||||||||||||||||||||||||||||
| Annual Incentive | Option | Restricted Stock Unit | LTIP | |||||||||||||||||||||||||
Name | Salary(1) ($) | Award(2) ($) | Awards(3) ($) | Awards(3) ($) | (2011- 2013)(4) ($) | 2013 Total ($) | 2012 Total ($) | |||||||||||||||||||||
Kelly S. King | 996,250 | 2,002,861 | 557,897 | 2,231,575 | 2,055,726 | 7,844,309 | 8,555,426 | |||||||||||||||||||||
Christopher L. Henson | 661,250 | 759,644 | 231,437 | 925,742 | 953,876 | 3,531,949 | 3,721,286 | |||||||||||||||||||||
Ricky K. Brown | 661,250 | 759,644 | 231,437 | 925,742 | 953,876 | 3,531,949 | 3,718,036 | |||||||||||||||||||||
Clarke R. Starnes III | 557,500 | 640,456 | 176,166 | 704,654 | 715,784 | 2,794,560 | 2,951,224 | |||||||||||||||||||||
Daryl N. Bible | 557,500 | 640,456 | 176,166 | 704,654 | 715,784 | 2,794,560 | 2,951,224 | |||||||||||||||||||||
As seen in the table above, total compensation decreased in 2013 as compared to 2012. This is due in large part to the structure of BB&T’s compensation program, which is designed to award increased compensation to our CEO and other NEOs for improved performance, and reduce compensation when lower performance figures are achieved relative to the established performance goals.
The Compensation Committee believes it is important when looking at total compensation to exclude the effect of gains in pension plan value and deferred compensation, as those items are also affected by non-performance-based factors, such as years of service at BB&T. This is especially important for BB&T in light of the fact that four of the five NEOs have spent substantially all of their professional lives working for BB&T (41 years, in the case of the CEO) and have accordingly built up significant pension and other post-employment benefits in the course of this long and valuable service to the Company.
2013 Annual Base Salary
ANNUAL BASE SALARY HIGHLIGHTS
CEO base salary increased $15,000, or 1.52% from 2012.
Salaries of other NEOs increased between $10,000 and $15,000, or between 1.82% and 2.31% from 2012.
The increase in base salaries reflects desire to recognize the efforts of our NEOs in a manner consistent with the overall salary pool increases by BB&T associates.
Base salary represents approximately 13% of our CEO’s total compensation and approximately 19% of total compensation for our other NEOs.
In its review of base salaries for 2013, the Compensation Committee considered the independent compensation consultant’s review, which detailed the positioning of BB&T’s salaries for the NEOs as compared to similarly situated executives within the Peer Group. NEO salaries have historically been positioned at the median of the Peer Group, and the Compensation Committee determined that NEO base salaries were appropriately positioned relative to the Peer Group and therefore more substantial base salary increases were not warranted.
2013 BASE SALARY INCREASES
| 2013 Base Salary(1) ($) | 2012 Base Salary ($) | Increase ($) | Percentage Increase | |||||||||||
Kelly S. King | 1,000,000 | 985,000 | 15,000 | 1.52% | ||||||||||
Christopher L. Henson | 665,000 | 650,000 | 15,000 | 2.31% | ||||||||||
Ricky K. Brown | 665,000 | 650,000 | 15,000 | 2.31% | ||||||||||
Clarke R. Starnes III | 560,000 | 550,000 | 10,000 | 1.82% | ||||||||||
Daryl N. Bible | 560,000 | 550,000 | 10,000 | 1.82% | ||||||||||
2013 Award Opportunities
AWARD OPPORTUNITY HIGHLIGHTS
BB&T’s variable compensation elements generate payments or awards based on an award opportunity, with variable performance payouts being made along a range based on “threshold,” “target” and “maximum” performance.
Award opportunities are expressed as a percentage of base salary.
Changes in 2013-2015 LTIP individual target award opportunity were made in consideration of reduced “maximum” payout levels for each of 2013 Annual Incentive Award and the 2013-2015 LTIP Award.
The NEOs’ respective award opportunities for the variable compensation elements are established by the Compensation Committee and are expressed as a percentage of the applicable NEO’s base salary. The table below displays the award opportunities for 2013 for the applicable compensation elements as compared to 2012.
The maximum payout level for each of the 2013 Annual Incentive and 2013-2015 LTIP awards was reduced from 200% in 2012 to 150% in 2013. This decision heavily factored in a preference expressed by our regulators that incentive compensation plan “upside” be reduced so as not to encourage potentially risky management decisions intended (in whole or in part) to achieve maximum payout levels. The Compensation Committee ultimately chose to reduce the “maximum” performance payout levels for the 2013 Annual Incentive and2013-2015 LTIP Awards, but in doing so, felt that part of the foregone “upside” should be replaced so as to maintain the overall positioning of NEO compensation relative to the Peer Group. After consideration and deliberation, the Compensation Committee elected to replace approximately 42% of the aggregate lost “upside” under both awards by increasing the individual target award opportunity (expressed as a percentage of base salary) for the2013-2015 LTIP awards by approximately one-third over 2012 levels, while making no change to the 2013 Annual Incentive Award individual target opportunity relative to the 2012 level. In reaching this decision, the Compensation Committee determined that it was appropriate and in the shareholders best interests to focus the NEOs on the achievement of ROCE (measured relative to the Peer Group) over the LTIP’s three-year performance period. The Compensation Committee further determined that although the 2013 Annual Incentive Award “upside” was substantially reduced, increasing the award opportunity for the Annual Incentive Award was unnecessary to maintain overall compensation positioning against the Peer Group and so as to not overstate the importance of BB&T’s short-term performance.
2012V. 2013 TARGET AWARD OPPORTUNITIES(1)
| Annual Incentive Award | Incentive Stock Award | LTIP | ||||||||||
| 2012 | 2013 | 2012(2) | 2013(3) | 2012(4) | 2013(5) | |||||||
Kelly S. King | 175% | 175% | 280% | 280% | 120% | 160% | ||||||
Christopher L. Henson | 100% | 100% | 175% | 175% | 75% | 100% | ||||||
Ricky K. Brown | 100% | 100% | 175% | 175% | 75% | 100% | ||||||
Clarke R. Starnes III | 100% | 100% | 158% | 158% | 67% | 90% | ||||||
Daryl N. Bible | 100% | 100% | 158% | 158% | 67% | 90% | ||||||
Annual Incentive Award
ANNUAL INCENTIVE AWARD HIGHLIGHTS
Annual Incentive Awards are cash incentives based on the achievement of corporate performance goals established annually by the Compensation Committee.
2013 Annual Incentive Award goals were based on:
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In 2013, maximum payout levels were reduced from 200% to 150%.
For EPS, threshold levels of performance were reduced to generate payouts at 25% of target, as compared to 50% in 2012.
For ROA, threshold levels of performance generate payouts at 50% of target, unchanged from 2012.
2013 Annual Incentive Awards paid out at 114.88% of aggregate award opportunity, based on BB&T’s 2013 performance.
PERFORMANCE METRICS® EPSAND ROA
Annual Incentive Award performance metrics refer to both BB&T’s earnings per share and return on assets. The Compensation Committee believes that these two corporate performance goals have a meaningful bearing on long-term increases in shareholder value and are valuable barometers for BB&T’s performance. Earnings per share growth has a strong long-term correlation with shareholder returns, which is the reason it is weighted at two-thirds. Return on assets also is correlated with long-term returns to shareholders and reflects the fundamental risk level and financial soundness of the business. The earnings per share measure and the return on assets measure are independent, meaning that if the earnings per share threshold was not achieved or exceeded, the executives could still receive a payment based solely on BB&T’s return on assets performance and vice versa.
In addition to the reductions to the overall maximum payout levels of the 2013 Annual Incentive Awards, the Compensation Committee also reduced the earnings per share threshold payout level relative to 2012. The Compensation Committee also made several changes to the way the threshold, target and maximum performance levels were established for the 2013 Annual Incentive Awards relative to 2012. Please refer to the table below. Together, these changes made it more difficult to achieve a threshold payment for the earnings per share metric for 2013 and reduced the potential payout in the event performance was achieved at the threshold level.
ANNUAL INCENTIVE AWARD – EPS CHANGESFOR 2013
| 2012 Annual Incentive Award – EPS | 2013 Annual Incentive Award – EPS | |||||||
Level of Achievement | Payout as % of Award Opportunity |
Method for Setting the Payout % | Payout as % of Award Opportunity | Method for Setting the Payout % | ||||
Threshold | 50% | 20% below target | 25% | 10% below target | ||||
Target | 100% | Consensus Earnings Expectations | 100% | Internal Profit Plan | ||||
Maximum | 200% | 20% above target | 150% | 5% above target | ||||
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The 2012 ROA performance range used a “band” concept, where the return on assets portion of the award funded within a band of performance, subject to adjustment within the band at the Compensation Committee’s discretion. For 2013, the Compensation Committee opted to return to a simpler formulation where BB&T’s actual performance relative to the Peer Group translates to the payout percentage on a simple interpolation basis (see the Return On Assets Performance chart, below).
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Consistent with 2012, for return on assets purposes, BB&T’s performance was measured against its Peer Group on a current period basis, subject to adjustment at the Compensation Committee’s discretion. The Compensation Committee believes that measuring performance on a current period basis provides a more accurate measure of BB&T’s performance against its peers. For officers who are covered employees as determined by Internal Revenue Code (the “Code”) Section 162(m), the awards are paid out of a pool equal to 1.5% of BB&T’s 2013 pre-tax income. Any adjustment in an award to a covered employee will not cause any payment to the covered employee to exceed his/her share of the pool. The Committee retains the discretion to adjust awards based on business factors. For a more detailed description of the Annual Incentive Award 162(m) pool, please refer to “Tax Considerations” in Section 4.
2013 ANNUAL INCENTIVE AWARD RESULTS
The following tables illustrate the calculation of the aggregate payout under the Annual Incentive Awards at threshold, target and maximum performance levels and the actual amount of payments awarded under the plan for 2013.
EARNINGS PER SHARE PERFORMANCE (66.7%OF ANNUAL INCENTIVE AWARD)
| EPS Performance Measure | Payout as % of Award Opportunity | |||||||||
Threshold | $2.57 | 25% | ||||||||
Target | $2.85 | 100% | ||||||||
Maximum | $2.99 | 150% | ||||||||
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Actual | $2.88 | 109.75% | ||||||||
RETURN ON ASSETS PERFORMANCE (33.3%OF ANNUAL INCENTIVE AWARD)
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2013 ANNUAL INCENTIVE AWARD PAYOUT CALCULATION
| Performance Level | Payout Ratio | Item Weight | Annual Incentive Award Payout | |||||||||||||||||||||||
Earnings per share | $ | 2.88 | 109.75 | % | 66.7 | % | 73.20 | % | ||||||||||||||||||
Return on assets | 1.24 | % | 125.17 | % | 33.3 | % | 41.68 | % | ||||||||||||||||||
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Total | 114.88 | %(1) | ||||||||||||||||||||||||
2013 ANNUAL INCENTIVE AWARD PAYMENTS
Name(1) | Threshold 2013 Annual Incentive Award Payments ($) | Targeted 2013 Annual Incentive Award Payments ($) | Maximum 2013 Annual Incentive Award Payments ($) | Actual 2013 Annual Incentive Award Payment ($) | ||||
Kelly S. King | 290,282 | 1,743,438 | 2,615,156 | 2,002,861 | ||||
Christopher L. Henson | 110,098 | 661,250 | 991,875 | 759,644 | ||||
Ricky K. Brown | 110,098 | 661,250 | 991,875 | 759,644 | ||||
Clarke R. Starnes III | 92,824 | 557,500 | 836,250 | 640,456 | ||||
Daryl N. Bible | 92,824 | 557,500 | 836,250 | 640,456 |
Incentive Stock Awards
INCENTIVE STOCK AWARDS HIGHLIGHTS
2013 incentive stock awards for each NEO were composed of nonqualified stock options (20% of award) and restricted stock units (80% of award). Restricted stock unit awards were given a heavier weighting in 2013, as compared to 60% of the award in 2012.
2013 stock option awards vest ratably on each of the first three annual anniversaries of the award. In prior years, stock options vested ratably over a four-year period.
Several changes were made to the restricted stock unit awards. In 2012, restricted stock unit awards cliff vested on the fourth annual anniversary of the award. For 2013, the following changes were made:
RSUs have a three-year service-based vesting component (ratable vesting on each of the first three annual anniversaries of the award) and a three-year performance-based vesting component, with vesting determined on a stand-alone annual basis at the end of each year of the three-year period.
For the 2013 performance component to be satisfied, BB&T must either maintain an investment grade credit rating or not post an annual loss for the performance period. If the performance criteria are not met for a particular year, 20% of the unvested restricted stock units will be forfeited, subject to the satisfaction of the service-based vesting component, and the remaining restricted stock units would not be subject to future performance-based forfeitures.
Equity awards and stock ownership align NEO interests with those of BB&T’s shareholders.
The 2013 incentive stock awards were made under the shareholder-approved BB&T Corporation 2012 Incentive Plan (the “2012 Incentive Plan”). The 2012 Incentive Plan allows for equity-based awards to the NEOs, as determined by the Compensation Committee. Awards that may be granted by the Compensation Committee to the NEOs include incentive stock options and nonqualified stock options, stock appreciation rights, restricted stock and restricted stock units, performance shares and performance units, and phantom stock.
The NEOs received the following grants of stock options and restricted stock units in 2013 (the number of options or restricted stock units granted is determined by dividing the target amount of compensation to be delivered via the award by the value of each option or restricted stock unit, as applicable).
2013 INCENTIVE STOCK AWARDS
Name | Non-Qualified Stock Options (#)(1) | Delivered Value of Stock Options ($)(2)(3) | Restricted Stock Units (#) | Delivered Value of Restricted Stock Units ($)(2)(3) | Total Delivered Value of Options and RSUs ($) | |||||
Kelly S. King | 101,806 | 557,897 | 74,188 | 2,231,575 | 2,789,472 | |||||
Christopher L. Henson | 42,233 | 231,437 | 30,776 | 925,742 | 1,157,179 | |||||
Ricky K. Brown | 42,233 | 231,437 | 30,776 | 925,742 | 1,157,179 | |||||
Clarke R. Starnes III | 32,147 | 176,166 | 23,426 | 704,654 | 880,820 | |||||
Daryl N. Bible | 32,147 | 176,166 | 23,426 | 704,654 | 880,820 |
2013 RESTRICTED STOCK UNIT AWARDS
BB&T’s restricted stock awards are granted as units, with each unit relating to a contingent share of BB&T common stock that is not earned or issued until specific conditions are met. As described above, the restricted stock unit awards made in 2013 have a three-year service-based vesting component (ratable vesting on each of the first three anniversaries of the award) and a three-year performance-based vesting component. For retirement eligible individuals, restricted stock unit vesting is generally accelerated upon retirement. No dividends are paid on the shares underlying the restricted stock units until the units vest and shares are issued. The Compensation Committee determined that the restricted stock units’ three-year vesting schedule is generally consistent with Peer Group practices, whereas BB&T’s historical use of a four-year vesting period was on the longer end of the vesting range as compared to BB&T’s Peer Group. The Compensation Committee believes that the retentive features and perceived value of restricted stock units are enhanced in a volatile stock market, which the financial services industry recently has experienced. These considerations contributed to the decision to grant the 2013 incentive stock awards with a heavier proportion of restricted stock units (80%) to stock options (20%).
2013 STOCK OPTION AWARDS
Stock options historically have been an important part of BB&T’s equity program. The Compensation Committee believes that stock options are inherently performance-based and effectively align the interests of the recipients with those of the shareholders because stock options only have value if BB&T’s stock price increases relative to its stock price on the date of the award. BB&T’s 2013 stock option awards vest 33 1/3% per year on each of the first three anniversaries of the date of grant and expire on the ten year anniversary of the date of grant. For retirement eligible individuals, stock option vesting is generally accelerated upon retirement. The exercise price for each stock option grant in 2013, including each award to the NEOs, was the market closing price on the date of grant. The Compensation Committee determined that the stock options’ three-year vesting schedule is generally consistent with that of many peer companies and was appropriate given the reduced emphasis on stock options in 2013 compensation. With respect to the ten-year term of the stock options, the Compensation Committee believes that this length of time encourages recipients to focus on delivering long-term shareholder value over a relatively long horizon.
For additional discussion of changes to 2013 incentive stock awards, including additional rationale for such changes, please refer to “Key Changes to BB&T’s 2013 Executive Compensation Program” in Section 1 of the Compensation Discussion and Analysis.
LTIP Awards
LTIP HIGHLIGHTS
LTIP awards measure three-year performance cycles relative to BB&T’s Peer Group.
The performance metric is average return on common equity (ROCE) and LTIP awards are typically paid in cash.
Prior to 2012, the LTIP performance matrix was established with a “backward looking” model, where the performance ranges were established based on Peer Group performance for the most recently completed three-year period. Beginning with LTIP awards made in 2012 and continuing with the 2013 award, BB&T’s performance is measured against the Peer Group’s actual performance for the same three-year performance period (a “relative performance” model).
For the 2011-2013 LTIP award (paid in March of 2014), BB&T’s ROCE performance was measured against the Peer Group using the backward looking model.
For the 2011-2013 LTIP award (paid in March of 2014), BB&T’s ROCE performance was 9.63%, exceeding the maximum performance goal of 7.17% and generating a payment of 200% of target award opportunity.
For the 2013-2015 LTIP award (and consistent with the 2012-2014 LTIP award), BB&T’s ROCE performance will be measured against the Peer Group using the relative performance model.
For the 2013-2015 LTIP award, maximum payout levels were reduced from 200% to 150%, and the individual target award opportunity was increased to partially offset this loss of “upside.”
LTIP awards reward performance over three-year cycles. Each year begins a new three-year cycle. At the beginning of each three-year cycle, the Compensation Committee, after considering information from the independent compensation consultant’s most recent comprehensive review, determines the performance measures and payout range. The Compensation Committee believes that measuring ROCE over a three-year period provides a valuable measure of company performance over time.
LTIP awards are payable, in the Compensation Committee’s discretion, in the form of shares of BB&T common stock, cash or a combination of both. Since 1996, all LTIP awards have been paid to the NEOs in cash. The Compensation Committee believes that with approximately 64% of the NEOs’ long-term incentive compensation currently consisting of equity, it is appropriate to pay the LTIP awards in cash, rather than additional equity. This belief is bolstered by the substantial BB&T common stock holdings of each of the NEOs. The actual value of the LTIP award is calculated as follows:
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2011-2013 LTIP CYCLE (PAID IN MARCH 2014)
The 2011-2013 LTIP performance metrics set by the Compensation Committee are presented below. The historical target setting practice under the backward looking model would have resulted in the 2011-2013 LTIP award ROCE target being a negative rate of return in that the Peer Group’s median average ROCE for the three-year period ending December 31, 2010, was a negative number. The Compensation Committee consequently set the 2011-2013 LTIP target as a positive rate of return, effectively eliminating the payout range between threshold and target. The Compensation Committee believed that paying LTIP awards for anything less than a positive ROCE over the three-year measurement period was inconsistent with BB&T’s compensation philosophy.
2011-2013 LTIP CYCLE PERFORMANCE METRICS
| Average 3-year ROCE | Payout as % of Award Opportunity | Rationale(2) | ||||||||||
Threshold | N/A | N/A | Eliminated because payouts for a negative rate of return are inconsistent with BB&T’s compensation philosophy | |||||||||
Target | 0.01 | % | 100 | % | Positive rate of return – Peer Group median was negative | |||||||
Maximum
| 7.17 | % | 200 | % | 75th percentile of Peer Group ROCE | |||||||
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Actual(1) | 9.63 | % | 200 | % | ||||||||
2011-2013 LTIP CYCLE PAYMENTS
Name | Threshold($) | Target($) | Maximum($) | Actual LTIP Payment, Based on 2011-2013 Performance($)(1) | ||||||||||||||||
Kelly S. King | N/A | 1,027,863 | 2,055,726 | 2,055,726 | ||||||||||||||||
Christopher L. Henson | N/A | 476,938 | 953,876 | 953,876 | ||||||||||||||||
Ricky K. Brown | N/A | 476,938 | 953,876 | 953,876 | ||||||||||||||||
Clarke R. Starnes III | N/A | 357,892 | 715,784 | 715,784 | ||||||||||||||||
Daryl N. Bible | N/A | 357,892 | 715,784 | 715,784 | ||||||||||||||||
2013-2015 LTIP CYCLE (PAYABLE IN 2016)
Consistent with the 2012-2014 cycle, the Compensation Committee elected to measure ROCE performance relative to the Peer Group over the same period for the 2013-2015 cycle. The Committee determined that measuring performance on a current period basis (the relative performance model) provides a more accurate measure of BB&T’s performance against its peers. In addition to the reductions in the maximum payout levels of the 2013-2015 LTIP awards and the corresponding increase to the LTIP target award opportunity, the Compensation Committee made a relatively modest change to the way the threshold, target and maximum performance levels were established compared to the 2012-2014 LTIP:
The 2012-2014 LTIP ROCE performance range used a “band” concept, where the award funded based on performance within a band and payment was subject to downward adjustment of up to fifty points at the Compensation Committee’s discretion. For the 2013-2015 LTIP award, the Compensation Committee opted to return to a simpler formulation where BB&T’s actual performance relative to the Peer Group translates to the payout percentage on a simple interpolation basis (see the 2013-2015 LTIP Cycle Performance Metrics chart, below).
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For additional discussion of changes to 2013-2015 LTIP awards, including the reduction of the maximum payout level, the corresponding increase to the award opportunity and the rationale for such changes, please refer to “Key Changes to BB&T’s 2013 Executive Compensation Program” in Section 1 of the Compensation Discussion and Analysis and “2013 Award Opportunities” in this Section 2 of the Compensation Discussion and Analysis.
2013-2015 LTIP CYCLE PERFORMANCE METRICS
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Section 3—BB&T’s Executive Compensation Process
Compensation Philosophy
BB&T operates in the highly competitive financial services industry where the attraction and retention of talented executives is critical to its future success. For this reason, BB&T has designed a total compensation program that is intended to be competitive with peer financial services institutions.
BB&T’s executive compensation philosophy is based on the following guiding principles:
compensation and reward systems are management tools to achieve positive business results;
total compensation is aligned with shareholder interests when it is paid based upon the achievement of financial goals that BB&T has attained for the performance period;
total compensation opportunities are established relative to organizations with which BB&T competes for both talent and shareholder investment and at levels that enable BB&T to attract and retain executives critical to its long-term success; and
compensation is compatible with effective controls and risk management and is supported by strong corporate governance.
Role of Compensation Committee
The Compensation Committee administers BB&T’s compensation program for Executive Management, including each of the NEOs. The Compensation Committee’s authority and responsibilities are set forth in its charter and include, among other things:
reviewing and approving the compensation for the Chief Executive Officer, the remaining NEOs and other members of Executive Management;
approving the performance metrics and goals for all Executive Management compensation programs and evaluating performance at the end of each performance period; and
approving Annual Incentive Award opportunities, Incentive Stock Awards and LTIP award opportunities.
In making compensation decisions, the Compensation Committee uses several resources and tools, including the services of Compensation Advisory Partners, an independent compensation consultant that is paid by, and reports to, the Compensation Committee, and summary analyses of total compensation delineating each compensation element (“tally sheets”), competitive benchmarking and other analyses, as further described below.
In addition, the Compensation Committee periodically receives reports from our Chief Risk Officer regarding BB&T’sour risk environment and risk management practices, from our Chief Compliance Officer regarding compliance and risk matters and from BB&T’sour General Auditor, the head of BB&T’sour internal audit function, regarding our internal controls.controls and regularly reviews the minutes of the Risk Committee of the Board of Directors. The purpose of these reports is to allow the Compensation Committee to evaluate our current risk environment and internal control positions relevant to incentive compensation, and to take these issues into consideration when determining incentive compensation.
The Chief Executive Officer also is involved in compensation determinations for other members of Executive Management (including compensation for each of the NEOs) and makes recommendations to the Compensation Committee on base salary and the other compensation elements. BB&T believesWe believe that the Chief Executive Officer is in the best possible position to assess the performance of the other members of Executive Management, and he accordingly plays an important role in the compensation setting process. However, decisions about individual compensation elements and total compensation, including those related to the Chief Executive Officer, are ultimately made by the Compensation Committee using its judgment, focusing primarily on the executive officer’s performance and BB&T’s overall performance, particularly in light of the business environment in which the results were achieved.
58 BB&T Corporation | 2016 Proxy Statement
| Compensation Discussion and Analysis | |
The following table illustrates the Compensation Committee’s executive compensation process timeline at BB&T. In addition, the Compensation Committee’s independent compensation consultant attends and participates in Committee meetings from time to time throughout the year.
Executive Compensation Process | ||||
February Teleconference | • | Receive risk management update on risk appetite and events that could impact incentive compensation | ||
| • | Joint meeting among the Compensation, Audit and Risk Committees | |||
| • | Review executive risk scorecards for the prior year | |||
| • | Review projected financial results with proposed adjustments for incentive plans | |||
| • | Receive update from BB&T’s General Auditor regarding the effectiveness of internal controls | |||
| • | Receive a report from BB&T’s Chief Compliance Officer regarding compliance and risk matters | |||
February Meeting | • | Approve financial results and proposed adjustments for incentive plans | ||
| • | Determine payments/vesting for incentive plans with performance periods completed the prior year (Annual Incentive Awards, LTIP, and Incentive Stock Awards) | |||
| • | Approve peer group for the current year | |||
| • | Determine compensation for the current year—base salary increases (if any), cash incentive plans (Annual Incentive Awards and LTIP) and Incentive Stock Awards | |||
| • | Review and approve the draft Compensation Discussion and Analysis and the draft Compensation Committee Report on Executive Compensation sections of the proxy statement | |||
June Meeting | • | Review projected financial results with proposed adjustments for incentive plans | ||
October Meeting | • | Receive risk management update on risk appetite and events that could impact incentive compensation | ||
| • | Joint meeting among the Compensation, Audit and Risk Committees | |||
| • | Review projected financial results with proposed adjustments for incentive plans | |||
| • | Review of Executive Management compensation with the Compensation Committee’s independent compensation consultant | |||
| • | Conduct a mid-year review of current executive risk scorecards | |||
December Meeting | • | Review projected financial results with proposed adjustments for incentive plans | ||
| • | Conduct annual review of director compensation | |||
| • | Consider retaining the Compensation Committee’s independent compensation consultant for the upcoming year | |||
Role of Compensation Consultant
The Compensation Committee engages an independent compensation consultant to conduct a review of the competitivenessprovide market reference perspective and effectiveness of BB&T’s executive compensation program relative to market practices and business goals.serve as an advisor. The independent compensation consultant serves at the request of, and reports directly to, the Compensation Committee and suchCommittee. Further, the Compensation Committee has the sole authority to approve the independent compensation consultant’s fees and other retention terms, including the authority to limit the amount of fees the independent compensation consultant may earn from other services provided to BB&T. For 2013,January to October 2015, the Compensation Committee retained Compensation Advisory
BB&T Corporation | 2016 Proxy Statement 59
| Compensation Discussion and Analysis |
Partners to act as the committee’sCommittee’s independent compensation consultant. In this capacity, Compensation Advisory Partners provided an overviewperformed a review of our executive compensation programs, and peer group analysis, aadvised on regulatory update, anddevelopments, corporate governance and best practice trends.
In retainingkeeping with its responsibilities in managing our compensation program, the Compensation AdvisoryCommittee periodically reviews its outside advisors. Last year, the Compensation Committee met with several compensation consulting firms as part of a governance review of executive compensation providers. After considering the services offered by several firms, the Compensation Committee determined to retain Meridian Compensation Partners thein October 2015 as its new independent compensation consultant.
The Compensation Committee determined that, based on an assessment of NYSE factors, the information presented to it, Compensation Advisory Partners wasconsulting firms retained were independent and that its engagement of these firms did not present any conflicts of interest. In making this determination, the Compensation Committee noted that (a) Compensation Advisory Partners providesthe consultants provide no other services to BB&T other than compensation consulting, (b) no personal or business relationships exist between Compensation Advisory Partnersthe consultants and members of BB&T’sour Board or executive officers, (c) Compensation Advisory Partners and itsthe consultants do not directly own any shares of BB&T stock, and (d) Compensation Advisory Partners maintainsthe consultants retain a written policy designed to avoid conflicts of interest that may arise. Compensation Advisory PartnersEach consultant also determined that it was independent from BB&Tour management and confirmed this in a written statement delivered to the Chair of the Compensation Committee.
Compensation Advisory Partners generallyDuring 2015, the compensation consultants provided the following services:services to the Compensation Committee:
reviewed BB&T’sour company’s total compensation philosophy for reasonableness and appropriateness;
reviewed overall compensation levels;
reviewed BB&T’sour total executive compensation program and advised the Compensation Committee of plans or practices that may be changed to improve effectiveness;
provided market and peer data and recommendations on Executive Management compensation;
assisted BB&T in analyzing the risk impact of BB&T’sour compensation practices;practices including with respect to the Merger Incentive;
reviewed public disclosure on compensation, including the draft Compensation Discussion and Analysis and related tables and compensation disclosures for the BB&Tour proxy statement; and
advised the Compensation Committee regarding the compensation of outside directors.
The advice rendered by Compensation Advisory Partners generally focuses on Executive Management; however, the consultant also provides guidance as to compensation issues that apply to associates who are eligible to participate in the same programs as the NEOs.
In order for Compensation Advisory Partnersa compensation consultant to provide effective advice, to the Compensation Committee it interactsexpects them to interact with BB&T’sour management from time to time. These interactions generally involve, among other things:
obtaining compensation and benefits data, as well as other relevant information that is not available from public sources;
working with management to understand the scope of the various executive jobs in order to provide accurate benchmarking; and
confirmingconferring with management so that factual and data analyses are accurate and up-to-date.
This process enables Compensation Advisory Partnersthe compensation consultant to identify any areas where further research or analysis may be necessary. It also allows the compensation consultantnecessary, while allowing it to discuss any changes to the compensation program or refine recommendations before finalizing its reports to the Compensation Committee.
The total amount of fees paid to Compensation Advisory Partners for 2013 was approximately $164,171.60 BB&T Corporation | 2016 Proxy Statement
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Benchmarking and Competitive Analyses
The compensation structure for Executive Management, which includes the NEOs, emphasizes variable pay based on performance. BB&TWe generally comparescompare each element of compensation against what it believes to bethe Compensation Committee determines is a reasonable grouping of publicly traded bank or financial services holding companies (identified below, the “Peer Group”).
Throughout 2015 and continuing into 2016, the Compensation Committee has carefully considered its benchmarking practices. The Compensation Committee reevaluated the peer group for 2016 and decided to add one larger bank (Wells Fargo) and one bank closer in size (Citizens Financial). The nature of the market limits the number of larger peers with the objective of targeting totala reasonably comparable business model. During our shareholder engagement program we received feedback that shareholders preferred that compensation at a point that approximatesopportunities generally not be targeted above the median of the Peer Group, for eachirrespective of our relative size. Accordingly, the variousCompensation Committee will be closely monitoring peer and market compensation elements.practices and the Compensation Committee may make additional changes to the executive compensation program (or awards) in furtherance of its commitment to provide a compensation program that is competitive, performance-based, risk balanced and aligned with the goals of our shareholders and regulatory expectations. The Compensation Committee factorsis committed to implementing a strategy in the views of Executive Management in selecting the Peer Group. The independent2016 to provide target compensation consultant validates the selection. The Peer Group used for evaluating the NEOs’ compensation also is used for benchmarking BB&T’s performance. The Peer Group is evaluated annually,opportunities that are aligned with the review conducted for 2013 resulting in the designation by the Compensation Committee of ten financial institutions as the Peer Group. In approving a peer group, the Committee analyzes several factors, including the mix and complexity of businesses, the markets being served, asset size, and changes resulting from mergers or shifts in strategic direction. Financial institutions that are similar to BB&T in general lines of business and operations, and are approximately one-third to two times BB&T’s asset size may be considered for inclusion in the Peer Group. Companies with whom BB&T competes for talent are also considered. BB&T’s total assets place us in the top quartilemedian of the Peer Group.
BB&T 2013 PEER GROUPIn evaluating our 2015 Peer Group, the Compensation Committee considered a number of factors, including that our asset size and market capitalization are in the top quartile of our Peer Group. Also considered was the independent compensation consultant’s advice that the most significant correlating factors for compensation levels of financial services institutions are asset size and market capitalization. Accordingly, for 2015 the Compensation Committee considered the compensation positioning relative to the members of the Peer Group most comparable to us in terms of asset size and market capitalization (which we refer to as the “Comparable Size Peers” as indicated in the table below) in addition to positioning relative to the overarching Peer Group. Our asset size approximates the median asset size of our Comparable Size Peers.
| BB&T 2015 PEER GROUP | ||||||||
| v Comerica | vPNC | |||||||
| vFifth Third | vRegions | |||||||
| v Huntington | vSunTrust | |||||||
| v KeyCorp | vU.S. Bancorp | |||||||
| v M&T | v Zions | |||||||
Comparable Size Peers appear in burgundy.
In considering the NEOs’ total compensation opportunities for 2015, the Compensation Committee’s objective was to target total compensation opportunities near the median of the Comparable Size Peers, which resulted in an overall compensation opportunity positioning above the median of the Peer Group. In making this determination, the Compensation Committee specifically considered that it was important to maintain the competitiveness of pay opportunities in light of the significant regulatory, competitive and economic challenges facing the financial services industry and the high demand for our talented, long-tenured and highly marketable Executive Management team. Also considered was that regulatory pressure has resulted in our executive compensation program shifting away from peer practice in several important aspects, possibly compromising the competitiveness of our compensation program.
In addition to the external Peer Group analysis, the Compensation Committee also reviews detailed tally sheets for each executive and reviews the total compensation of the Executive Management team relative to one another.Thisanother. This practice is consistent with our compensation philosophy of rewarding our employees based upon their taking on greater responsibilitieslevel of responsibility within the Company.
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Responsible Equity Grant PracticesExecutive Risk Scorecard
Generally,We utilize an executive risk scorecard which the timingCompensation Committee may use to adjust, if necessary, the short-term and long-term incentive compensation of each member of Executive Management (which includes the NEOs). The executive risk scorecard:
allows for evaluation of both corporate and individual results that can be compared to stated risk appetites in all risk categories;
presents the positive and negative risk outcomes that have influenced each risk category and includes recommended actions with respect to significant negative outcomes;
is used in conjunction with the recommendations of the Chief Risk Officer, the CEO and the Committee’s own insight and evaluation;
is included as part of our risk review process in which 100% of each Executive Manager’s short-term and long-term compensation for 2015 is subject to potential adjustment;
was developed by our Senior Risk and Compliance Officers; and
is reviewed by the independent compensation consultant.
The Compensation Committee believes that the executive risk scorecard is an important element to ensure that incentive compensation at the Executive Management level is risk balanced. The use of this risk scorecard has been discussed with our regulators as an additional way to conform to incentive compensation guidance and best practices.
Section 4—Other Aspects of BB&T’s regular annual equity awards is determined monthsExecutive Compensation Program
In addition to the key components of our executive compensation program described in advanceSection 2 above, other significant policies, plans and factors influence executive compensation, including the compensation of the actual grantsNEOs. These items provide meaningful value to members of Executive Management, including the NEOs, while at the same time promoting the retention of these highly valued executives and aligning their interests with those of the shareholders.
Stock Ownership Guidelines for Executive Management
The Compensation Committee believes that members of Executive Management, including the NEOs, should accumulate meaningful equity stakes in orderBB&T over time to coincidefurther align their economic interests with the regular February meetingsinterests of shareholders, thereby promoting our objective of increasing shareholder value.
The table below summarizes the Boardstock ownership guidelines for our NEOs. Each of our NEOs currently exceeds these guidelines.
| Name | Stock Ownership Guidelines | Approximate Stock Value to be held Under Stock Ownership Guidelines(1) | ||
Kelly S. King | 5x Base Salary | $5,375,000 | ||
| Christopher L. Henson | 3x Base Salary | $2,100,000 | ||
Ricky K. Brown | 3x Base Salary | $2,100,000 | ||
Clarke R. Starnes | 3x Base Salary | $1,770,000 | ||
Daryl N. Bible | 3x Base Salary | $1,770,000 |
| (1) | Under the stock ownership guidelines, all shares of BB&T common stock held or controlled by the individual are considered in determining compliance with the ownership requirement, including, but not limited to, direct holdings, shares in qualified and nonqualified individual account plans sponsored by BB&T, and unvested restricted stock units and restricted shares (but not stock options) granted by us. |
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Risk Management
In establishing and reviewing the Compensation Committee. The grant date is established when the grants and all key terms are approved by the Board orexecutive compensation program, the Compensation Committee asannually considers whether the case may be.program encourages unnecessary or excessive risk taking. The exercise price for each stock option grant in 2013 was the market closing price on the dategoal of grant. For the 2013 incentive stock awards, the Compensation Committee usedis to establish a compensation program designed to encourage prudent risk management and discourage inappropriate risk-taking by granting a diverse portfolio of compensation to the closingNEOs and other members of Executive Management that is expected to reward the creation of shareholder value over time. To help achieve this goal, the Compensation Committee considers the risk profile of the primary compensation elements. The Compensation Committee believes that because the base salaries of the NEOs and the other members of Executive Management are fixed in amount they do not encourage inappropriate risk-taking. In addition, a significant proportion of compensation provided to the NEOs and other members of Executive Management is in the form of equity awards that have performance and retention features that extend over a period of years. The Compensation Committee believes that these awards do not encourage unnecessary or excessive risk-taking because the ultimate value of the awards is tied to our stock price. In addition, because awards are subject to long-term vesting schedules they help ensure that the NEOs and other members of Executive Management have significant value tied to long-term stock price performance. Also, LTIP awards are based on our performance over a three-year period, which encourages the NEOs to focus on long-term performance in addition to annual results, further reducing risk-taking that is likely to produce only short-term benefits and allowing sufficient time for risk outcomes to emerge.
The Compensation Committee is responsible for exercising authority to modify payments and impose or release “holdbacks” from Executive Management’s incentive compensation arrangements, based on a risk review or regulatory requirements. When determining incentive compensation and consistent with regulatory guidance, the Compensation Committee evaluates our current risk environment and internal control positions relevant to incentive compensation, and reviews the reports, including executive risk scorecards, provided by our Chief Risk Officer. The Compensation Committee also receives reports from our General Auditor, the head of BB&T’s common stock oninternal audit function, regarding the grant dateeffectiveness of our overall system of internal controls. Please also refer to determine the numberbelow discussion of restricted stock unit awards. In addition, the 2012 Incentive Plan includes prohibitions onCompensation Committee’s broad clawback ability and, in Section 3, the direct and indirect repricinguse of stock options without shareholder approval.an executive risk scorecard to adjust compensation, if necessary, for negative risk outcomes.
In addition, and consistent with our compensation philosophy of rewarding the NEOs based on the long-term success of BB&T, is required to recognizeour Codes of Ethics and Insider Trading Policy prohibit all associates, including the expense of all share-based awards (such asNEOs, from speculative trading in BB&T common stock (including prohibitions on buying call options and restricted stock units) in its income statement over the award’s minimum required service period. Over time, the restricted stock unit awards have been less costlyselling put options for our common stock) and place limitations on a NEO’s ability to BB&T relativeconduct short-term trading, thus encouraging long-term ownership of common stock. Our Corporate Governance Guidelines contain a similar prohibition applicable to the expense for the stock option awards.members of Executive Management and also prohibit members of Executive Management from entering into hedging strategies and limit pledging activity. See “Pledging/Hedging of Shares” below.
Compensation Clawbacks
TheOur Board believes that the current structure of BB&T’s incentive compensation recoupment practices areis appropriate, and effective, and provideprovides a balanced approach to risk management and properly alignaligns the interests of our Executive Management and shareholders.
Our 2012 Incentive Plan and award agreements contain broad language regarding clawbacks and make all awards subject to recoupment to the extent determined by the plan administrator.Compensation Committee. Any and all amounts payable under the 2012 Incentive Plan or paid under the 2012 Incentive Plan are subject to clawback, forfeiture, and reduction to the extent determined by the administratorCompensation Committee as necessary to comply with applicable law and/or policies adopted by BB&T.
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Responsible Equity Grant Practices
Generally, the timing of our regular annual equity awards is determined months in advance of the actual grants in order to coincide with the regular February meetings of the Board and the Compensation Committee. The grant date is established when the grants and all key terms are approved by the Board has reviewed the shareholder proposal we received regarding our current compensation recoupment practices (see Proposal 6), and believes that BB&T’s current clawback provisions already permitor the Compensation Committee, as the case may be. The exercise price for each stock option grant in 2015 was the market closing price on the date of grant. For the 2015 Incentive Stock Awards, the Compensation Committee also used the closing price of our common stock on the grant date to determine the number of restricted stock unit awards. In addition, the 2012 Incentive Plan administrator,includes prohibitions on the direct and indirect repricing of stock options without shareholder approval. We are required to takerecognize the expense of all of the recoupment actions requested by the proposal,share-based awards (such as stock options and to go further than the proposal in many respects. The clawback provisions are interpreted broadly and include the ability of the administrator to seek recoupment of incentive compensation in cases where there has been a violation of law or BB&T policy by an executive that causes significant financial or reputational harm to BB&T.
In addition, both the restricted stock unit and stock option award agreements contain conditions that permitunits) in our income statement over the award administrator to make certain changes to the awards if necessary or appropriate to improve the risk sensitivity of the awards or as directed by the Board of Governors of the Federal Reserve System. Such changes may include adjusting the award quantitatively or qualitatively based upon the risk the holder’s activities pose to BB&T or an affiliate; extending the restriction or vesting period of the award; adjusting the award for actual losses or other performance issues; or as otherwiseaward’s minimum required by the award administrator, the Federal Reserve Board, or the United States government to comply with any law, regulation, policy or similar requirement.service period.
Risk ScorecardPledging/Hedging of Shares
For 2013, BB&T adopted a risk scorecard which the Compensation Committee can use to adjust, if necessary, the short-term and long-term incentive compensation of each member of Executive Management. The Risk Scorecard allows for evaluation of both corporate and individual results that can be compared to stated risk appetites in all risk categories. The risk scorecard presents, for each individual Executive Manager, the positive and negative risk outcomes that have influenced each risk category and includes recommended actions with respect to significant negative outcomes.
One hundred percent of each Executive Manager’s short-term and long-term compensation for 2013 is subject to potential adjustment based on BB&T’s risk review processes, which includes the risk scorecard. The Compensation Committee uses the risk scorecard in conjunction with the recommendations of the Chief Risk Officer, the CEO and the Committee’s own insight and evaluation. The risk scorecard was compiled and
developed by BB&T’s Senior Risk Officers, with input from the Regulatory Risk and Compliance Officer and the Chief Corporate Communications Officer, and was reviewed by the independent compensation consultant, Compensation Advisory Partners.
The Compensation Committee believes that using this document to adjust short-term and long-term incentive compensation of Executive Management will be another mechanism, along with plan design features, to ensure that incentive compensation at the Executive Management level is risk balanced. The use of this risk scorecard has been discussed with our regulators as an additional way to conform to incentive compensation guidance and best practices.
Section 4—Other Aspects of BB&T’s Executive Compensation Program
In addition to the key components of BB&T’s executive compensation program described in Section 2 above, other significant policies, plans and factors influence executive compensation, including the compensation of the NEOs. These items provide meaningful value to members of Executive Management, including the NEOs, while at the same time promoting the retention of these highly valued executives and aligning their interests with those of the shareholders.
Stock Ownership Guidelines for Executive Management
The Compensation Committee believes that members of Executive Management, including the NEOs, should accumulate meaningful equity stakes in BB&T over time to further align their economic interests with the interests of shareholders, thereby promoting BB&T’s objective of increasing shareholder value.
The table below summarizes the stock ownership guidelines for our NEOs. Each of our NEOs currently satisfies these guidelines.
Name | Stock Ownership Guidelines | Approximate Stock Value to be held Under Stock Ownership Guidelines(1) | ||||||||
Kelly S. King | 5x Base Salary | $ | 5,000,000 | |||||||
Christopher L. Henson | 3x Base Salary | $ | 1,995,000 | |||||||
Ricky K. Brown | 3x Base Salary | $ | 1,995,000 | |||||||
Clarke R. Starnes III | 3x Base Salary | $ | 1,680,000 | |||||||
Daryl N. Bible | 3x Base Salary | $ | 1,680,000 | |||||||
Risk Management
The Compensation Committee considers annually, in establishing and reviewing the executive compensation program, whether the program encourages unnecessary or excessive risk taking. The goal of the Compensation Committee is to establish a compensation program designed to encourage prudent risk management and discourage inappropriate risk-taking by granting a diverse portfolio of compensation to the NEOs and other members of Executive Management that is expected to reward the creation of shareholder value over time. To help achieve this goal, the Compensation Committee considers the risk profile of the primary compensation elements. The Compensation Committee believes that because the base salaries of the NEOs and the other members of Executive Management are fixed in amount they do not encourage inappropriate risk-taking. In addition, a significant proportion of compensation provided to the NEOs and other members of Executive Management is in the form of equity awards that have performance and retention features that extend over a period of years. The Compensation Committee believes that these awards do not encourage unnecessary or excessive risk-taking because the ultimate value of the awards is tied to BB&T’s stock price and, because awards
are subject to long-term vesting schedules, to help ensure that the NEOs and other members of Executive Management have significant value tied to long-term stock price performance. Also, LTIP awards are based on our performance over a three-year period, which encourages the NEOs to focus on long-term performance in addition to annual results, further reducing risk-taking that is likely to produce only short-term benefits and allowing sufficient time for risk outcomes to emerge.
The Compensation Committee is responsible for exercising authority to modify payments and impose or release “holdbacks” from Executive Management’s incentive compensation arrangements, based on a risk review or regulatory requirements. When determining incentive compensation and consistent with regulatory guidance, the Compensation Committee evaluates our current risk environment and internal control positions relevant to incentive compensation, and reviews the reports, including risk scorecards, provided by our Chief Risk Officer. The Compensation Committee also receives reports from BB&T’s General Auditor, the head of BB&T’s internal audit function, regarding the effectiveness of our overall system of internal controls. Please also refer to Section 3 for a discussion of the Compensation Committee’s broad clawback ability and the use of a risk scorecard to adjust compensation, if necessary, for negative risk outcomes.
In addition, and consistentConsistent with our compensation philosophy of rewarding the NEOs based on the long-term success of BB&T, our Codes of Ethics and Insider Trading Policy prohibit all associates, including the NEOs, from speculative trading in BB&T common stock (including prohibitions on buying call options and selling put options for BB&Tour common stock) and place limitations on a NEO’s ability to conduct short-term trading, thus encouraging long-term ownership of BB&T common stock. BB&T’sOur Corporate Governance Guidelines contain a similar prohibition applicable to members of Executive Management and also prohibit members of Executive Management, including the NEOs, from entering into hedging strategies that protect against downside risk in BB&Tour common stock.Furthermore,stock. Furthermore, our Corporate Governance Guidelines now limit pledging activity so that future share pledges by directors and members of Executive Management are limited to those shares in excess of each individual’s share ownership requirements.
Employment Agreements
BB&T usesWe use employment agreements to secure the services of key talent within the highly competitive financial services industry. Generally, the employment agreements are entered into with high-performing and long-term potential senior employees and are structured to carefully balance the individual financial goals of the executives relative to the needs of BB&T and its shareholders. All the NEOs have entered into employment agreements with BB&T. Each employment agreement with the NEOs includes provisions: (a) generally prohibiting the executive from competing against BB&Tus (or working for a competitor) if the executive leaves BB&T; (b) providing for payments if the executive is terminated by BB&Tus for other than “Just Cause” or if the executive voluntarily terminates his employment with BB&Tus for “Good Reason;” and (c) generally providing for payments under various termination scenarios following a “Change of Control.” These arrangements set compensation and benefits payable to the NEOs in certain termination and merger and acquisition scenarios, giving them some certainty regarding their individual outcomes under these circumstances. Specifically, BB&T believeswe believe the “Change of Control” provisions appropriately minimize the distraction of the NEOs in the event of a significant merger and acquisition scenario, allowing them to remain objective and focused on maximizing shareholder value. In addition, the noncompetition provisions are intended to protect BB&T from a competitive disadvantage if one of the NEOs leaves BB&T to work for a competitor. The Compensation Committee approves Executive Management’s initial employment agreements and then reviews the agreements on an as-needed basis, based on market trends or on changes in BB&T’s business environment.
The employment agreements for the NEOs provide that, under certain circumstances upon leaving the employment of BB&T and Branch Bank, the executive may not compete in the banking business, directly or indirectly, against the Corporation, Branch Bank and their affiliates. This prohibition generally precludes the NEO from working for a direct competitor with each membera banking presence within the continental United States. Additionally, the employment agreements for the NEOs prohibit the executive from soliciting or assisting in the solicitation of Executive Management (which includesany of our depositors, customers, or affiliates, or inducing any of our associates to terminate their employment with BB&T or its affiliates. These noncompetition and nonsolicitation provisions generally will be effective until the NEOs)one-year anniversary of the NEO’s termination. These noncompetition provisions generally are not effective if the NEO terminates employment after a “Change of Control.”
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The employment agreements have terms of 36 months that automatically extend monthly by an additional month, absent contrary notice by either party. The term of any employment agreement ends when such NEO reaches age 65; provided, however,65, with the exception of Mr. King’sKing, whose employment agreement was amended in December 2012 to eliminate the age 65 automatic expiration of the term for his agreement.does not contain that provision. Information provided by the independent compensation consultant showed that providing a three-year contract term is a common practice within the financial services industry. The Compensation Committee believes that a three-year term provides appropriate incentives for retention, protections against unjustified terminations, and is in line with other financial services companies. The employment agreements provide for reductions in payments to the extent necessary to avoid exceeding the limits established by Section 280G of the Code. Payments in excess of these limits are often referred to as “excess parachute payments,” and exceeding the Section 280G limits generally triggers an excise tax on the payments.
The Compensation Committee approves Executive Management’s employment agreements and then reviews the agreements on an as-needed basis, based on market trends or on changes in our business environment. The employment agreements for each of the NEOs are described in greater detail under the section “Compensation of Executive Officers—Officers – Narrative to 20132015 Summary Compensation Table” and the section “Compensation of Executive Officers—Officers – Potential Payments Upon Termination or Change of Control.”
Pension Plan
The NEOs participate in the BB&T Corporation Pension Plan (the “Pension Plan”), a tax-qualified defined benefit retirement plan for eligible associates, on the same basis as other similarly situated associates. The Pension Plan provides retirement benefits based on length of service and salary level prior to retirement with benefits increasing substantially as a participant approaches retirement. BB&T believes the retirement benefits provided by the Pension Plan are meaningful in their own right. Moreover, BB&T also views the Pension Plan as an important retention tool for the NEOs and other highly compensated associates in the later stages of their careers because the Pension Plan benefits could not easily be replicated upon the associate’s departure from the Corporation prior to retirement. The NEOs also participate in the BB&T Corporation Non-Qualified Defined Benefit Plan, which is an excess benefit plan maintained for the purpose of providing deferred compensation to certain highly compensated associates, including the NEOs. The primary purpose of the BB&T Corporation Non-Qualified Defined Benefit Plan is to augment the benefits payable to participants under the Pension Plan to the extent that such benefits are curtailed by application of certain tax limitations on the qualified plan. The Compensation Committee believes that the benefits under this supplemental plan, when added to the benefits under the Pension Plan, assure that BB&T will receive the executive retention benefits of the Pension Plan. The Compensation Committee believes that the overall retirement benefits provided to the NEOs are competitive with those provided by its Peer Group.
Perquisites Practices
The NEOs receive limited perquisites and other personal benefits that the Compensation Committee believes are reasonable and consistent with BB&T’s overall compensation program. Executive Management, including the NEOs, do not receive perquisites such as personal club memberships or vacation houses or apartments. For additional detail on the perquisites provided to the NEOs, please refer to the section “Narrative to 2013 Summary Compensation Table—Perquisites.”
Other Employee Benefits
During 2013, BB&T maintained various employee benefit plans that constitute a portion of the total compensation package available to the NEOs and all eligible associates of BB&T. These plans consist of the following:
the BB&T Corporation 401(k) Savings Plan, which in 2013 permitted associates to contribute up to 50% of their cash compensation, on a tax-deferred basis, up to certain IRS compensation deferral amount limits applicable to tax-qualified retirement plans, with BB&T matching deferrals up to 6% of their compensation;
the BB&T Corporation Non-Qualified Defined Contribution Plan, which is designed to augment the benefits under the BB&T Corporation 401(k) Savings Plan to the extent such benefits are curtailed by the application of certain limits imposed by the Code (during 2013, eligible participants in the Non-Qualified Defined Contribution Plan were permitted to defer up to 50% of their cash compensation with certain participants eligible to receive a matching contribution of up to 6% of their compensation);
a medical plan that provides coverage for all eligible associates; and
certain other welfare benefits (such as sick leave, vacation, dental and vision coverage, etc.).
BB&T also provides disability insurance for the benefit of its associates (including each of the NEOs) which, in the event of disability, pays the associates 50% of the associate’s monthly compensation, subject to a cap of$35,000 per month. Under this program, associates may select greater disability coverage with a benefit that pays 60% of their monthly compensation; however, associates are required to pay the additional premium (over that
already paid by BB&T to receive the standard 50% coverage) to receive this heightened level of coverage. If a member of Executive Management, including a NEO, became disabled and the insurance benefit was limited due to the monthly cap, BB&T would provide supplemental payments to the member of Executive Management to bring the monthly payment up to the selected coverage level.
The employee benefits for the NEOs discussed in this subsection are determined by the same criteria applicable to all BB&T associates. In general, benefits are designed to provide a safety net of protection against the financial catastrophes that can result from illness, disability or death, and to provide a reasonable level of retirement income based on years of service with BB&T. These benefits help keep BB&T competitive in attracting and retaining associates. BB&T believes that its employee benefits are generally on par with benefits provided by the Peer Group and consistent with industry standards.
Tax Considerations
SECTION 162(m)162(M)
In establishing total compensation for the executive officers, the Compensation Committee considers the effect of Section 162(m) of the Internal Revenue Code. Section 162(m) generally disallows a tax deduction for compensation over $1 million paid for any fiscal year to the Chief Executive Officer and the three other highest paid executive officers other than the Chief Financial Officer (“Covered Employees”) unless the compensation qualifies as performance-based.
BB&T’sOur compensation philosophy and policies are generally intended to comply with Section 162(m) to the extent the Compensation Committee determines appropriate with Section 162(m).appropriate. In typical years, when establishing and administering BB&T’sour compensation programs, the Compensation Committee generally intends that performance-based compensation will be deductible under Section 162(m). However, we retainthe Compensation Committee retains the flexibility to pay compensation that is not eligible for such treatmentdeductible under Section 162(m) if the Compensation Committee determines it is in the best interest of the Corporation to do so. For example, vesting of the 2015 RSUs generally accelerates upon retirement for retirement-eligible grantees who are Covered Employees, including the NEOs, of 2013 restricted stock unit awards earn a portion of the full fair market value of the BB&T shares represented by those awards each year during the three-year performance period ofand therefore the awards if they remain employed by BB&T. The restricted stock unit awards made in 2013 will count toward the $1 million cap in compensation for the Covered Employees, and any such non-performance-based compensation over $1 million to the Covered Employees will not be deductible by BB&T. The Compensation Committee accepted this tax consequence because it determined that the benefits of the 2013 awards were in the best interests of the Corporation, even in light of the unavailability of theunder Section 162(m) deduction..
ANNUAL INCENTIVE AWARD 162(m)162(M) POOLAND 2013-20152015-2017 LTIP AWARDS
As discussed in Section 2 – Components of Executive Compensation, the Compensation Committee employed a performance-based compensation structure for the Annual Incentive Award that is sometimes referred to as a “162(m) Pool,” and retained the ability to exercise negative discretion to reduce Annual Incentive Award payments to the Covered Employees.
Under the 162(m) Pool structure, the Annual Incentive Awards for the Covered Employees were paid from a 162(m) Pool equal to 1.5% of BB&T’s 20132015 income before taxes (pre-tax income), pursuant to a percentage of the pool assigned, within the first 90 days of 2013,2015, to each Covered Employee (48.1%(45.4% for Mr. King, 18.2%19.9% for Mr. Henson, 18.2%19.9% for Mr. Brown, and 15.4%14.8% for Mr. Starnes). Under the 2012 Incentive Plan, each Covered Employee’s Annual Incentive Award payment was also subject to a $7.5 million cap on the size of each individual payment. Under the 162(m) Pool, the Compensation Committee can exercise negative discretion (but not upward discretion) in determining the actual Annual Incentive Award payment amounts to the Covered Employees. For 2013,
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2015, the Compensation Committee approved in February 2014,2016, through its exercise of negative discretion, actual Annual Incentive Award payment amounts to Covered Employees that were below each Covered Employee’s assigned percentage of the 162(m) Pool. Because the 20132015 Annual Incentive Award awards to the Covered Employees were subject only to the negative discretion of the Compensation Committee to reduce potential awards payments, such awards are expected to qualify as “performance-based compensation” for Section 162(m) purposes and therefore should not be subject to the $1 million compensation deduction cap.
The 2013-20152015-2017 LTIP cycle awards similarly are expected to qualify as “performance-based compensation” for Section 162(m) purposes in thatbecause they are subject only to the negative discretion of the Compensation Committee to reduce potential payments. The Compensation Committee expects that the amounts paid, if any, to the Covered Employees in 20152018 for the 2013-20152015-2017 LTIP awards will not be subject to the Section 162(m)’s $1 million compensation deduction limit. The rules and regulations promulgated under Section 162(m) are complicated, however, and may change from time to time, sometimes with retroactive effect. As such, there can be no guarantee that all amounts intended to comply with the requirements of Section 162(m) will so qualify.
Conclusion
BB&T and the Compensation Committee review all elements of BB&T’sour compensation program for the NEOs, including a tally sheet for each NEO delineating each element of the NEO’s compensation. In designing the various elements of the total compensation program, BB&T haswe have taken great care to select elements that are performance-based and to use a variety of performance metrics that, on the whole, will encourage the achievement of short-term and long-term shareholder value while enabling BB&Tus to retain itsour talented executives. BB&T believesWe believe the total compensation for each NEO is reasonable and the components of BB&T’sour compensation program for the NEOs are consistent with market standards and with comparable programs of the Peer Group. The compensation program for the NEOs is based on theour financial performance of BB&T compared to both market medians and Peer Group performance. This practice links executive performance to theour annual financial and operational results of BB&T and the long-term financial interests of the shareholders. BB&TWe further believesbelieve that the foregoing compensation philosophy is consistent with BB&T’sour corporate culture and objectives and has served, and will continue to serve, as a reasonable basis for administering theour total compensation program, of BB&T, both for the NEOs and for all BB&Tof our associates, for the foreseeable future.
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COMPENSATION COMMITTEE REPORTON EXECUTIVE COMPENSATIONCompensation Committee Report on Executive Compensation
The Compensation Committee is composed entirely of non-employee directors, each of whom has been determined in the Board’s business judgment to be independent based on the categorical standards for independence adopted by the Board, which include the applicable NYSE standards. The Compensation Committee is responsible for oversight and review of BB&T’sour compensation and benefit plans, including administering BB&T’sour executive incentive plan, fixing the compensation for the Chief Executive Officer and reviewing and approving the compensation for the other members of Executive Management.
The Compensation Discussion and Analysis section of this Proxy Statementproxy statement is management’s report on the Corporation’s compensation program and, among other things, explains the material elements of the compensation paid to the Chief Executive Officer and the other NEOs. The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis section of this Proxy Statementproxy statement with management. Based on this review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statementproxy statement and incorporated by reference into BB&T’sour Annual Report on Form 10-K for the fiscal year ended December 31, 2013.2015.
Submitted by the Compensation Committee of the Board of Directors, whose current members are:
| Edwin H. Welch, Ph.D., Chair | Louis B. Lynn, Ph.D. | |||||
| Anna R. Cablik | Tommy N. Thompson | |||||
| Eric C. Kendrick |
COMPENSATION COMMITTEE INTERLOCKSAND INSIDER PARTICIPATIONCompensation Committee Interlocks and Insider Participation
The directors who constituted the Compensation Committee during some or all of 20132015 were Anna R. Cablik, John P. Howe III, M.D., EdwardEric C. Milligan, Charles A. Patton,Kendrick, Louis B. Lynn, Ph.D., Tollie W. Rich, Jr. and Edwin H. Welch, Ph.D. None of the individuals who served as a member of the Compensation Committee during 2013 were2015 was at any time officersan officer or employeesan employee of BB&T or any of its subsidiaries or had any relationship with BB&Tus requiring disclosure under SEC regulations.
BB&T Corporation | 2016 Proxy Statement 67
| Compensation of Executive Officers |
COMPENSATIONOF EXECUTIVE OFFICERS
20132015 SUMMARY COMPENSATION TABLE
Name and Principal Position(1) | Year | Salary ($) | Stock Awards(2)(3) ($) | Option Awards(4)(5) ($) | Non-Equity Incentive Plan Compensation(6) ($) | Change in Pension Value & Non-Qualified Deferred Compensation Earnings(7) ($) | All Other Compensation(8) ($) | Total | ||||||||||||||||||||||||||||||||||||||||||||||
| (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | |||||||||||||||||||||||||||||||||||||||||||||||
Name and Principal Position (1) (a) | Year | Salary ($) | Stock (2)(3) | Option (2)(4) | Non-Equity Plan (5) | Change in (6) ($) | All Other (7) | Total ($) | ||||||||||||||||||||||||||||||||||||||||||||||
| (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | |||||||||||||||||||||||||||||||||||||||||||||||
Kelly S. King | 2013 | 996,250 | 1,984,529 | 557,897 | 4,058,587 | 4,040,976 | 355,386 | 11,993,625 | 2015 | 1,056,250 | 2,583,019 | 591,499 | 4,096,763 | 3,070,931 | 298,430 | 11,696,892 | ||||||||||||||||||||||||||||||||||||||
Chairman and Chief Executive Officer | 2012 | 979,813 | 1,406,466 | 1,097,389 | 4,832,151 | 3,153,580 | 238,935 | 11,708,334 | ||||||||||||||||||||||||||||||||||||||||||||||
| 2011 | 960,688 | 1,230,906 | 941,471 | 2,594,312 | 1,602,109 | 128,989 | 7,458,475 | |||||||||||||||||||||||||||||||||||||||||||||||
Chairman and Chief | 2014 | 1,000,000 | 2,050,870 | 559,998 | 3,400,276 | 6,803,966 | 303,653 | 14,118,763 | ||||||||||||||||||||||||||||||||||||||||||||||
Executive Officer | 2013 | 996,250 | 1,984,529 | 557,897 | 4,058,587 | 4,040,976 | 355,386 | 11,993,625 | ||||||||||||||||||||||||||||||||||||||||||||||
Christopher L. Henson | 2013 | 661,250 | 823,258 | 231,437 | 1,713,520 | 593,804 | 160,939 | 4,184,208 | 2015 | 691,250 | 1,069,201 | 241,938 | 1,741,055 | 1,173,107 | 136,024 | 5,052,575 | ||||||||||||||||||||||||||||||||||||||
Chief Operating Officer | 2012 | 639,750 | 573,950 | 447,820 | 1,961,987 | 1,282,681 | 121,101 | 5,027,289 | 2014 | 665,000 | 852,383 | 232,747 | 1,350,812 | 2,863,816 | 142,711 | 6,107,469 | ||||||||||||||||||||||||||||||||||||||
| 2011 | 606,750 | 555,282 | 424,725 | 1,180,185 | 782,916 | 71,274 | 3,621,132 | |||||||||||||||||||||||||||||||||||||||||||||||
| 2013 | 661,250 | 823,258 | 231,437 | 1,713,520 | 593,804 | 160,939 | 4,184,208 | |||||||||||||||||||||||||||||||||||||||||||||||
Ricky K. Brown | 2013 | 661,250 | 823,258 | 231,437 | 1,713,520 | 951,910 | 158,914 | 4,540,289 | 2015 | 691,250 | 1,069,201 | 241,938 | 1,741,055 | 1,574,421 | 136,024 | 5,453,889 | ||||||||||||||||||||||||||||||||||||||
Senior Executive Vice President and President, Community Banking | 2012 | 639,750 | 573,950 | 447,820 | 1,958,737 | 1,732,028 | 123,574 | 5,475,859 | ||||||||||||||||||||||||||||||||||||||||||||||
| 2011 | 606,750 | 555,282 | 424,725 | 1,174,061 | 1,166,178 | 70,050 | 3,997,046 | |||||||||||||||||||||||||||||||||||||||||||||||
Senior Executive Vice | 2014 | 665,000 | 852,383 | 232,747 | 1,350,812 | 3,561,848 | 142,711 | 6,805,501 | ||||||||||||||||||||||||||||||||||||||||||||||
President and President, Community Banking | 2013 | 661,250 | 823,258 | 231,437 | 1,713,520 | 951,910 | 158,914 | 4,540,289 | ||||||||||||||||||||||||||||||||||||||||||||||
Clarke R. Starnes III | 2013 | 557,500 | 626,646 | 176,166 | 1,356,240 | 867,220 | 129,045 | 3,712,817 | 2015 | 582,500 | 810,227 | 184,069 | 1,308,360 | 1,139,457 | 109,304 | 4,133,917 | ||||||||||||||||||||||||||||||||||||||
Senior Executive Vice President and Chief Risk Officer | 2012 | 539,375 | 436,890 | 340,879 | 1,559,651 | 1,173,461 | 110,203 | 4,160,459 | ||||||||||||||||||||||||||||||||||||||||||||||
| 2011 | 505,625 | 417,778 | 319,553 | 969,751 | 686,256 | 57,803 | 2,956,766 | |||||||||||||||||||||||||||||||||||||||||||||||
Senior Executive Vice | 2014 | 560,000 | 648,063 | 176,959 | 1,071,738 | 2,794,286 | 114,974 | 5,366,020 | ||||||||||||||||||||||||||||||||||||||||||||||
President and Chief Risk Officer | 2013 | 557,500 | 626,646 | 176,166 | 1,356,240 | 867,220 | 129,045 | 3,712,817 | ||||||||||||||||||||||||||||||||||||||||||||||
Daryl N. Bible | 2013 | 557,500 | 626,646 | 176,166 | 1,356,240 | 220,843 | 145,229 | 3,082,624 | 2015 | 582,500 | 810,227 | 184,069 | 1,308,360 | 408,120 | 109,304 | 3,402,580 | ||||||||||||||||||||||||||||||||||||||
Senior Executive | 2012 | 539,375 | 436,890 | 340,879 | 1,559,651 | 204,034 | 105,966 | 3,186,795 | ||||||||||||||||||||||||||||||||||||||||||||||
Vice President and Chief Financial Officer | 2011 | 505,625 | 417,778 | 319,553 | 969,751 | 114,233 | 57,686 | 2,384,626 | ||||||||||||||||||||||||||||||||||||||||||||||
Senior Executive Vice | 2014 | 560,000 | 648,063 | 176,959 | 1,071,738 | 647,239 | 114,974 | 3,218,973 | ||||||||||||||||||||||||||||||||||||||||||||||
President and Chief Financial Officer | 2013 | 557,500 | 626,646 | 176,166 | 1,356,240 | 220,843 | 145,229 | 3,082,624 | ||||||||||||||||||||||||||||||||||||||||||||||
| (1) | In accordance with SEC regulations, the listed positions are those held as of December 31, |
| (2) | The |
| (3) | The grant date fair value of the restricted stock unit awards and the corresponding number of restricted stock units for each of the last three years are as follows: |
Name | Date of Grant | Per Unit Grant | Grant Date Fair Value ($) | |||||||||||
Kelly S. King | 12/31/2015 2/24/2015 2/25/2014 | 2/26/2013
|
| 59,653 74,188 | $33.48 $34.36 $34.38 $26.75 | 455,998 2,127,021 2,050,870 1,984,529
| ||||||||
Christopher L. Henson | 12/31/2015 2/24/2015 2/25/2014 | 2/26/2013
|
| 24,793 30,776 | $33.48 $34.36 $34.38 $26.75 | 199,206 869,995 852,383 823,258
| ||||||||
Ricky K. Brown | 12/31/2015 2/24/2015 2/25/2014 | 2/26/2013
|
| 24,793 30,776 | $33.48 $34.36 $34.38 $26.75 | 199,206 869,995 852,383 823,258
| ||||||||
Clarke R. Starnes III | 12/31/2015 2/24/2015 2/25/2014 | 2/26/2013
|
| 18,850 23,426 | $33.48 $34.36 $34.38 $26.75 | 148,316 661,911 648,063 626,646
| ||||||||
Daryl N. Bible | 12/31/2015 2/24/2015
| 2/26/2013
|
| 18,850 23,426 | $33.48 $34.36 $34.38 $26.75 | 148,316 661,911 648,063 626,646
|
68 BB&T Corporation | 2016 Proxy Statement
| Compensation of Executive Officers | |
| (4) |
| The grant date fair value of option awards to the NEOs with the corresponding number of stock options for each of the last three years are as follows: |
Name | Date of Grant | Stock Options (#) | Fair Value ($) | Grant Date Fair Value ($) | ||||||||||||
Kelly S. King | | 2/24/2015 2/25/2014 2/26/2013 | | 120,714 71,611 101,806 |
| $5.48 |
| 557,897
| ||||||||
Christopher L. Henson |
| 2/ 2/ 25/2014 |
| 49,375 29,763 42,233 | |
| $5.48 | 241,938
| ||||||||
Ricky K. Brown | | 2/24/2015 2/25/2014 2/26/2013 | | 49,375 29,763 42,233 |
| $5.48 |
| 231,437
| ||||||||
Clarke R. Starnes III | | 2/24/2015 2/25/2014 2/26/2013 | | 37,565 22,629 32,147 |
| $5.48 |
| 176,166
| ||||||||
Daryl N. Bible | | 2/24/2015 2/25/2014 2/26/2013 | | 37,565 22,629 32,147 |
| $5.48 |
| 176,166
| ||||||||
| Column (f) contains Annual Incentive Award |
| 2015 Information ($) | 2014 Information ($) | 2013 Information ($) | ||||||||||||||||||||||||||||||||||||||||||
| 2013 Information ($) | 2012 Information ($) | 2011 Information ($) | ||||||||||||||||||||||||||||||||||||||||||
Name | 2013 Annual Incentive Award | 2011-2013 LTIP | 2012 Annual Incentive Award | 2010-2012 LTIP | 2011 STIP | 2009-2011 | 2015 Annual Incentive Award | 2013-2015 LTIP | Merger Incentive | 2014 Annual Incentive Award | 2012-2014 LTIP | 2013 Annual Incentive Award | 2011-2013 LTIP | |||||||||||||||||||||||||||||||
Kelly S. King | 2,002,861 | 2,055,726 | 2,817,549 | 2,014,602 | 1,787,119 | 807,193 | 1,572,160 | 2,009,603 | 515,000 | 1,614,638 | 1,785,638 | 2,002,861 | 2,055,726 | |||||||||||||||||||||||||||||||
Christopher L. Henson | 759,644 | 953,876 | 1,051,237 | 910,750 | 902,965 | 277,220 | 685,921 | 830,134 | 225,000 | 613,562 | 737,250 | 759,644 | 953,876 | |||||||||||||||||||||||||||||||
Ricky K. Brown | 759,644 | 953,876 | 1,051,237 | 907,500 | 902,965 | 271,096 | 685,921 | 830,134 | 225,000 | 613,562 | 737,250 | 759,644 | 953,876 | |||||||||||||||||||||||||||||||
Clarke R. Starnes III | 640,456 | 715,784 | 886,301 | 673,350 | 752,471 | 217,280 | 511,316 | 629,544 | 167,500 | 516,684 | 555,054 | 640,456 | 715,784 | |||||||||||||||||||||||||||||||
Daryl N. Bible | 640,456 | 715,784 | 886,301 | 673,350 | 752,471 | 217,280 | 511,316 | 629,544 | 167,500 | 516,684 | 555,054 | 640,456 | 715,784 | |||||||||||||||||||||||||||||||
| The amounts listed in column (g) are attributable to changes in the present value of the benefits under the BB&T Corporation Pension Plan and the BB&T Corporation Non-Qualified Defined Benefit Plan, as applicable, for each of the NEOs. The benefits the NEOs, including Mr. King, receive are calculated in the same manner as all plan participants. Mr. King’s increase in 2014 relative to |
| The detail relating to “All Other Compensation” for |
BB&T Corporation | 2016 Proxy Statement 69
| Compensation of Executive Officers |
NARRATIVE TO 20132015 SUMMARY COMPENSATION TABLE
The following narrative focuses on NEO compensation for 2013.2015. For a discussion that focuses on compensation for 20122014 and 2011,2013, please refer to the proxy statements for the annual meeting of shareholders that occurred on April 23, 201328, 2015 and April 24, 2012,29, 2014, respectively. Copies of prior years’ proxy statements are available for review on the SEC’s website at www.sec.gov.
All Other Compensation. The detail relating to the “All Other Compensation” for 20132015 found in column (h) to the 20132015 Summary Compensation Table is as follows:
COMPONENTSOF ALL OTHER COMPENSATION
Name | 401(k) Match(a) ($) | NQDC Match(b) ($) | Perquisites(c) | 401(k) Match(1)($) | NQDC Match(2)($) | |||||||||||
Kelly S. King | 15,300 | 334,542 | N/A | 15,900 | 282,529 | |||||||||||
Christopher L. Henson | 15,300 | 142,094 | N/A | 15,900 | 120,124 | |||||||||||
Ricky K. Brown | 15,300 | 141,899 | N/A | 15,900 | 120,124 | |||||||||||
Clarke R. Starnes III | 15,300 | 111,729 | N/A | 15,900 | 93,404 | |||||||||||
Daryl N. Bible | 15,300 | 111,729 | 18,200 | 15,900 | 93,404 | |||||||||||
| BB&T’s matching contribution under the BB&T Corporation 401(k) Savings Plan on behalf of the applicable NEO. |
| BB&T’s matching contribution to the BB&T Corporation Non-Qualified Defined Contribution Plan on behalf of the applicable NEO. |
Compensation Program. As indicated in the 20132015 Summary Compensation Table, salary as a percentage of total annual compensation (set forth in column (i) of the 20132015 Summary Compensation Table) for each of the NEOs in 20132015 were as follows: Mr. King—8.3%9.0%; Mr. Henson—15.8%13.7%; Mr. Brown—14.6%12.7%; Mr. Starnes—15.0%14.1%; and Mr. Bible—18.1%17.1%.
Perquisites.In 2013, BB&T providedPursuant to SEC rules, we have not reported perquisites to NEOs because the NEOs with perquisites related to: (a) a residential security system which was provided by BB&T; (b) a cash benefit adjustment pursuant to an election to opt out of BB&T’s group term life insurance coverage; (c) spousal participation in limited corporate events, including travel for the same and (d) occasional use of sports tickets.Mr. Bible moved in 2013 and approximately $17,500 of Mr. Bible’s reported total is comprisedvalue of the installation and monitoring of a residential security system at his new primary residence.perquisites, in aggregate, is less than $10,000.
Change in Pension Value and Non-Qualified Deferred Earnings. For information regarding the formula for calculation of the pension values, see the discussion included in the “Narrative to 20132015 Pension Benefits Table” below. Eligible associates are permitted to defer a percentage (up to 50% in 2013)2015) of their cash compensation under the Non-Qualified Defined Contribution Plan. All cash compensation is eligible for deferral unless otherwise limited by Code Section 409A. Plan participants may select from deemed investment funds under the Non-Qualified Defined Contribution Plan that are identical to the investment funds offered in the BB&T Corporation 401(k) Savings Plan (the “401(k) Plan”) with the exception that no deemed investments in BB&T common stock are permitted. Participants make an election upon entering the plan regarding the timing of plan distributions. The two allowable distribution elections are distribution upon termination or distribution upon reaching age 65. The Non-Qualified Defined Contribution Plan also allows for an in-service hardship withdrawal based on facts and circumstances that meet Internal Revenue Service guidelines.
401(k) Plan. The BB&T Corporation 401(k) Savings Plan (the “401(k) Plan”) is maintained to provide a means for most associates of BB&T and its subsidiaries to defer and save a percentage (up to 50% in 2013,2015, subject to IRS limitations) of their annual cash compensation on a pre-tax basis for retirement. The 401(k) Plan provides for BB&T to match 100% of a participant’s deferrals up to 6% of his or her compensation. Our contributions to each of the NEOs during 20132015 under the 401(k) Plan are included under the “All Other Compensation” column in the 20132015 Summary Compensation Table above.
Employment Agreements. We and our wholly owned subsidiary, Branch Bank, have entered into employment agreements with each member of Executive Management, including each NEO. The employment agreements generally provide a 36 month term that is automatically extended monthly for an additional month, absent contrary
70 BB&T Corporation | 2016 Proxy Statement
| Compensation of Executive Officers | |
notice by either party. The term of any employment agreement ends when such NEO reaches age 65; provided, however, Mr. King’s employment agreement was amended in December 2012 to eliminate the age 65 automatic expiration of the term for his agreement. The employment agreements provide that the NEOs are guaranteed minimum annual salaries equal to their current annual base salaries and continued participation in incentive compensation plans that BB&T or Branch Bank may from time to time extend to its similarly situated officers. During the term of the employment agreements, each NEO is entitled to participate in and receive, on the same basis as other similarly situated officers of BB&T and Branch Bank, pension and welfare benefits and other benefits such as sick leave, vacation, group disability and health, life and accident insurance and similar non-cash compensation that BB&T or Branch Bank may from time to time extend to its officers.
The employment agreements for the NEOs provide that, under certain circumstances upon leaving the employment of BB&T and Branch Bank, the executive may not compete in the banking business, directly or indirectly, against the Corporation, Branch Bank and their affiliates. This prohibition generally precludes the NEO from working for a direct competitor with a banking presence within the continental United States. Additionally, the employment agreements for the NEOs prohibit the executive from soliciting or assisting in the solicitation of any our depositors or customers or our affiliates or inducing any of our associates to terminate their employment with BB&T or its affiliates. These noncompetition and nonsolicitation provisions generally will be effective until the one-year anniversary of the NEO’s termination. These noncompetition provisions generally are not effective if the NEO terminates employment after a “Change of Control.” For a discussion of the potential payments that would be provided to each of the NEOs under their respective employment agreements in the event of such NEO’s termination, including in connection with a Change of Control, of the Corporation, and a discussion of the terms “Just Cause” and “Change of Control,” please refer to the “Potential Payments Upon Termination or Change of Control” section below. For a further discussion of the employment agreements of our NEOs, please see “Employment Agreements” within Section 4 of the Compensation Discussion and Analysis.
BB&T Corporation | 2016 Proxy Statement 71
| Compensation of Executive Officers |
20132015 GRANTSOF PLAN-BASED AWARDS
Name | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (2) (3) (4) | Estimated Future Payouts Under Equity Incentive Plan Awards (5) | All Other Stock Awards: Number of Shares of Stock or Units (#) (5) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/Sh) (6) | Grant Date Fair Value of Stock and Option Awards (7) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Estimated Future Payouts Under Non-Equity Incentive Plan | Estimated Future Payouts Under Equity Incentive Plan Awards(6) | Exercise or Base Price of Option Awards ($/Sh)(7) | Grant Date Fair Value of Stock and Option Awards ($)(8) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | All Other Stock Awards: Number of Shares of Stock or Units (#) (5) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/Sh) (6) | Grant Date Fair Value of Stock and Option Awards (7) | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| (c) | (d) | (e) | (f) | (g) | (h) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (k) | (l) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Kelly S. King | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Options | 2/26/2013 | 101,806 | $ | 30.08 | $ | 557,897 | 2/24/2015 | 120,714 | 38.22 | 591,499 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted Stock Units | 2/26/2013 | 14,837 | 59,351 | $ | 1,984,529 | 2/24/2015 | 61,904 | 2,127,021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Annual Incentive Award | 2/26/2013 | $ | 290,282 | $ | 1,743,438 | $ | 2,615,156 | 2/24/2015 | 308,953 | 2,059,688 | 2,574,610 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013-2015 LTIP(1) | 2/26/2013 | $ | 825,987 | $ | 1,651,973 | $ | 2,477,960 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2015-2017 LTIP(1) | 2/24/2015 | 884,011 | 1,768,021 | 2,210,026 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Merger Incentive(2) | 12/31/2015 | 515,000 | 13,620 | 455,998 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Christopher L. Henson | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Options | 2/26/2013 | 42,233 | $ | 30.08 | $ | 231,437 | 2/24/2015 | 49,375 | 38.22 | 241,938 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted Stock Units | 2/26/2013 | 6,155 | 24,621 | $ | 823,258 | 2/24/2015 | 25,320 | 869,995 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Annual Incentive Award | 2/26/2013 | $ | 110,098 | $ | 661,250 | $ | 991,875 | 2/24/2015 | 134,794 | 898,625 | 1,123,281 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013-2015 LTIP(1) | 2/26/2013 | $ | 343,092 | $ | 686,183 | $ | 1,029,275 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2015-2017 LTIP(1) | 2/24/2015 | 360,349 | 720,697 | 900,871 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Merger Incentive(2) | 12/31/2015 | 225,000 | 5,950 | 199,206 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ricky K. Brown | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Options | 2/26/2013 | 42,233 | $ | 30.08 | $ | 231,437 | 2/24/2015 | 49,375 | 38.22 | 241,938 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted Stock Units | 2/26/2013 | 6,155 | 24,621 | $ | 823,258 | 2/24/2015 | 25,320 | 869,995 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Annual Incentive Award | 2/26/2013 | $ | 110,098 | $ | 661,250 | $ | 991,875 | 2/24/2015 | 134,794 | 898,625 | 1,123,281 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013-2015 LTIP(1) | 2/26/2013 | $ | 343,092 | $ | 686,183 | $ | 1,029,275 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2015-2017 LTIP(1) | 2/24/2015 | 360,349 | 720,697 | 900,871 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Merger Incentive(2) | 12/31/2015 | 225,000 | 5,950 | 199,206 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Clarke R. Starnes III | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Options | 2/26/2013 | 32,147 | $ | 30.08 | $ | 176,166 | 2/24/2015 | 37,565 | 38.22 | 184,069 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted Stock Units | 2/26/2013 | 4,685 | 18,741 | $ | 626,646 | 2/24/2015 | 19,264 | 661,911 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Annual Incentive Award | 2/26/2013 | $ | 92,824 | $ | 557,500 | $ | 836,250 | 2/24/2015 | 100,481 | 669,875 | 837,344 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013-2015 LTIP(1) | 2/26/2013 | $ | 260,126 | $ | 520,251 | $ | 780,377 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2015-2017 LTIP(1) | 2/24/2015 | 273,332 | 546,663 | 683,329 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Merger Incentive(2) | 12/31/2015 | 167,500 | 4,430 | 148,316 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Daryl N. Bible | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Options | 2/26/2013 | 32,147 | $ | 30.08 | $ | 176,166 | 2/24/2015 | 37,565 | 38.22 | 184,069 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted Stock Units | 2/26/2013 | 4,685 | 18,741 | $ | 626,646 | 2/24/2015 | 19,264 | 661,911 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Annual Incentive Award | 2/26/2013 | $ | 92,824 | $ | 557,500 | $ | 836,250 | 2/24/2015 | 100,481 | 669,875 | 837,344 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013-2015 LTIP(1) | 2/26/2013 | $ | 260,126 | $ | 520,251 | $ | 780,377 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2015-2017 LTIP(1) | 2/24/2015 | 273,332 | 546,663 | 683,329 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Merger Incentive(2) | 12/31/2015 | 167,500 | 4,430 | 148,316 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (1) | LTIP awards are a component of the 2012 Incentive Plan. LTIP awards may be paid in the form of cash or stock at the discretion of the Compensation Committee. However, since 1996 awards have been paid only in |
| (2) | The Merger Incentive was adopted on 6/23/2015 and at such time the Compensation Committee retained the discretion to pay the awards in cash, equity or a combination of the two, as well as the ability to reduce the payments, if any. The Compensation Committee met on 12/31/2015 and approved Merger Incentive payouts at the full award opportunity (no reduction was applied) in the form of 50% cash and 50% RSUs. Accordingly, the cash portion of the Merger Incentive amount is presented under column (d) and the RSU portion is presented under column (g). Please see the Compensation Discussion and Analysis for additional details on the Merger Incentive. |
| (3) | The amounts shown in column (c) reflect the minimum payment level possible under the applicable award. For the Annual Incentive Award, the minimum payment is |
| The amounts shown in column (d) reflect the target payment level under the applicable award. Please see the Compensation Discussion and Analysis for additional detail on the structure of the |
| The amounts shown in column (e) reflect the maximum payment level possible under the applicable award. For the Annual Incentive Award and the LTIP, the maximum payment is |
| If the performance criteria applicable to |
| In accordance with the 2012 Incentive Plan, the option exercise price is the closing price of BB&T Common Stock on the date of grant. |
| This column reflects the grant date fair value, computed in accordance with SEC rules, of stock options and restricted stock units granted in |
NARRATIVE TO 20132015 GRANTS OF PLAN--BBASEDASED AWARDS TABLE
For a discussion of the awards presented in the 20132015 Grants of Plan-Based Awards table and the material terms of the awards, please refer to “Section 2—Components of2015 Executive Compensation” of the Compensation DiscussionProgram and Analysis.Pay Decisions.”
72 BB&T Corporation | 2016 Proxy Statement
| Compensation of Executive Officers | |
20132015 OUTSTANDING EQUITY AWARDSAT FISCAL YEAR-END
| OPTION AWARDS | STOCK AWARDS | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Number of Securities Underlying Unexercised Options | Number of Securities Underlying Unexercised Options | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock that Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that Have Not Vested (#) | Equity | OPTION AWARDS | STOCK AWARDS | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name | Exercisable (#) | Unexercisable (#) | Number of Securities Underlying Unexercised Options Exercisable (#) | Number of Securities Underlying Unexercised Options Unexercisable (#) | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Have Not (#) | Market Value of Shares or Units of Stock That | Equity Awards: Shares, Units | Equity Incentive Plan Awards: market or Payout Value of Unearned Shares, Units or Other Rights that Have Not Vested ($) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Kelly S. King | 87,727 | 36.68 | 2/24/2014 | 78,376 | (6) | 2,924,992 | 14,837 | (11) | 553,717 | 116,290 | 39.73 | 2/21/2016 | 54,705 | (5) | 2,068,396 | 4,946 | (6) | 187,008 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 125,000 | 38.64 | 2/22/2015 | 49,662 | (7) | 1,853,386 | 126,294 | 44.15 | 2/20/2017 | 19,784 | (6) | 748,033 | 39,771 | (7) | 1,503,742 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 116,290 | 39.73 | 2/21/2016 | 169,369 | (8) | 6,320,851 | 162,415 | 34.29 | 2/26/2018 | 61,904 | (8) | 2,340,590 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 126,294 | 44.15 | 2/20/2017 | 50,927 | (9) | 1,900,596 | 46,216 | 16.88 | 2/24/2019 | 13,620 | (9) | 514,972 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 162,415 | 34.29 | 2/26/2018 | 54,705 | (10) | 2,041,591 | 164,062 | 27.75 | 2/23/2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 18,108 | 68,108 | (1) | 16.88 | 2/24/2019 | 59,351 | (11) | 2,214,979 | 126,372 | 27.73 | 2/22/2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 123,046 | 41,016 | (2) | 27.75 | 2/23/2020 | 135,591 | 45,198 | (1) | 30.09 | 2/21/2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 63,186 | 63,186 | (3) | 27.73 | 2/22/2021 | 67,871 | 33,935 | (2) | 30.08 | 2/26/2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 45,197 | 135,592 | (4) | 30.09 | 2/21/2022 | 23,867 | 47,744 | (3) | 37.55 | 2/25/2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 0 | 101,806 | (5) | 30.08 | 2/26/2023 | 0 | 120,714 | (4) | 38.22 | 2/24/2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Christopher L. Henson | 8,938 | 36.68 | 2/24/2014 | 24,881 | (6) | 928,559 | 6,155 | (11) | 229,705 | 34,887 | 39.73 | 2/21/2016 | 22,324 | (5) | 844,070 | 2,052 | (6) | 77,586 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 38,768 | 38.64 | 2/22/2015 | 21,756 | (7) | 811,934 | 52,362 | 44.15 | 2/20/2017 | 8,208 | (6) | 310,344 | 16,529 | (7) | 624,961 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 34,887 | 39.73 | 2/21/2016 | 74,199 | (8) | 2,769,107 | 73,295 | 34.29 | 2/26/2018 | 25,320 | (8) | 957,349 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 52,362 | 44.15 | 2/20/2017 | 22,974 | (9) | 857,390 | 71,875 | 27.75 | 2/23/2020 | 5,950 | (9) | 224,970 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 73,295 | 34.29 | 2/26/2018 | 22,324 | (10) | 833,132 | 57,010 | 27.73 | 2/22/2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 5,405 | 21,622 | (1) | 16.88 | 2/24/2019 | 24,621 | (11) | 918,856 | 55,332 | 18,444 | (1) | 30.09 | 2/21/2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 53,906 | 17,969 | (2) | 27.75 | 2/23/2020 | 28,155 | 14,078 | (2) | 30.08 | 2/26/2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 28,505 | 28,505 | (3) | 27.73 | 2/22/2021 | 9,920 | 19,843 | (3) | 37.55 | 2/25/2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 18,444 | 55,332 | (4) | 30.09 | 2/21/2022 | 0 | 49,375 | (4) | 38.22 | 2/24/2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 0 | 42,233 | (5) | 30.08 | 2/26/2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ricky K. Brown | 9,455 | 36.68 | 2/24/2014 | 23,356 | (6) | 871,646 | 6,155 | (11) | 229,705 | 34,887 | 39.73 | 2/21/2016 | 22,324 | (5) | 844,070 | 2,052 | (6) | 77,586 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 38,768 | 38.64 | 2/22/2015 | 21,510 | (7) | 802,753 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 34,887 | 39.73 | 2/21/2016 | 73,361 | (8) | 2,737,833 | 52,362 | 44.15 | 2/20/2017 | 8,208 | (6) | 310,344 | 16,529 | (7) | 624,961 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 52,362 | 44.15 | 2/20/2017 | 22,974 | (9) | 857,390 | 73,295 | 34.29 | 2/26/2018 | 25,320 | (8) | 957,349 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 73,295 | 34.29 | 2/26/2018 | 22,324 | (10) | 833,132 | 71,062 | 27.75 | 2/23/2020 | 5,950 | (9) | 224,970 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 5,813 | 20,297 | (1) | 16.88 | 2/24/2019 | 24,621 | (11) | 918,856 | 57,010 | 27.73 | 2/22/2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 53,296 | 17,766 | (2) | 27.75 | 2/23/2020 | 55,332 | 18,444 | (1) | 30.09 | 2/21/2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 28,505 | 28,505 | (3) | 27.73 | 2/22/2021 | 28,155 | 14,078 | (2) | 30.08 | 2/26/2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 18,444 | 55,332 | (4) | 30.09 | 2/21/2022 | 9,920 | 19,843 | (3) | 37.55 | 2/25/2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 0 | 42,233 | (5) | 30.08 | 2/26/2023 | 0 | 49,375 | (4) | 38.22 | 2/24/2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Clarke R. Starnes III | 5,308 | 36.68 | 2/24/2014 | 17,417 | (6) | 650,002 | 4,685 | (11) | 174,844 | 7,329 | 39.73 | 2/21/2016 | 16,993 | (5) | 642,505 | 1,562 | (6) | 59,059 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 7,673 | 38.64 | 2/22/2015 | 15,800 | (7) | 589,656 | 36,635 | 44.15 | 2/20/2017 | 6,248 | (6) | 236,237 | 12,567 | (7) | 475,158 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 7,329 | 39.73 | 2/21/2016 | 53,714 | (8) | 2,004,606 | 21,447 | 27.73 | 2/22/2021 | 19,264 | (8) | 728,372 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 36,635 | 44.15 | 2/20/2017 | 17,285 | (9) | 645,076 | 42,118 | 14,040 | (1) | 30.09 | 2/21/2022 | 4,430 | (9) | 167,498 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 46,642 | 34.29 | 2/26/2018 | 16,993 | (10) | 634,179 | 21,431 | 10,716 | (2) | 30.08 | 2/26/2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 0 | 15,135 | (1) | 16.88 | 2/24/2019 | 18,741 | (11) | 699,414 | 7,542 | 15,087 | (3) | 37.55 | 2/25/2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 39,147 | 13,049 | (2) | 27.75 | 2/23/2020 | 0 | 37,565 | (4) | 38.22 | 2/24/2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 21,446 | 21,447 | (3) | 27.73 | 2/22/2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 14,039 | 42,119 | (4) | 30.09 | 2/21/2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 0 | 32,147 | (5) | 30.08 | 2/26/2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Daryl N. Bible | 101,902 | 36.22 | 1/31/2018 | 17,417 | (6) | 650,002 | 4,685 | (11) | 174,844 | 101,902 | 36.22 | 1/31/2018 | 16,993 | (5) | 642,505 | 1,562 | (6) | 59,059 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 44,293 | 34.29 | 2/26/2018 | 15,800 | (7) | 589,656 | 44,293 | 34.29 | 2/26/2018 | 6,248 | (6) | 236,237 | 12,567 | (7) | 475,158 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 0 | 15,135 | (1) | 16.88 | 2/24/2019 | 53,714 | (8) | 2,004,606 | 42,118 | 14,040 | (1) | 30.09 | 2/21/2022 | 19,264 | (8) | 728,372 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 39,147 | 13,049 | (2) | 27.75 | 2/23/2020 | 17,285 | (9) | 645,076 | 21,431 | 10,716 | (2) | 30.08 | 2/26/2023 | 4,430 | (9) | 167,498 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 21,446 | 21,447 | (3) | 27.73 | 2/22/2021 | 16,993 | (10) | 634,179 | 7,542 | 15,087 | (3) | 37.55 | 2/25/2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 14,039 | 42,119 | (4) | 30.09 | 2/21/2022 | 18,741 | (11) | 699,414 | 0 | 37,565 | (4) | 38.22 | 2/24/2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 0 | 32,147 | (5) | 30.08 | 2/26/2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BB&T Corporation | 2016 Proxy Statement 73
| Compensation of Executive Officers |
| (1) | Stock options |
| Stock options awarded in 2013 that vest at the rate of 33 1/3%/year, with vesting dates of 2/26/2014, 2/26/2015 and 2/26/2016. |
| Stock options awarded in 2014 that vest at the rate of 33 1/3%/year, with vesting dates of 2/25/2015, 2/25/2016 and 2/25/2017 subject to satisfaction of a performance-based vesting condition at the end of each year. If the performance criteria are not met, up to 100% of the unvested portion of the stock options is subject to forfeiture. For the 2015 fiscal year, the Compensation Committee determined that the performance criteria had been met. |
| (4) | Stock options awarded in 2015 that vest at the rate of 33 1/3%/year, with vesting dates of 3/15/2016, 3/15/2017 and 3/15/2018 subject to satisfaction of a performance-based vesting condition at the end of each year. If the performance criteria are not met, up to 100% of the unvested portion of the stock options is subject to forfeiture. For the 2015 fiscal year, the Compensation Committee determined that the performance criteria had been met. |
| (5) | Restricted stock units |
| Performance-based restricted stock units awarded in 2013 that vest at the rate of 33 1/3%/year, with vesting dates of 2/26/2014, 2/26/2015 and 2/26/2016, subject to the satisfaction of a performance-based vesting condition at the end of each year. If the performance criteria applicable to restricted stock unit awards are not met once during the three-year vesting period, 20% of the unvested portion of the award is subject to forfeiture. Accordingly and pursuant to SEC rules, 20% of the restricted stock units are shown under column |
| (7) | Performance-based restricted stock units awarded in 2014 that vest at the rate of 33 1/3%/year, with vesting dates of 2/25/2015, 2/25/2016 and 2/25/2017, subject to the satisfaction of a performance-based vesting condition at the end of each year. If the performance criteria are not met, up to 100% of the unvested portion of the restricted stock units is subject to forfeiture. For the 2015 fiscal year, the Compensation Committee determined that the performance criteria had been met. |
| (8) | Performance-based restricted stock units awarded in 2015 that vest at the rate of 33 1/3%/year, with vesting dates of 3/15/2016, 3/15/2017 and 3/15/2018, subject to the satisfaction of a performance-based vesting condition at the end of each year. If the performance criteria are not met, up to 100% of the unvested portion of the restricted stock units is subject to forfeiture. For the 2015 fiscal year, the Compensation Committee determined that the performance criteria had been met. |
| (9) | Performance-based restricted stock units awarded under the Merger Incentive on 12/31/15 that vest at the rate of 33 1/3%/year, with vesting dates of 2/15/2017, 2/15/2018 and 2/15/2019, subject to the satisfaction of a performance-based vesting condition at the end of each year. If the performance criteria are not met, up to 100% of the unvested portion of the restricted stock units is subject to forfeiture. |
OPTION EXERCISESAND STOCK VESTEDIN 20132015(1)
| Option Awards | Stock Awards | Option Awards | Stock Awards | |||||||||||||||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting(2) ($) | Number of Shares (#) | Value Realized on ($) | Number of Shares (#) | Value Realized on ($) | ||||||||||||||||
Kelly S. King | 150,000 | 2,467,005 | N/A | N/A | N/A | N/A | 264,908 | 10,600,457 | ||||||||||||||||
Christopher L. Henson | 81,081 | 1,329,991 | N/A | N/A | 27,027 | 618,256 | 115,696 | 4,630,200 | ||||||||||||||||
Ricky K. Brown | 75,371 | 1,237,924 | N/A | N/A | 26,110 | 592,164 | 114,858 | 4,595,825 | ||||||||||||||||
Clarke R. Starnes III | 25,540 | 448,567 | N/A | N/A | 68,088 | 519,452 | 85,091 | 3,402,996 | ||||||||||||||||
Daryl N. Bible | 60,540 | 825,360 | 17,037 | 516,172 | 49,631 | 635,149 | 85,091 | 3,402,996 | ||||||||||||||||
| (1) | SEC rules require that this table include information for option exercises and stock award vestings that occurred during |
| (2) | Based on the |
74 BB&T Corporation | 2016 Proxy Statement
| Compensation of Executive Officers | |
Name | Plan Name(2) | Number of Years Credited Service(3) (#) | Present Value of Accumulated Benefit ($) | Payments During Last Fiscal Year ($) | Plan Name(2) | Number of Years Credited Service(3) (#) | Present Value of Accumulated Benefit ($) | Payments During Last Fiscal Year ($) | ||||||||||||||||
Kelly S. King | Q | 35 | 1,384,105 | 0 | Q | 35 | 1,673,163 | 0 | ||||||||||||||||
| NQ | 35 | 17,699,705 | 0 | NQ | 35 | 27,285,545 | 0 | |||||||||||||||||
Christopher L. Henson | Q | 29 | 604,742 | 0 | Q | 31 | 899,518 | 0 | ||||||||||||||||
| NQ | 29 | 3,548,819 | 0 | NQ | 31 | 7,290,966 | 0 | |||||||||||||||||
Ricky K. Brown | Q | 35 | 951,346 | 0 | Q | 35 | 1,285,565 | 0 | ||||||||||||||||
| NQ | 35 | 5,423,836 | 0 | NQ | 35 | 10,225,886 | 0 | |||||||||||||||||
Clarke R. Starnes III | Q | 32 | 704,879 | 0 | Q | 34 | 1,036,187 | 0 | ||||||||||||||||
| NQ | 32 | 2,951,534 | 0 | NQ | 34 | 6,553,969 | 0 | |||||||||||||||||
Daryl N. Bible | Q | 6 | 125,119 | 0 | Q | 8 | 232,134 | 0 | ||||||||||||||||
| NQ | 6 | 527,740 | 0 | NQ | 8 | 1,476,085 | 0 | |||||||||||||||||
| (1) | The |
| (2) | Q = BB&T Corporation Pension Plan. |
| NQ = BB&T Corporation Non-Qualified Defined Benefit Plan. |
| (3) | Each plan limits the years of credited service to a maximum of 35 years. Mr. King and Mr. Brown, respectively, have |
NARRATIVETO 20132015 PENSION BENEFITS TABLE
We maintain the BB&T Corporation Pension Plan (the “Pension Plan”) and the BB&T Corporation Non-Qualified Defined Benefit Plan (the “Non-Qualified Defined Benefit Plan”). For a discussion of the valuation
methods and material assumptions applied in quantifying the present value of the current accrued benefit under each of these plans, as set forth in the table above, please refer to Note 13 “Benefit Plans” in the “Notes to Consolidated Financial Statements” included with the Annual Report on Form 10-K for the year ended December 31, 2013,2015, and filed with the SEC on February 26, 2014.25, 2016. A discussion of each of these plans is set forth below.
Tax-Qualified Defined Benefit Plan. The Pension Plan is a tax-qualified defined benefit pension plan for eligible associates. Most associates of BB&T and its subsidiaries who have attained age 21 are eligible to participate in the Pension Plan after completing one year of service. Our contributions to the Pension Plan are computed on an actuarial basis. No participant contributions are permitted. A participant’s annual normal retirement benefit under the Pension Plan at age 65 is an amount equal to 1.0% of the participant’s final average compensation plus .5% of the participant’s final average compensation in excess of Social Security covered compensation, multiplied by the number of years of creditable service completed up to a maximum of 35 years. A participant’s final average compensation is his or her average annual cash compensation, including salary, wages, overtime, bonuses and incentive compensation, for the five consecutive years in the last ten years in which he or she receives compensation that produces the highest average.
Non-Qualified Defined Benefit Plan. The Non-Qualified Defined Benefit Plan is an excess benefit plan designed to provide supplemental pension benefits for certain highly compensated associates, including the NEOs, to the extent that their benefits under the Pension Plan are curtailed due to IRS compensation and benefit limitations. Benefits under the Non-Qualified Defined Benefit Plan are included in the table above.
Early Retirement. Mr. King, Mr. Brown, and Mr. BrownStarnes have met the requirements for early retirement under the Pension Plan and the Non-Qualified Defined Benefit Plan; Mr. Henson Mr. Starnes and Mr. Bible currently are not eligible for early retirement. Associates with at least 10 years of service who have attained age 55 are eligible to retire
BB&T Corporation | 2016 Proxy Statement 75
| Compensation of Executive Officers |
and begin receiving a reduced pension immediately. If an associate begins pension payments prior to normal retirement age, the payments are reduced based on a plan-specified reduction schedule.
20132015 NON-QUALIFIED DEFERRED COMPENSATION
Name | Executive Contributions in 2013 ($)(1) | BB&T Contributions in 2013 ($)(2) | Aggregate Earnings in 2013 ($)(3) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at 12/31/2013 ($)(4) | Executive ($)(1) | BB&T ($)(2) | Aggregate ($)(3) | Aggregate Distributions ($) | Aggregate ($)(4) | ||||||||||||||||||||||||||||
Kelly S. King | 334,542 | 334,542 | 37,058 | 0 | 5,996,350 | 282,529 | 282,529 | 29,999 | 0 | 7,217,514 | ||||||||||||||||||||||||||||
Christopher L. Henson | 244,822 | 142,094 | 194,068 | 0 | 1,783,040 | 208,706 | 120,124 | 121,030 | 0 | 2,805,747 | ||||||||||||||||||||||||||||
Ricky K. Brown | 141,899 | 141,899 | 5,922 | 0 | 1,012,718 | 120,124 | 120,124 | 10,984 | 0 | 1,525,532 | ||||||||||||||||||||||||||||
Clarke R. Starnes III | 130,701 | 111,729 | 81,126 | 0 | 742,940 | 109,522 | 93,404 | 68,906 | 0 | 1,340,596 | ||||||||||||||||||||||||||||
Daryl N. Bible | 248,538 | 111,729 | 257,356 | 0 | 1,225,668 | 214,289 | 93,404 | (44,114 | ) | 0 | 1,846,605 | |||||||||||||||||||||||||||
| (1) | Executive contributions were based on each NEO’s deferral elections and the salaries, |
| (2) | This column represents BB&T’s matching contributions credited to the accounts of the NEOs during |
| (3) | This column reflects earnings or losses on plan balances in |
| (4) | This column represents each NEO’s year-end balance under the Non-Qualified Defined Contribution Plan. These balances include the NEO’s and BB&T’s respective contributions that were included in the summary compensation tables in previous years. Amounts in this column include earnings that were not previously reported in the summary compensation table because they were not above-market or preferential earnings. |
NARRATIVE TO 20132015 NON-QUALIFIED DEFERRED COMPENSATION TABLE
The BB&T Corporation Non-Qualified Defined Contribution Plan (the “Non-Qualified Defined Contribution Plan”) is an excess benefit plan that provides supplemental benefits to certain highly compensatedhighly-compensated associates, including the NEOs, to the extent that their benefits under the 401(k) Plan are curtailed due to the application of certain IRS benefit and compensation limitations. During 2013,2015, eligible associates were permitted to defer up to 50% of their cash compensation under the Non-Qualified Defined Contribution Plan, with certain participants, including each NEO, eligible to receive a matching contribution up to 6% of his or her compensation. All cash compensation is eligible for deferral unless prohibited under Code Section 409A. Plan participants may select deemed investment funds under the Non-Qualified Defined Contribution Plan that are identical to the investment funds offered under the 401(k) Plan with the exception that no deemed investments of BB&T common stock are permitted. Participants make an election upon entering the Non-Qualified Defined Contribution Plan regarding the timing of plan distributions. The two allowable distribution elections are distribution upon termination or distribution upon reaching age 65. The Non-Qualified Defined Contribution Plan also allows for an in-service hardship withdrawal based on facts and circumstances that meet Internal Revenue Service guidelines. The Non-Qualified Defined Contribution Plan also provides participants in our incentive compensation plans with an effective means of electing to defer, on a pre-tax basis, a portion of the payments that they are entitled to receive under such plans.
76 BB&T Corporation | 2016 Proxy Statement
| Compensation of Executive Officers | |
Potential Payments Upon Termination or Change of Control
The potential payments to the NEOs pursuant to existing plans and arrangements in the event of their termination or a change of control at December 31, 20132015 are shown in the table below. As discussed in the “Compensation Discussion and Analysis,” BB&T has entered into employment agreements with each member of Executive Management, including each of the NEOs. Several of the important provisions of these employment agreements are discussed in the “Compensation Discussion and Analysis” and the “Narrative to 20132015 Summary Compensation Table,” bothTable” above, including the noncompetition and nonsolicitation conditions, which generally are a prerequisite to receiving termination payments under the employment agreements.
| Vested and Accrued Benefits(1)(2) ($) (a) | Other than Just Cause or for Good Reason(1) ($) (b) | Change of Control(1)(3) ($) (c) | ||||||||||
Kelly S. King | ||||||||||||
Cash Payments | n/a | 8,012,474 | 8,012,474 | |||||||||
Pension and Supplemental Retirement Benefits | 21,077,837 | n/a | n/a | |||||||||
LTIP Payments(4) | 3,377,484 | n/a | n/a | |||||||||
Acceleration of Equity(6) | 21,918,122 | n/a | n/a | |||||||||
Welfare Benefits(7) | n/a | 17,963 | 17,963 | |||||||||
Outplacement Benefits | n/a | 20,000 | 20,000 | |||||||||
Reduction per Employment Agreement(8) | n/a | n/a | 0 | |||||||||
|
|
|
|
|
| |||||||
Total | 46,373,443 | 8,050,437 | 8,050,437 | |||||||||
|
|
|
|
|
| |||||||
Christopher L. Henson | ||||||||||||
Cash Payments | n/a | 7,869,713 | 7,869,713 | |||||||||
Pension and Supplemental Retirement Benefits | 4,959,281 | n/a | n/a | |||||||||
LTIP Payments(4)(5) | n/a | 1,499,543 | 1,022,605 | |||||||||
Acceleration of Equity(6) | n/a | 8,941,778 | 8,941,778 | |||||||||
Welfare Benefits(7) | n/a | 18,351 | 18,351 | |||||||||
Outplacement Benefits | n/a | 20,000 | 20,000 | |||||||||
Reduction per Employment Agreement(8) | n/a | n/a | (14,434,130 | ) | ||||||||
|
|
|
|
|
| |||||||
Total | 4,959,281 | 18,349,385 | 3,438,317 | |||||||||
|
|
|
|
|
| |||||||
| Voluntary / Retirement ($) | For Cause ($) | Death ($) | Other than Just Cause or for Good Reason ($) | Change of Control ($) | ||||||||||||||||
Kelly King | ||||||||||||||||||||
Severance | — | — | — | 14,468,007 | 14,468,007 | |||||||||||||||
LTIP (1) | — | — | — | — | 3,669,603 | |||||||||||||||
Acceleration of Equity (2) (3) | 7,986,401 | — | 7,986,401 | 7,986,401 | 7,986,401 | |||||||||||||||
Welfare Benefits (4) | — | — | — | 18,865 | 18,865 | |||||||||||||||
Outplacement | — | — | — | 20,000 | 20,000 | |||||||||||||||
Reduction Per Employment Agreement (5) | — | — | — | — | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| Total | 7,986,401 | — | 7,986,401 | 22,493,273 | 26,162,876 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Chris Henson | ||||||||||||||||||||
Severance | — | — | — | 7,869,713 | 7,869,713 | |||||||||||||||
LTIP (1) | — | — | — | — | 1,512,634 | |||||||||||||||
Acceleration of Equity (2) (3) | — | — | 3,295,651 | 3,295,651 | 3,295,651 | |||||||||||||||
Welfare Benefits (4) | — | — | — | 19,254 | 19,254 | |||||||||||||||
Outplacement | — | — | — | 20,000 | 20,000 | |||||||||||||||
Reduction Per Employment Agreement (5) | — | — | — | — | (5,513,572 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | — | — | 3,295,651 | 11,204,618 | 7,203,680 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Ricky Brown | ||||||||||||||||||||
Severance | — | — | — | 7,859,963 | 7,859,963 | |||||||||||||||
LTIP (1) | — | — | — | — | 1,512,634 | |||||||||||||||
Acceleration of Equity (2) (3) | 3,295,651 | — | 3,295,651 | 3,295,651 | 3,295,651 | |||||||||||||||
Welfare Benefits (4) | — | — | — | 19,254 | 19,254 | |||||||||||||||
Outplacement | — | — | — | 20,000 | 20,000 | |||||||||||||||
Reduction Per Employment Agreement (5) | — | — | — | — | (560,226 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| Total | 3,295,651 | — | 3,295,651 | 11,194,868 | 12,147,276 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Ricky K. Brown Cash Payments Pension and Supplemental Retirement Benefits LTIP Payments(4) Acceleration of Equity(6) Welfare Benefits(7) Outplacement Benefits Reduction per Employment Agreement(8) Total Clarke R. StarnesIII Cash Payments Pension and Supplemental Retirement Benefits LTIP Payments(4)(5) Acceleration of Equity(6) Welfare Benefits(7) Outplacement Benefits Reduction per Employment Agreement(8) Total Daryl N. Bible Cash Payments Pension and Supplemental Retirement Benefits LTIP Payments(4)(5) Acceleration of Equity(6) Welfare Benefits(7) Outplacement Benefits Reduction per Employment Agreement(8) Total Vested and
Accrued
Benefits(1)(2)
($) (a) Other than
Just Cause
or for Good
Reason(1)
($) (b) Change
of Control(1)(3)
($) (c) n/a 7,859,963 7,859,963 7,730,869 n/a n/a 1,499,543 n/a n/a 8,815,385 n/a n/a n/a 18,351 18,351 n/a 20,000 20,000 n/a n/a (4,319,835 ) 18,045,797 7,898,314 3,578,479 n/a 6,351,454 6,351,454 4,185,463 n/a n/a n/a 1,128,002 770,111 n/a 6,574,958 6,574,958 n/a 18,351 18,351 n/a 20,000 20,000 n/a n/a (11,047,867 ) 4,185,463 14,092,765 2,687,007 n/a 6,351,454 6,351,454 1,133,816 n/a n/a n/a 1,128,002 770,111 n/a 6,574,958 6,574,958 n/a 18,351 18,351 n/a 20,000 20,000 n/a n/a (11,545,214 ) 1,133,816 14,092,765 2,189,660
| Compensation of Executive Officers |
| Voluntary / Retirement ($) | For Cause ($) | Death ($) | Other than Just Cause or for Good Reason ($) | Change of Control ($) | ||||||||||||||||
Clarke Starnes | ||||||||||||||||||||
Severance | — | — | — | 6,351,454 | 6,351,454 | |||||||||||||||
LTIP (1) | — | — | — | — | 1,147,044 | |||||||||||||||
Acceleration of Equity (2) (3) | 2,503,976 | — | 2,503,976 | 2,503,976 | 2,503,976 | |||||||||||||||
Welfare Benefits (4) | — | — | — | 19,254 | 19,254 | |||||||||||||||
Outplacement | — | — | — | 20,000 | 20,000 | |||||||||||||||
Reduction Per Employment Agreement (5) | — | — | — | — | (207,000 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| Total | 2,503,976 | — | 2,503,976 | 8,894,684 | 9,834,728 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Daryl Bible | ||||||||||||||||||||
Severance | — | — | — | 6,351,454 | 6,351,454 | |||||||||||||||
LTIP (1) | — | — | — | — | 1,147,044 | |||||||||||||||
Acceleration of Equity (2) (3) | — | — | 2,503,976 | 2,503,976 | 2,503,976 | |||||||||||||||
Welfare Benefits (4) | — | — | — | 19,254 | 19,254 | |||||||||||||||
Outplacement | — | — | — | 20,000 | 20,000 | |||||||||||||||
Reduction Per Employment Agreement (5) | — | — | — | — | (4,136,575 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| Total | — | — | 2,503,976 | 8,894,684 | 5,905,153 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| (1) |
| Amounts include life and medical benefits to be paid under the applicable employment agreement. |
| The amount reflects the reduction to the NEO’s |
78 BB&T Corporation | 2016 Proxy Statement
| Compensation of Executive Officers | |
NARRATIVETO POTENTIAL PAYMENTS UPON TERMINATIONOR CHANGEOF CONTROL TABLE
AccruedAmounts shown in the table above assume the NEO terminates employment on December 31, 2015, and Vested Benefits. Eachare estimates of the NEOs has accrued various benefits and awardsamounts the NEO would receive upon termination. The actual amounts to be paid can only be determined at the time of a NEO’s termination of employment. The amounts reported above do not include amounts that would be provided to a NEO under the Corporation’s compensation programs, including stock-based plans and arrangements that are generally available to all salaried employees. The amounts listed above also do not include amounts reported in the “2015 Pension Benefits” and “2015 Nonqualified Deferred Compensation” tables.
Voluntary Termination or Retirement. Upon voluntary termination by a NEO, any unvested awards and benefits (that are not subject to acceleration due to the NEO’s retirement and other broad-based employee benefit plans. Certain of these benefits and awards are fully vested, and each of the NEOseligibility) would generally receive all of their vested benefits and awards if their employment with the Corporation ends. Additionally, as of December 31, 2013, each ofbe forfeited. Messrs. King, Brown and BrownStarnes are over 55 years of age, have more than 10 years of service with the Corporation and are “retirement eligible,eligible.” and therefore,Therefore, upon the end of their employment with the Corporation each would generally be entitled to accelerated vesting of outstanding unvested equity awards, pro rata LTIP payments through their date of termination, and the full balance of their respective retirement accounts. To the extent that the vesting of any performance-based awards was subject to acceleration in accordance with a NEO qualifying as “retirement eligible,” payments under the awards would generally remain subject to the Corporation’s actual performance and Code Section 409A’s six-month waiting period. Any unvested awards and benefits (that are not subject to acceleration due to the NEO’s retirement eligibility and years of service) would be forfeited upon termination.awards.
The Corporation and Branch Bank have the right under the employment agreements to terminate each NEO’s employment at any timeTermination for “Just Cause” (which is generally defined as dishonesty, commission of a felony or willful disobedience)JustCause. If the Corporation or Branch Bank terminates a NEO’s employment for “Just Cause,” the NEO will not have the right to receive any compensation or other benefits under the employment agreement for any period after such termination other than compensation that is earned but unpaid, unreimbursed expenses, and accrued and vested benefits.
Payments Made Upon Death.In the event of the death of any of any of our NEOs, the Corporation and Branch Bank will use their best efforts to accelerate vesting of any unvested benefits to which the NEO may be entitled under any stock-based or other benefit plan or arrangement to the extent permitted by the terms of such plans.
Termination for Other than Just Cause.Cause or Voluntary Termination for Good Reason. If a NEO’s employment is terminated by the Corporation or Branch Bank other than for “Just Cause,” the officer will be entitled (subject to any required six-month delay) to receive monthly payments of cash compensation (including salary and bonuses) equal to one-twelfth of the highest annual amount of such compensation over the past three years, for officers other than Mr. King, and the officer will also receive employee welfare benefits, including health care, and outplacement services, for the full three-yearthree year term (or, for officers other than Mr. King, until age 65 if that is a shorter period). For Mr. King, the amount of severance benefits due, if any, is determined by reference to Mr. King’s average annual cash compensation for the three years prior to the year of termination rather than by reference to the highest such year of cash compensation.
In addition, if any of the NEOs’ employment is terminated by the Corporation or Branch Bank other than for “Just Cause,” the Corporation and Branch Bank will use their best efforts to accelerate vesting of any unvested benefits to which the NEO may be entitled under any stock-based or other benefit plan or arrangement to the extent permitted by the terms of such plan(s).plans. The receipt by any of the NEOs of payments and other benefits under his employment agreement is subject to compliance with the noncompetition and nonsolicitation provisions of the applicable employment agreement, which are described above under the heading “Narrative to 20132015 Summary Compensation Table—Employment Agreements” and any required six-month delay. Voluntary termination by a NEO for “Good Reason” would result in the same payouts to the NEO as described above for a termination for other than “Just Cause.”
Voluntary Termination for Good Reason. The NEOs have the right to terminate their employment voluntarily at any time for “Good Reason” (which is generally defined to include a reduction in the NEO’s status, duties, salary or benefits). If a NEO voluntarily terminates his employment for “Good Reason,” the NEO will be entitled to receive the termination compensation and the other benefits described above under “Termination for Other than Just Cause.”
Change of Control. The employment agreements of NEOs, other than Mr. King, provide that if a NEO’s employment is terminated by the NEO or the Corporation for any reason (other than for “Just Cause” or on account of the death of the NEO) within twelve months after a “Change of Control” of the Corporation, the NEO will be entitled to receive the termination compensation and the other benefits described above under Column (c)column titled, “Change of Control” in the table above. However, in the event of a termination in connection with a “Change of Control,” the NEO generally will not be required to comply with the noncompetition and nonsolicitation provisions of the applicable
employment agreement. Mr. King’s employment agreement, as amended in
BB&T Corporation | 2016 Proxy Statement 79
| Compensation of Executive Officers |
December 2012, requires, in reference to the foregoing,“Change of Control”, that a termination by Mr. King be a termination for “Good Reason” or that a termination by the Corporation or Branch Bank be without “Just Cause” in order for Mr. King to receive such compensation and benefits.
A “Change of Control” is generally deemed to have occurred under the employment agreements if: (a) any person or group acquires 20% or more of the voting securities of the Corporation; (b) during any two-year period, persons who were directors of the Corporation at the beginning of the two-year period cease to constitute at least two-thirds of the Corporation’s Board of Directors; (c) the shareholders of the Corporation approve any merger, share exchange or consolidation of the Corporation with another company that would result in less than 60% of the voting securities outstanding after the transaction being held by persons who were shareholders of the Corporation immediately prior to the transaction; (d) the shareholders of the Corporation approve a plan of complete liquidation or an agreement for the sale or disposition of substantially all of the Corporation’s assets; or (e) any other event occurs that the Corporation’s Board of Directors determines should constitute a Change of Control.
| (a) | any person or group acquires 20% or more of the voting securities of the Corporation; |
| (b) | during any two-year period, persons who were directors of the Corporation at the beginning of the two-year period cease to constitute at least two-thirds of the Corporation’s Board of Directors; |
| (c) | the shareholders of the Corporation approve any merger, share exchange or consolidation of the Corporation with another company that would result in less than 60% of the voting securities outstanding after the transaction being held by persons who were shareholders of the Corporation immediately prior to the transaction; |
| (d) | the shareholders of the Corporation approve a plan of complete liquidation or an agreement for the sale or disposition of substantially all of the Corporation’s assets; or |
| (e) | any other event occurs that the Corporation’s Board of Directors determines should constitute a Change of Control. |
In addition, for the NEOs other than Mr. King, the Corporation’s Board of Directors can determine, in its discretion, that a transaction constitutes a “Merger of Equals,” even though one or more of the above definitions of a “Change of Control” is met, and, upon such determination, the applicable individual will not be entitled to terminate his or her employment agreement voluntarily and receive continued salary and benefits unless “Good Reason” exists.
80 BB&T Corporation | 2016 Proxy Statement
| Compensation of Directors | |
20132015 DIRECTOR COMPENSATION TABLE
Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(2) | All Other Compensation ($) | Total ($) | ||||||||||||||||||
| (a)(1) | (b) | (c) | (d) | (e) | ||||||||||||||||||
John A. Allison IV | 100,500 | 58,873 | — | 159,373 | ||||||||||||||||||
Name (a)(1) | Fees Earned or Paid in Cash ($)(b) | Stock Awards ($)(c)(2)(3) | Total ($)(d) | |||||||||||||||||||
Jennifer S. Banner | 105,000 | 58,873 | — | 163,873 | 94,500 | 97,865 | 192,365 | |||||||||||||||
K. David Boyer, Jr | 88,500 | 58,873 | — | 147,373 | ||||||||||||||||||
Anna Cablik | 104,500 | 58,873 | — | 163,373 | ||||||||||||||||||
K. David Boyer, Jr. | 87,000 | 97,865 | 184,865 | |||||||||||||||||||
Anna R. Cablik | 113,500 | 97,865 | 211,365 | |||||||||||||||||||
Ronald E. Deal | 114,000 | 58,873 | — | 172,873 | 109,500 | 97,865 | 207,365 | |||||||||||||||
James A. Faulkner | 82,500 | 58,873 | — | 141,373 | 98,000 | 97,865 | 195,865 | |||||||||||||||
I. Patricia Henry | 90,000 | 58,873 | — | 148,873 | 87,000 | 97,865 | 184,865 | |||||||||||||||
John P. Howe III, M.D. | 109,500 | 58,873 | — | 168,373 | 112,500 | 97,865 | 210,365 | |||||||||||||||
Eric C. Kendrick | 84,000 | 58,873 | — | 142,873 | 103,500 | 97,865 | 201,365 | |||||||||||||||
Louis B. Lynn | 87,500 | 58,873 | — | 146,373 | ||||||||||||||||||
Louis B. Lynn, Ph.D. | 103,500 | 97,865 | 201,365 | |||||||||||||||||||
Edward C. Milligan | 90,000 | 58,873 | — | 148,873 | 93,000 | 97,865 | 190,865 | |||||||||||||||
Charles A. Patton | 102,000 | 58,873 | — | 160,873 | 94,500 | 97,865 | 192,365 | |||||||||||||||
Nido R. Qubein | 102,000 | 58,873 | 500 | 161,373 | 91,500 | 97,865 | 189,365 | |||||||||||||||
William J. Reuter | 40,000 | — | 40,000 | |||||||||||||||||||
Tollie W. Rich, Jr. | 85,500 | 58,873 | — | 144,373 | 97,500 | 97,865 | 195,365 | |||||||||||||||
Christine Sears | 37,000 | — | 37,000 | |||||||||||||||||||
Thomas E. Skains | 114,000 | 58,873 | — | 172,873 | 108,000 | 97,865 | 205,865 | |||||||||||||||
Thomas N. Thompson | 84,000 | 58,873 | — | 142,873 | 85,500 | 97,865 | 183,365 | |||||||||||||||
Edwin H. Welch, Ph.D | 94,500 | 58,873 | — | 153,373 | ||||||||||||||||||
Edwin H. Welch, Ph.D. | 96,000 | 97,865 | 193,865 | |||||||||||||||||||
Stephen T. Williams | 88,500 | 58,873 | — | 147,373 | 102,000 | 97,865 | 199,865 | |||||||||||||||
| (1) | Kelly S. King is not included in this table because during |
| (2) | In February |
BB&T Corporation | 2016 Proxy Statement 81
| Compensation of Directors |
| (3) | The outstanding stock options and |
Name | Stock Options (#) | RSUs (#) | Stock Options (#) | RSUs (#) | ||||||||
John A. Allison IV | 1,136,817 | 5,402 | ||||||||||
Jennifer S. Banner | 28,842 | 5,402 | 25,792 | 3,344 | ||||||||
K. David Boyer, Jr. | 7,506 | 5,046 | 7,506 | 3,344 | ||||||||
Anna R. Cablik | 33,299 | 5,402 | 31,469 | 3,344 | ||||||||
Ronald E. Deal | 41,962 | 5,402 | 31,969 | 0 | ||||||||
James A. Faulkner | — | 2,327 | 0 | 2,762 | ||||||||
I. Patricia Henry | — | 2,327 | 0 | 2,762 | ||||||||
John P. Howe III, M.D. | 35,019 | 5,402 | 31,969 | 0 | ||||||||
Eric C. Kendrick | — | 2,327 | 0 | 2,762 | ||||||||
Louis B. Lynn | — | 2,327 | ||||||||||
Louis B. Lynn, Ph.D. | 0 | 2,762 | ||||||||||
Edward C. Milligan | — | 2,327 | 0 | 2,762 | ||||||||
Charles A. Patton | — | 2,327 | 0 | 2,762 | ||||||||
Nido R. Qubein | 41,188 | 5,402 | 31,969 | 3,344 | ||||||||
William J. Reuter | 44,735 | 0 | ||||||||||
Tollie W. Rich, Jr. | — | 2,327 | 0 | 2,762 | ||||||||
Christine Sears | 1,058 | 0 | ||||||||||
Thomas E. Skains | 7,506 | 5,046 | 7,506 | 3,344 | ||||||||
Thomas N. Thompson | 21,025 | 5,402 | 21,025 | 3,344 | ||||||||
Edwin H. Welch, Ph.D. | — | 4,072 | 0 | 3,344 | ||||||||
Stephen T. Williams | 21,025 | 5,402 | 21,025 | 3,344 | ||||||||
NARRATIVETO 20132015 DIRECTOR COMPENSATION TABLE
Effective January 1, 2013, the membership of our Board of Directors was expanded to include all of the Board members of Branch Banking and Trust Company as of that date, and vice-versa, resulting in the two Boards having identical memberships. The director compensation shown in the table above reflects total compensation paid to each director for service on the Board of BB&T and Branch Bank. Each non-management director listed above is compensated for his or her role as joint members on the Boards of BB&T and Branch Banking and Trust Company.
In 2013, each of our non-management directors received a $60,000 annual retainer, $70,000 in restricted stock units granted under the terms of the 2012 Incentive Plan and $1,500 for each board and assigned committee meeting attended by the director. A retainer fee of $15,000 was paid to the chair of each of the Audit Committee, the Compensation Committee and the Risk Committee, and a retainer fee of $10,000 was paid to the chair of the Nominating and Corporate Governance Committee for service during 2013. Ronald A. Deal, received a $15,000 retainer fee for his service as our Lead Director, in lieu of $10,000 fee he would have received as chair of the Executive Committee. A director who is also an employee of BB&T or its subsidiaries is not eligible to receive any retainer or fees for service on the Board of Directors.
In addition, the chair2015, each of the Trust Committee of Branch Bank, Mr. Louis B. Lynn, was paid a $5,000 retainer fee.our non-management directors received:
| Amount of Retainer | Position | |
$60,000 | • Each non-management director | |
$15,000 | • Chair of the Audit Committee • Chair of the Compensation Committee • Chair of the Risk Committee • Lead Director | |
$10,000 | • Chair of the Executive Committee • Chair of the Nominating and Corporate Governance Committee | |
$5,000 | • Chair of the Trust Committee of Branch Bank | |
$1,500 for each Board and committee meeting attended | • All non-management directors and assigned committee members |
82 BB&T Corporation | 2016 Proxy Statement
| Compensation of Directors | |
Director Equity Awards. Historically, theThe Board of Directors has providedprovides equity awards to its non-management members as a way of further aligning the interests of the Board with those of the shareholders. ForEquity awards in 2015 were provided to non-employee directors serving during 2013, theas follows:
The Board approved approximately $70,000$100,000 in the value of equity-based compensation, with 100% of the compensation, issued in the form of restrictedRSUs that 100% vest at the end of the year;
Each RSU relates to a contingent share of our common stock units. that is not earned or issued until the vesting criteria are met; and
The calculation for compensation to be delivered to the Board is the same as for our associates, including our NEOs. For more detail on how these amounts are calculated, please see “Incentive Stock Awards” within Section 2 of the Compensation Discussion and Analysis.
BB&T’s 2013 restricted stock unit awards made to members of the Board vest 25% per year on each of the first four annual anniversaries of the date of grant. Each restricted stock unit relates to a contingent share of BB&T common stock that is not earned or issued until the vesting criteria are met.
IfFor RSUs that were granted in 2015, if a non-employee director’s boardBoard service is terminated due to retirement, disability or death, all options and restricted stock unitsunvested RSUs granted to the director becomewould fully vested (and exercisable, in the case of options)vest as of the date of retirement, disability or death. All such options may be exercised in whole or in part over the remaining term of each such option, and all such restricted stock unitsRSUs would be issuable as shares of BB&T common stock. If boardBoard service is terminated for any other reason, then all vested options on the date of termination would be exercisable by the former director for a period of thirty days after the date of termination, and all unvested options and restricted stock unitsany RSUs granted in 2015 that are outstanding as of the date of termination would be forfeited.
In the event that we experience a change of control, all outstanding, unvested options granted to non-employee directors would become fully vested and exercisable pursuant to the terms of each such option. Similarly, upon Upon a change of control, all unvested restricted stock unitsRSUs would become fully vested and a corresponding number of shares of BB&T common stock would be issuable to each director holding such restricted stock units.RSUs.
Non-Employee Directors’ Deferred Compensation Plan. We maintain the BB&T Amended and Restated Non-Employee Directors’ Deferred Compensation Plan which was originally adopted in 1997, and later amended in 2005 (the “Directors’ Plan”). The Directors’ Plan includes the Deferred Compensation Sub-Plan which permits participating non-employee directors to defer 50% or 100% of their retainer fees, meeting fees or both into a deferred savings account. Deferrals are credited with earnings based on the performance of certain investment funds selected by the participant. Deferrals are fully vested at all times and are payable in cash (in lump sum or in installments, at the election of the director) upon termination of the director’s service on the Board (except for hardship withdrawals in limited circumstances). During 2013, nine of our non-employee directors participated in the Deferred Compensation Sub-Plan.
Prior to amendments to the Directors Plan in 2005, non-employees directors were permitted to also defer compensation under a Stock Option Sub-Plan. Under the Stock Option Sub-Plan, non-employee directors were permitted to make an election to defer, prior to the start of the year in which fees were to be earned, 50% or 100% of their retainer fees, meeting fees, or both, and apply that percentage toward the purchase of options to acquire BB&T common stock. Options granted under the Stock Option Sub-Plan prior to 2005 may be exercised during the period beginning on a date six months after the date of grant and ending on the date ten years from the date of grant. On December 31, 2013, two of our non-employee directors held, in the aggregate and subject to the Stock Option Sub-Plan, options to acquire 13,112 shares of BB&T common stock at an average weighted exercise price of $28.08 per share.
Stock Ownership Guidelines. BB&T requires non-employee directors to maintain an amount of common stock equal to 4x5x his or her annual retainer. For purposes of calculating stock ownership, all shares of BB&T common stock held or controlled by the individual are considered, including, but not limited to, direct holdings, shares in qualified and nonqualified individual account plans sponsored by the Corporation, and unvested restricted stock units or restricted shares (but not stock options) granted by the Corporation.considered. All non-employee directors are expected to meet this ownership requirement by the later of (i) five years following the adoption of these guidelines in December 2011 or his or her initial appointment as a director, or (ii) such period of time as it may take to reach the ownership requirement threshold by continuously holding those shares or restricted stock unitsRSUs granted by BB&T pursuant to itsour equity compensation arrangements. Each non-employee director currently satisfies these guidelines.
Consulting Agreements. Mr. Deal and Dr. Qubein have executed consulting agreements with BB&T to provide business development consulting services for a period of ten years following their retirement. Each will receive a sum equal to the annual retainer paid to our directors in effect at the time they begin such service. Such directorsMessrs. Deal and Qubein have agreed not to serve as directors of, or advisers to, businesses that compete with BB&T and its subsidiaries during the time they serve as our consultants. Payments made to Mr. Deal and Dr. Qubein under their respective consulting agreements will not begin until after retirementretired from the Board effective December 31, 2015, and he has begun to receive payments.
BB&T Board.Corporation | 2016 Proxy Statement 83
| Transactions With Executive Officers and Directors |
TRANSACTIONS WITH EXECUTIVE OFFICERSAND DIRECTORS
Loans to Executive Officers and Directors
A number of our directors, members of Executive Management, including our NEOs, and their affiliates are customers of our bank subsidiaries. All extensions of credit made to them are made in the ordinary course of business on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans with persons not related to the lender, and do not involve more than the normal risk of collectability or present other features unfavorable to the lenders.
Pursuant to our Related Person Transactions Policy and Procedures, it is our policy to enter into or ratify Related Person Transactions only when the Board, acting through the Nominating and Corporate Governance Committee, determines that the Related Person Transaction in question is consistent with the best interests of BB&T and its shareholders. Under this written policy, any Related Person Transaction shall be consummated or shall continue only if the Nominating and Corporate Governance Committee (or the Chair, acting pursuant to delegated authority) approves or ratifies the transaction.
The term “Related Person Transaction” generally means a transaction where the amount involved exceeds $120,000 and in which a Related Person has a direct or indirect interest. A “Related Person” generally means (a) a director, director nominee or executive officer of the Corporation; (b) a person who is known to be the beneficial owner of more than five percent of any class of the Corporation’s common stock; and (c) any immediate family member of any of the foregoing persons, which means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law of the director, executive officer, nominee, or more than five percent beneficial owner, and any person (other than a tenant or employee) sharing the household of such director, executive officer, nominee, or more than five percent beneficial owner. Each of theThe transactions described under this caption are “Related Person Transactions” and have been approved and ratified in accordance with the Corporation’sour Related Person Transactions Policy.
To help the Board assess whether a material relationship exists for both independence and related person transactions purposes, our Board adopted guidance with regards to charitable contributions. Under this guidance, a Related Person who serves as an executive officer, director or trustee of a charitable or non-profit organization that receives a contribution from BB&T will not be deemed to have a direct or indirect material interest in the transaction if:
Within the past three years, the aggregate amount of all such contributions during any single fiscal year of the charitable or non-profit organization did not exceed the greater of $1 million or 2% of the charitable or non-profit organization’s consolidated gross revenues for that fiscal year; and
The charitable or non-profit organization is not a family foundation created by the Related Person or an immediate family member of the Related Person.
Consulting Resources and Services, Inc.We have entered into a consulting services contract with Consulting Resources and Services, Inc., a consulting firm owned by the children of Nido R. Qubein, a director, under which Consulting Resources and Services, Inc., formerly known as Creative Services, Inc., advises management by providing organizational development expertise, including the conceptualization and creation of integrated corporate associate training materials and programs. Consulting Resources and Services, Inc., was paid approximately $405,000$417,000 under this contract in 2013.2015. Management believes this contract is on terms as favorable as could have been obtained from other non-affiliated parties. Consulting Resources and Services, Inc., will continue to provide consulting services to us in 20142016 under the terms of its existing contract.
WilcoHess LLC. Branch Bank has a contract to rent space for ATM machines from WilcoHess LLC, a leading operator of travel plazas and convenience stores in the southeastern United States (currently, there are approximately 168 such ATMs). Stephen T. Williams, a director, was the President and Chief Executive Officer of WilcoHess from 2001 through January of 2014 when A.T. Williams Oil Company, for which Mr. Williams serves as the President and is the majority owner, sold its interests in WilcoHess and Mr. Williams stepped down from his WilcoHess positions. For 2013, Branch Bank paid WilcoHess approximately $454,000 pursuant to the terms of the ATM rental contract. Branch Bank expects to continue renting ATM space from WilcoHess for 2014 under the terms of this contract. Mr. Williams is no longer affiliated with WilcoHess.
See also “Consulting Agreements” above, under the “Narrative to 20132015 Director Compensation Table,” each of which constitutes a Related Person Transaction.
84 BB&T Corporation | 2016 Proxy Statement
| Voting and Other Information | |
PVROPOSALOTINGAND 4—AOMENDMENTSTO ARTICLESOFTHER INCORPORATIONTO IMPLEMENTA MAJORITY VOTING STANDARDIN UNCONTESTED ELECTIONSOF DIRECTORSNFORMATION
The Board of Directors has adoptedVoting and recommends that shareholders approve amendments (the “Amendments”) to BB&T’s Restated Articles of Incorporation, as amended (the “Articles”), to implement a majority voting standard for the election of directors in uncontested elections.Annex B, attached to this Proxy Statement, shows the changes to the Articles if the Amendments are approved.Quorum Requirements
The
Pursuant to the provisions of the North Carolina Business Corporation Act, (the “Act”) Section 55-7-28 (Voting for directors; cumulative voting) provides that, unless otherwise specified in a company’s articles of incorporation, directors are elected by a plurality of the votes cast by the shares entitled to vote in the election at a meeting in which a quorum is present. The Articles do not specify the voting standard required in director elections, so BB&T directors are currently elected by a plurality vote. Under plurality voting, director nominees receiving the greatest number of votes “for” election (although not necessarily a majority) are elected as directors.
In 2011, BB&T implemented a Director Resignation Policy designed to address concerns regarding a director potentially being elected while receiving a majority of “withheld” votes. Pursuant to this policy, if a director nominee in an uncontested election receives a greater number of votes “withheld” with respect to his or her election than votes “for” his or her election, then that director nominee is required to offer his or her resignation to the Board of Directors. The Nominating and Corporate Governance Committee (excluding the nominee in question, if applicable) then considers the resignation offer and makes a recommendation to the Board of Directors as to whether to accept the director’s resignation. Within 130 days following certification of the shareholder vote, the Board of Directors makes a final determination as to whether to accept the director’s resignation. An uncontested election would generally be defined as any election of directors in which the number of candidates for election as directors does not exceed the number of directors to be elected.
At BB&T’s 2013 Annual Meeting of Shareholders, our shareholders approved an advisory proposal to amend the Articles to provide that director nominees be elected by the affirmative vote of the majority of votes cast at an annual meeting of shareholders in uncontested elections, with a plurality vote standard retained for contested director elections (i.e., elections where there are more director nominees than the number of directors to be elected). Under a majority voting standard in uncontested director elections, each vote is required to be counted “for” or “against” the director’s election. In order to be elected, the votes cast “for” such nominee’s election must exceed the number of votes cast “against” such nominee’s election. Shareholders will also be entitled to abstain with respect to the election of a director, although abstentions will have no effect in determining whether the required affirmative majority voteFebruary 17, 2016 has been obtained.
After careful considerationfixed as the record date for the determination of the results of this shareholder vote, and after obtaining feedback from several of its largest shareholders on this issue, BB&T’s Board of Directors determined it is in the best interests of BB&T and its shareholders to provide for majority voting in uncontested director elections. The Board of Directors continues to believe that the plurality vote standard should continue to apply in contested director elections. If a majority vote standard is used in a contested election, fewer candidates could be elected to the Board of Directors than the number of authorized board seats if too many directors receive more “against” than “for” votes. Therefore, the Amendments allow for majority voting in uncontested director elections while retaining plurality voting in contested director elections.
Currently, pursuant to North Carolina law and BB&T’s bylaws, an incumbent director who is not re-elected remains in office until the director’s successor is elected and qualified, or until his or her earlier resignation or removal. Therefore, as contemplated in the shareholder approved advisory proposal, BB&T will retain the Director Resignation Policy to address the “holdover” issue if an incumbent director nominee receives less than a majority of votes “for” election.
If approved by BB&T’s shareholders, the Amendments will become effective upon the filing of Restated Articles of Incorporation with the North Carolina Secretary of State. BB&T would make such a filing promptly after the annual meeting. The new majority voting standard would then be applicable to an uncontested election of directors at BB&T’s 2015 annual meeting of shareholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” PROPOSAL 4 — AMENDMENTS TO OUR ARTICLES OF INCORPORATION TO IMPLEMENT A MAJORITY VOTING STANDARD IN UNCONTESTED ELECTIONS OF DIRECTORS.
PROPOSAL 5—SHAREHOLDER PROPOSAL REQUESTING REPORTS WITH RESPECT TO BB&T’S POLITICAL CONTRIBUTIONSAND RELATED POLICIESAND PROCEDURES
The Massachusetts Laborers’ Pension Fund, 14 New England Executive Park, Suite 200, Burlington, MA 01803-5201, beneficial owner of 1,150 sharesholders of BB&T common stock has submittedentitled to notice of and to vote at the following proposal. This proposalAnnual Meeting.
Each share of our common stock issued and outstanding on February 17, 2016 is entitled to one vote on all proposals at the meeting, except that shares held in a fiduciary capacity by Branch Banking and Trust Company (“Branch Bank”) and certain other of our affiliates may only be voted in accordance with the instruments creating the fiduciary capacity. As of the close of business on February 17, 2016, there were 780,470,501 shares of our common stock outstanding and entitled to vote.
In order to obtain a quorum to conduct the Annual Meeting, a majority of shares of our common stock outstanding at the record date must be present in person or by proxy. Shareholders who deliver valid proxies or vote in person at the meeting will be voted on only if properly presentedconsidered part of the quorum. Once a share is represented for any purpose at the annual meeting. The Board of Directors recommends a vote“AGAINST” this proposal. The textmeeting, it is deemed present for quorum purposes for the remainder of the proposalmeeting and for any adjourned meeting. Abstentions and broker “non-votes” (explained below) are counted as it was provided by the proponent,present and without corrections, follows.entitled to vote for purposes of determining a quorum.
Resolved, that the shareholders of BB&T Corporation (“BB&T” or “Company”) hereby request that the Company provide a report, updated semi-annually, disclosing the amounts that the Company has paid or incurred in connection with influencing legislation; participating or intervening in any political campaign on behalf of (or in opposition to) any candidate for public office; and attempting to influence the general public, or segments thereof, with respect to elections, legislative matters or referenda.
The report should include (a) contributions to or expenditures on behalf of political candidates, political parties, political committees and other political entities and (b) the portions of any dues or other payments that are made to a tax-exempt organization for an expenditure or contribution that, if made directly by the Company, would not be deductable under section 162(e)(1) of the Internal Revenue Code. The report should identify each recipient, the amount paid to each, and the purpose of any contribution or expenditure.
Stockholder Supporting Statement
As long-term shareholders of BB&T, we support transparency and accountability in corporate spending on lobbying and political activities. The expenditures upon which we seek a report are those that Congress has said do not warrant a deduction as an ordinary and necessary business expense, namely, lobbying, participation in the political system by supporting or opposing candidates for office, and trying to influence the general public or segment thereof as to elections, legislative matters or referenda. This includes payments to third parties, including trade associations and other tax-exempt groups, which payments are used for expenditures that would not be deductable if made by the company itself.
Disclosure is consistent with public policy and we believe, in the best interest of the company and its shareholders. The Supreme Court’s Citizens United decision recognized the importance of political spending disclosure when it said “[D]isclosure permits citizens and shareholders to react to the speech of corporate entities in a proper way. This transparency enables the electorate to make informed decisions and give proper weight to different speakers and messages.”
Gaps in transparency and accountability may expose the company to reputational and business risks that could threaten long-term shareholder value. Moreover, publicly available data does not provide a complete picture of the Company’s lobbying or political expenditures. Thus the Company’s payments to trade associations for these purposes and undisclosed and unknown, as are any payments to tax-exempt groups that work to influence legislation and political campaigns, as well as public opinion that could affect legislation or elections.
The sums involved can be significant. A 2010 Blumberg story reported that several health insurers donated $86.2 million to the U.S. Chamber of Commerce in 2009-10 for advertisements, polling and grassroots events to drum up opposition to health care reform legislation. A former Federal Election Commission chairman described this figure as “breathtaking”.
We believe that the shareholders need improved disclosure in order to fully evaluate the use of corporate assets on these activities. Thus, we urge you to vote FOR this critical governance reform.
Statement of the Board of Directors in Opposition to the Shareholder ProposalVoting Procedures
There are four ways to vote:
| • | Internet: You may access the proxy materials on the Internet athttp://www.envisionreports.com/BBT |
| • | Telephone:You may call toll-free 1-800-652-VOTE (8683), and follow the instructions on the proxy card or on the Notice of Internet Availability. |
| • | Mail:If you received voting materials by mail, you may vote by signing, dating and mailing the enclosed proxy card in the postage-paid envelope provided. |
| • | In person:A shareholder may vote in person at the Annual Meeting by filling out a ballot. |
Shareholders who vote over the Internet may incur costs, such as telephone and Internet access charges, for which the shareholder is responsible. The Internet and telephone voting facilities for eligible shareholders of record will close at 11:59 p.m., EDT, on April 25, 2016. The Internet and telephone voting procedures are designed to authenticate a shareholder’s identity and to allow a shareholder to vote his or her shares and confirm that his or her instructions have been properly recorded.
THE BOARD OF DIRECTORS BELIEVES THAT THE PROPONENT’S PROPOSAL IS NOT IN THE BEST INTERESTS OF BB&T AND ITS SHAREHOLDERS AND RECOMMENDS A VOTE “AGAINST” PROPOSAL 5.Shareholders who hold shares in “street name,” that is, through a broker, bank or other nominee, should instruct their nominee to vote their shares by following the instructions provided by the nominee.Your vote as a shareholder is important. Please vote as soon as possible to ensure that your vote is recorded.
As a financial holding company whose subsidiaries provide a complete range of financial services, including banking, lending, insurance, trust and wealth management solutions, BB&T is extensively regulated under federal and state laws and regulations. Changes in the current regulatory environment for financial institutions may substantially impact the manner in which the Corporation and its subsidiaries operate and create value for shareholders. For this reason, the Board believes that active participation in the legislative process is in the best interestsWe encourage you to take advantage of the Corporationoptions to vote using the Internet or by telephone. Voting in this manner will result in cost savings for us.If you vote via the Internet or by telephone, please donot return your proxy card.Three of our executives, Kelly S. King, Christopher L. Henson and Robert J. Johnson, Jr., have been designated as the proxies to cast the votes of our shareholders. To document its oversight and governance of BB&T’s political activities,shareholders at the Board of Directors has adopted a Statement of Political Activity, which can be found on our website athttp://www.bbt.com/assets/docs/pdf/bbt-com/about/investor-relations/corporate-governance/reports/statement-of-political-activity.pdf. The decision to adopt the Statement of Political Activity was directly influenced by feedback we received during our shareholder engagement program in 2013.Annual Meeting.
As provided byA proxy that is signed and dated, but which does not contain voting instructions, will be voted as follows:
“FOR” the Statementelection of Political Activity, the Board of Directors oversees BB&T’s political strategy, political contributions and lobbying expenses. BB&T periodically participates in policy debates on issues to support the Corporation’s interests and sponsors employee political action committees, or PACs, which allow associates to pool their financial resources to support federal and state candidates who support effective legislation important to BB&T, its shareholders, clients and communities. However, it is BB&T’s policy not to use corporate funds to make contributions to political candidates, political parties or committees or political committees organized for the advancement of political candidates, including Super PACs or independent expenditure committees. All contributions to the PAC are voluntary, and any associate who contributes to the PAC may request a contribution by the PAC to a political candidate or another PAC. Decisions regarding political contributions are ultimately subject to the oversighteach of the board of18 directors for each PAC, based on the best interests of BB&T.
As required by law, all contributions by BB&T sponsored PACs are reported on a periodic basis to the Federal Election Commission and appropriate state election authorities. In addition, BB&T is required to comply with federal and state laws and regulations regarding the disclosure of certain lobbying activities. All such disclosures of BB&T’s political activities are publicly available, with certain information posted online by the Federal Election Commission. BB&T’s participation in certain business and trade organizations supports a range of purposes including education, professional development, charitable outreach, and political advocacy. The political or lobbying portions of those organizations’ expenditures are subject to public reporting as required by law and regulations. The Board believes that, in light of BB&T’s policy prohibiting the use of corporate funds for political contributions, the fact that BB&T already provides all legally required disclosures regarding political contributions and the fact that much of this information is already publicly available, this proposal is duplicative and unwarranted, and would cause the Corporation to expend unnecessary time and resources without providing any additional benefit to shareholders.
In addition, the same shareholder placed a proposal virtually identical to this onenamed in the proxy statements for each annual meeting that was held from 2010 to 2013. The Board recommended then, as it does now, a vote against those proposals. Eachstatement;
“FOR” the ratification of the last four years,appointment of PricewaterhouseCoopers LLP as BB&T’s shareholders firmly voted against these proposals, demonstrating shareholders’ strong repudiation of this type of proposalauditors for 2016; and support for
“FOR” the Board’s position on this topic. However, in light of the increasing interest fromadvisory vote to approve our shareholders involving the political contribution policy of executive compensation program.
BB&T the Board felt that adopting theCorporation | 2016 Proxy Statement of Political Activities would benefit the Corporation and shareholders by publicly formalizing the Board’s oversight and governance of political spending. Accordingly, the Board believes that the reports called for by this proposal are unnecessary and unwarranted and urges shareholders to vote against the proposal. 85
| Voting and Other Information |
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “AGAINST” PROPOSAL 5.Non-Votes, Abstentions, and Revocations
PROPOSAL 6—SHAREHOLDER PROPOSAL RELATINGTO RECOUPMENTOF INCENTIVE COMPENSATIONA broker or other nominee may generally vote your shares without instruction on routine matters but not on non-routine matters. A broker “non-vote” occurs when your broker submits a proxy for your shares but does not indicate a vote for a particular “non-routine” proposal (Proposals 1 and 3 on your proxy) because your broker does not have authority to vote on that proposal and has not received specific voting instructions from you. Broker non-votes, as well as abstentions, are not counted as votes cast for or against any of the proposals, and therefore will not affect the outcome of the vote.
The following proposal has been submittedproxy may be revoked by a shareholder at any time before it is exercised by filing with the Secretary of BB&T an instrument revoking it, filing a duly executed proxy bearing a later date (including a proxy given over the Internet or by telephone), or by attending the meeting and electing to vote in person.Even if you plan to attend the Annual Meeting, you are encouraged to vote your shares by proxy.
We deliver proxy materials primarily through the Internet, in accordance with SEC rules. In addition to reducing the amount of paper used in producing these materials, this method lowers the costs associated with mailing the proxy materials to shareholders. Shareholders who own shares directly in BB&T and not through a bank, broker or intermediary (“record holders”), will have proxy materials or the Notice of Internet Availability of Proxy Materials delivered directly to their mailing address or electronically if they have previously consented to that delivery method. Shareholders whose shares are held for them by banks, brokerages or other intermediaries (“beneficial holders”), will have the proxy materials or the Notice of Internet Availability of Proxy Materials forwarded to them by the Comptrollerintermediary that holds the shares.
If you received only a Notice of Internet Availability of Proxy Materials by mail, you will not receive a printed copy of the Cityproxy materials unless you request a copy by following the instructions on the notice. The Notice of New York, asInternet Availability of Proxy Materials also contains instructions for accessing and reviewing the custodianproxy materials over the Internet and a trusteeprovides directions for submitting your vote over the Internet.
To reduce the expenses of the New York City Employees’ Retirement System, the New York City Fire Department Pension Fund, the New York City Teachers’ Retirement System, and the New York City Police Pension Fund, and as custodiandelivering duplicate proxy materials to shareholders, we are relying upon SEC rules that permit us to deliver only one set of the New York City Board of Education Retirement System (collectively, the “Systems”). The Systems are the beneficial owners of 2,969,774 sharesapplicable proxy materials to multiple shareholders who share an address, unless we receive contrary instructions from any shareholder at that address. All shareholders sharing an address will continue to receive separate proxy cards based on their registered ownership of BB&T common stock. TheAny shareholder sharing such an address who does not receive an individual proxy statement, our 2015 Annual Report and our Annual Report on Form10-K, may write or call BB&T’s transfer agent as specified below and we will promptly deliver the materials at no cost. For future meetings, a shareholder may request separate copies of our proxy materials or request that we only send one set of these materials if the proponentshareholder is receiving multiple copies, by telephoning our transfer agent at 1-800-213-4314, or writing the City of New York, Municipal Building, One Centre Street, Room 629, New York,transfer agent at: Computershare Trust Company N.A., P.O. Box 43078, Providence, Rhode Island, 02940-3078. If your shares are held in “street name,” you may contact Broadridge Investor Communication Solutions, Inc., Householding Department, 51 Mercedes Way, Edgewood, NY 10007-2341. This proposal will be voted on only if properly presented at the 2014 Annual Meeting of Shareholders. The Board of Directors recommends a vote“AGAINST” this proposal. The text of the proposal as it was provided11717 or by the proponent, and without corrections, follows.calling 1-866-540-7095.
RESOLVED, that shareholdersAny shareholder may obtain a copy of BB&T Corporation (“BB&T”) urgeour 2015 Annual Report and our Annual Report on Form 10-K for the Compensation Committee offiscal year ended December 31, 2015 (including the Board of Directors (the “Committee”) to adopt an incentive compensation recoupment policy (the “Policy”) to provide thatfinancial statements and financial statement schedules), without charge by contacting Computershare at the Committee will (a) review, and determine whether to seek recoupment of, incentive compensation paid, granted or awarded to a senior executive if, in the Committee’s judgment, (i) there has been misconduct resulting in a violation of law or BB&T policy, that causes significant financial or reputational harm to BB&T and (ii) the senior executive either committed the misconduct or failed in his or her responsibility to manage or monitor conduct or risks; and (b) disclosure to shareholders the circumstances of any recoupment, and of any Committee decision not to pursue recoupment in instances that meet criteria (i) and (ii). The Policy should mandate that the above recoupment provisions be included in all future incentive plans and award agreements.
“Recoupment” includes (a) recovery of compensation already paid and (b) forfeiture, recapture, reduction or cancellation of amounts awarded or granted to an executive over which BB&T retains control. The Policy should operate prospectively, so as not to affect any compensation paid, awarded or granted before it takes effect.address above.
Supporting Statement
As long-term shareholders, we believe that compensation policies should promote sustainable value creation. We agree with former GE general counsel Ben Heineman Jr. that recoupment policies with business-related misconduct triggers are “a powerful mechanism for holding senior leadership accountable to the fundamental mission of the corporation: proper risk taking balanced with proper risk management and the robust fusion of high performance with high integrity.” (http://blogs.law.harvard.edu/corpgov/2010/08/13/making-sense-out-of-clawbacks/)
Currently, BB&T does not disclose a comprehensive recoupment, or “clawback”, policy and its 2012 Incentive Plan provides for clawbacks only as necessary to comply with applicable law and/or policies. While the 2012 Plan also grants the Committee authority “to specify in an Agreement that a Participant’s rights, payments, and/or benefits with respect to an Award shall be subject to reduction, cancellation, forfeiture, or recoupment upon the occurrence of certain specified events,” including conduct “detrimental to the business or reputation of BB&T or any Affiliate,” the Committee did not include such an express provision to that effect in Award Agreements subsequently issued under the 2012 Plan.
We view BB&T’s current provisions as too weak. First, they do not on their face explicitly provide for the clawback of incentive compensation for misconduct. Second, neither the 2012 Plan nor any Award Agreement authorizes a clawback against any executive who does not personally commit misconduct. We think there are circumstances in which more senior executives should be held financially accountable for a supervisory failure. Our proposal gives the Committee discretion to decide whether recoupment is appropriate in particular circumstances.
Finally, shareholders cannot monitor enforcement without full disclosure on recoupment decisions, which BB&T’s current provisions do not require. We are sensitive to privacy concerns, and urge BB&T to adopt a policy that does not violate privacy expectations (subject to laws requiring fuller disclosure).
We urge shareholders to vote for this proposal.
Statement of the Board of Directors in Opposition to the Shareholder ProposalProxy Costs
THE BOARD OF DIRECTORS BELIEVES THAT THE PROPONENT’S PROPOSAL IS NOT IN THE BEST INTERESTS OFAll expenses incurred in this solicitation will be paid by BB&T AND ITS SHAREHOLDERS AND RECOMMENDS A VOTE “AGAINST” PROPOSAL 6.
The Board believes that the current structure of BB&T’s compensation programs and incentive compensation recoupment practices are appropriate and effective and provide a balanced approach to aligning the interests of our senior executives and shareholders. Our 2012 Incentive Plan and award agreements filed under that Plan contain broad language regarding clawbacks. Specifically, the Plan provides that the Plan Administrator retains the right at all times to decrease or terminate all awards and payments under the Plan.&T. In addition anyto soliciting proxies by mail, over the Internet and all amounts payable under the Plan or paid under the Planby telephone, our directors, officers and employees, who are subjectalso referred to clawback, forfeiture, and reduction to the extent determined by the Administrator as necessary to comply with applicable law and/or policies adopted by BB&T. Furthermore and as discussed earlier, we have adopted the practice of utilizing a risk scorecard, which the Compensation Committee can use to adjust the short-term and long-term incentive compensation of each member of Executive Management. The risk scorecard provides the Compensation Committee, for each individual Executive Manager, the positive and negative risk outcomes that have influenced each risk category and includes recommended actions with respect to significant negative outcomes.
We have carefully considered this proposal and the current clawback language contained in our Plan and award agreements. We have also considered the Compensation Committee’s ability to adjust compensation through the risk scorecard process and concluded that our clawback authority is broad, appropriately flexible and covers substantially all of the recoupment actions requested by the proposal. We further believe that by not being limited to specific acts of misconduct, our ability to recoup compensation is broader than the proposal in many respects.
In addition, Section 954 of the Dodd-Frank Act mandates that the SEC adopt rules related to the recoupment of executive compensation. The SEC has not yet adopted the required clawback rulemaking. Rather than adopt clawback provisions thatassociates, may ultimately vary from the SEC’s interpretation of Section 954, the Board has determined that a broad clawback provision, like that in the 2012 Incentive Plan, is appropriate and in the best interests of BB&T and our shareholders. Once these rules have been finalized, the Board will reexamine its current policies and determine whether changes are needed.
The proposal also calls for us to report on the results of any deliberations about whether to recoup compensation from a senior executive. The Board believes that such a report is unnecessary and inappropriate. Decisions to disclose information, taking into account applicable legal requirements, the desire of investors to receive information, confidentiality and commercial considerations, and other matters, are properly made on a case-by-case basis. Mandating a report would deprive the Board of the ability to exercise judgment and discretion with respect to the disclosure of potentially sensitive information.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “AGAINST” PROPOSAL 6.86 BB&T Corporation | 2016 Proxy Statement
| Voting and Other Information | |
OTHER MATTERSsolicit proxies on behalf of BB&T without additional compensation. We have engaged D. F. King & Co., Inc., to act as our proxy solicitor and have agreed to pay it approximately $12,500 plus reasonable expenses for such services. Banks, brokerage houses and other institutions, nominees and fiduciaries are requested to forward the proxy materials to beneficial holders and to obtain authorization for the execution of proxies. Upon request, we will reimburse these parties for their reasonable expenses in forwarding proxy materials to beneficial holders.
Proposals for 20152017 Annual Meeting of Shareholders
Under SEC Rule 14a-8, any shareholder desiring to make a proposal to be included in the notice for the 20152017 Annual Meeting of Shareholders and related proxy materials must present such proposal to the following address: Secretary, BB&T Corporation, at its principal office in200 West Second Street, Winston-Salem, North Carolina and27101. Proposals must be received by no later than the close of business on November 17, 2014,2016, and must comply with SEC Rule 14a-8 in order for the proposal to be considered for inclusion in the Corporation’s proxy statement.
Additionally, under BB&T’s bylaws, for other business to be properly brought before an annual meeting by a shareholder even if the proposalwhere such business is not to be included in the Corporation’s proxy statement, the shareholder must givedeliver timely notice in writing to the Secretary of the Corporation at least 120 days, but no more than 150 days (no earlier than October 18, 20142016 and no later than November 17, 2014)2016), in advance of the first anniversary of the notice date of the Corporation’s proxy statement for the preceding year’s annual meeting. Additional time limitations apply in the event of special meetings or annual meetings that are advanced by more than thirty days or delayed by more than sixty days from the first anniversary date of the prior year’s annual meeting.
Article II, Section 10 of the bylaws provides that, as to each matter, the notice must contain (in addition to any information required by applicable law): (i) the name and address of the shareholder of record who intends to present the proposal and of all beneficial owners, if any, on whose behalf the proposal is made; (ii) the number of shares of each class of capital stock of the Corporation beneficially owned by the shareholder of record and such beneficial owners and the nature of such ownership; (iii) a description of the business proposed to be introduced to the meeting of shareholders; (iv) any material interest, direct or indirect, which the shareholder or beneficial owners may have in the business described in the notice; and (v) a representation that the shareholder is a holder of record of shares of the Corporation entitled to vote at the meeting and intends to appear in person or by proxy at the meeting to present the proposal. As used above, “beneficial ownership” or “beneficially own” means the power, directly or indirectly, through any contract, understanding or other arrangement, to exercise voting or investment discretion with respect to shares of any class of capital stock, including, but not limited to, through any derivative position, hedge, swap, securities lending arrangement or other transaction or arrangement relating to any class of capital stock.
Shareholder nominations for director must comply with the notice and informational requirements described above for other shareholder proposals, as well as additional information that would be required under Article II, Section 10(b) of the bylaws and applicable SEC proxy rules. See also “Corporate Governance Matters—Director Nominations” above. The chairman of the meeting may refuse to acknowledge or introduce any shareholder proposal or nomination if notice thereof is not received within the applicable deadlines or does not comply with the bylaws. If a shareholder fails to meet these deadlines or fails to satisfy the requirements of SEC Rule 14a-4, the persons named as proxies will be allowed to use their discretionary voting authority to vote on any such matter as they determine appropriate if and when the matter is raised at the Annual Meeting.
Delivery of Future Meeting MaterialsHow will voting results be reported?
To reduceAfter the expensesAnnual Meeting of delivering duplicate proxy materials to shareholders, we are relying upon SEC rules that permit us to deliver only one set of applicable proxy materials to multiple shareholders who share an address, unless we receive contrary instructions from any shareholder at that address. All shareholders sharing an addressShareholders, BB&T will continue to receive separate proxy cards basedreport final voting results in a Current Report on their registered ownership of BB&T common stock. Any shareholder sharing such an address who does not receive an individual proxy statement and annual report may write or call BB&T’s transfer agent as specified below and receiveForm 8-K filed with the materials at no cost. For future meetings, a shareholder may request separate copies of our proxy statement and annual report or request that we only send one set of these materials if the shareholder is receiving multiple copies, by telephoning our transfer agent at 1-800-213-4314 or writing the transfer agent at: Computershare Trust Company N.A., P.O. Box 43078, Providence, Rhode Island, 02940-3078. If your shares are held in “street name,” you may contact Broadridge Investor Communication Solutions, Inc., Householding Department, 51 Mercedes Way, Edgewood, NY 11717 or by calling 1-800-542-1061.SEC.
Any shareholder may obtain a copy of BB&T’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013 (including the financial statements and financial statement schedules), without charge by contacting Computershare, at the address above.&T Corporation | 2016 Proxy Statement 87
| Voting and Other Information |
As of the date of this proxy statement, the Board does not know of any other matter to be presented for consideration at the 20142016 Annual Meeting of Shareholders other than the items referred to in the proxy statement. In the event that any other matter requiring a vote of the shareholders is properly brought before the meeting for shareholder action, it is the intention of the persons named in the accompanying proxy to vote such proxy in accordance with their best judgment.
By Order of the Board of Directors
Kelly S. King
Chairman and Chief Executive Officer
Dated: March 17, 2014
88 BB&T Corporation | 2016 Proxy Statement
ANNEX A – NON-GAAP FINANCIAL MEASURES
Adjustments to Net Income
As previously described, for the purposes of certifying BB&T’s performance under BB&T’s compensation plans, the Compensation Committee typically makes adjustments to BB&T’s GAAP results to ensure that the participants are compensated for BB&T’s core performance. For 2013,2015, the Compensation Committee made adjustments to BB&T’s GAAP net income, as set forth in the tables below (“Adjusted Net Income”). Typically, the Compensation Committee adjusts BB&T’s GAAP net income for gains or losses on sales/purchases of business, merger-related and restructuring charges and similar non-core performance items, on an after-tax basis.a pre-tax basis, provided the adjustment is not solely a tax-related item. These adjustments are made so that participants are compensated for BB&T’s core performance and are neither penalized nor rewarded for one-time charges, unusual gains, or similar non-core events. To the extent practicable, the Compensation Committee also makes similar adjustments to the reported performance of Peer Group members for awards that measure BB&T’s performance relative to the Peer Group.
The adjustments for 20132015 impact the Annual Incentive Award’s performance metrics, earnings per share and return on assets, and the three-year average ROCE for LTIP purposes. BB&T derives each of these non-GAAP performance metrics from its Adjusted Net Income, which is a non-GAAP financial measure, and accordingly, each of these adjusted financial measures is determined by methods other than in accordance with GAAP.
The adjusted earnings per share and return on assets measures are each calculated in the same manner as their GAAP counterparts, except that Adjusted Net Income for the applicable performance metric is substituted for its GAAP counterpart in each calculation. Please refer to the adjustments table and accompanying narratives for additional detail on the ROCE calculations and GAAP reconciliation.
20132015 ADJUSTED NET INCOMEFOR ANNUAL INCENTIVE AWARD
| Net Income Adjustments ($ in millions) | Return on Assets Measure | Earnings per Share Measure | ||||||||||||||
| Return on Assets Measure | Earnings Per Share Measure | |||||||||||||||
2013 GAAP Net Income(1) | 1,729 | — | ||||||||||||||
2013 GAAP Net Income Available to Common Shareholders(1) | — | 1,562 | ||||||||||||||
| 2015 GAAP Net Income(1) | 2,123 | |||||||||||||||
| 2015 GAAP Net Income Available to Common Shareholders(1) | 1,936 | |||||||||||||||
Compensation Committee Approved Adjustments | ||||||||||||||||
Securities (Gains)/Losses(2) | — | (51 | ) | |||||||||||||
Tax litigation charges | 516 | 516 | ||||||||||||||
Gain on sale of business | (31 | ) | (31 | ) | ||||||||||||
FHLB debt extinguishment | 172 | 172 | ||||||||||||||
Tax litigation charges(2) | (172 | ) | (172 | ) | ||||||||||||
Net Loss on sale of business | 21 | 21 | ||||||||||||||
Merger-related and restructuring charges, net | 46 | 46 | 165 | 165 | ||||||||||||
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Adjustments Subtotal | 531 | 480 | 186 | 186 | ||||||||||||
Tax Effect of Adjustments(3) | (6 | ) | 13 | |||||||||||||
Tax Effect of Adjustments(3) | (51 | ) | (51 | ) | ||||||||||||
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Adjusted Net Income | 2,254 | 2,055 | 2,258 | 2,071 | ||||||||||||
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| (1) | The Compensation Committee uses GAAP net income available to common shareholders to calculate earnings per share performance as this reflects income attributable to each share of common stock. The Compensation Committee uses GAAP net income for return on assets performance because the return on assets metric measures relative Peer Group performance. |
| (2) |
| (3) | GAAP net income includes the effect of applicable taxes. The Compensation Committee’s approved adjustments are pre-tax |
As described in the Compensation Discussion and Analysis, in approving the Merger Incentive payment, the Compensation Committee decided that the earnings attributable to the legacy Susquehanna operations following the merger (which occurred on August 1, 2015) should be removed from the Annual Incentive’s EPS performance measure as relates to Executive Management. Due primarily to the conversion of the accounting systems, it was necessary to estimate the impact of Susquehanna’s earnings on BB&T’s 2015 results. The methodology used pre-systems conversion results, adjusted primarily for loan accretion and merger cost savings. Using this methodology, Adjusted Net Income for EPS purposes was reduced by $108 million and average diluted shares were reduced by 19 million.
20132015 ANNUAL INCENTIVE AWARD PERFORMANCE METRICS
Performance Metric | GAAP Performance Metric | Performance Metric Calculated Using Adjusted Net Income | ||||||||||||||
Earnings per share(1) | $ | 2.19 | $ | 2.88 | ||||||||||||
Return on assets(2) | 0.95 | % | 1.24 | % | ||||||||||||
| Performance Metrics | GAAP Performance Metric | Performance Metric Calculated Using Adjusted Net Income | Performance Metric Excluding SUSQ | |||||||||||||
Earnings per share(1) | $2.56 | $2.73 | $2.66 | |||||||||||||
Return on assets(2) | 1.08% | 1.14% | N/A | |||||||||||||
| (1) |
| (2) |
BB&T’s 2011-20132013-2015 LTIP award references BB&T’s three-year ROCE performance. BB&T derives this non-GAAP performance metric from its GAAP net income available to common shareholders for each year of the performance period. The adjustments include the items detailed in the table below.
LTIP ADJUSTMENTS
| Return on Common Equity Measure ($ in millions) | Return on Common Equity Measure ($ in millions) | |||||||||||||||||||||||
| 2013 | 2012 | 2011 | 2015 | 2014(3) | 2013 | |||||||||||||||||||
GAAP Net Income Available to Common Shareholders(1) | 1,562 | 1,916 | 1,289 | |||||||||||||||||||||
| GAAP Net Income Available to Common Shareholders(1) | 1,936 | 2,003 | 1,562 | |||||||||||||||||||||
Compensation Committee Approved Adjustments | ||||||||||||||||||||||||
Tax litigation charges | 516 | — | — | |||||||||||||||||||||
Gain on sale of business | (31 | ) | — | — | ||||||||||||||||||||
Merger-related and restructuring charges, net | 46 | 68 | 16 | |||||||||||||||||||||
| -FHLB debt extinguishment | 172 | 122 | — | |||||||||||||||||||||
| -Gain on sale of TDRs | — | (42 | ) | — | ||||||||||||||||||||
| -Tax litigation charges (benefits)(2) | (172 | ) | (67 | ) | 829 | |||||||||||||||||||
| -Net (gain) loss on sale of business | 21 | (1 | ) | (31 | ) | |||||||||||||||||||
| -Merger-related and restructuring charges, net | 165 | 46 | 46 | |||||||||||||||||||||
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Adjustments Subtotal | 531 | 68 | 16 | 186 | 58 | 844 | ||||||||||||||||||
Tax Effect of Adjustment | (6 | ) | (25 | ) | (6 | ) | (51 | ) | (20 | ) | (319 | ) | ||||||||||||
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Adjusted Net Income | 2,087 | 1,959 | 1,299 | 2,071 | 2,041 | 2,087 | ||||||||||||||||||
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GAAP Average Shareholders’ Equity | 21,890 | 19,477 | 17,267 | 25,871 | 23,991 | 21,890 | ||||||||||||||||||
Preferred stock | (2,443 | ) | (920 | ) | n/a | |||||||||||||||||||
Noncontrolling interest | (50 | ) | (56 | ) | (59 | ) | ||||||||||||||||||
| -Preferred stock | (2,603 | ) | (2,603 | ) | (2,443 | ) | ||||||||||||||||||
| -Noncontrolling interest | (62 | ) | (71 | ) | (50 | ) | ||||||||||||||||||
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Average Common Shareholders’ Equity | 19,397 | 18,501 | 17,208 | 23,206 | 21,317 | 19,397 | ||||||||||||||||||
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GAAP ROCE | 8.06 | % | 10.35 | % | 7.49 | % | 8.34 | % | 9.40 | % | 8.06 | % | ||||||||||||
GAAP 3-year average ROCE | 8.63 | % | 8.58 | % | ||||||||||||||||||||
Adjusted ROCE | 10.76 | % | 10.59 | % | 7.55 | % | 8.93 | % | 9.58 | % | 10.76 | % | ||||||||||||
Adjusted 3-year average ROCE | 9.63 | % | 9.73 | % | ||||||||||||||||||||
| (1) | The Compensation Committee uses GAAP net income available to common shareholders to calculate return on common equity performance as this reflects income attributable to common equity. |
| (2) | Tax litigation charges are shown as pre-tax equivalents. |
| (3) | Effective January 1, 2015, BB&T retrospectively adopted new guidance related to the accounting for investments in qualified affordable housing projects. Prior periods have not been revised to reflect the adoption of this new guidance. Awards for the 2014 fiscal year were based upon operating results for BB&T as originally reported. |
These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.
ANNEX B – AMENDMENTS TO ARTICLES OF INCORPORATION
Amended languagePrice/Tangible book—tangible book value per share generally represents the amount of money an investor would theoretically receive for each share if a company were liquidated at the values stated on the company’s balance sheet, excluding goodwill and other intangibles. The ratio of stock price to tangible book value is included below and deleted language is indicated by strike-outs.
PROPOSED AMENDMENTS TO ARTICLE V OF THE
RESTATED ARTICLES OF INCORPORATION, AS AMENDED, OFa non-GAAP measure. BB&T CORPORATION
The proposed amendments&T’s management believes investors use this measure to evaluate the ratio of the stock price to the Articles would, if approved, amend Article Vbook value per share without the impact of the Articles to read as follows:
ARTICLE V
The number and term of directors of the Corporation shall be fixed by or in accordance with the Bylaws.Each director shall be elected by a majority of the votes cast with respect to the director by the shares represented in person or by proxy and entitled to vote at any meeting for the election of directors at which a quorum is present; provided, however, that, in the event of a contested election of directors, directors shall be elected by the vote of a plurality of the votes represented in person or by proxy at any such meeting and entitled to vote on the election of directors. For purposes of this Article V: (a) a majority of the votes cast means that the number of shares voted “for” a director must exceed the number of votes cast “against” that director; provided that neither abstentions nor broker non-votes will be deemed to be votes “for” or “against” a director’s election; and (b) a contested election shall mean any election of directors in which the number of candidates for election as directors exceeds the number of directors to be elected and the excess number is the result of a timely nomination by a shareholder or shareholders in accordance with Article II, Section 10 of the Bylaws, as determined by the Secretary of the Corporation as of the close of the applicable notice of nomination period set forth in said Article II, Section 10. The number and term of directors of the Corporation and the filling of any vacancy occurring in the Board of Directors shall be fixed by or in accordance with the Bylaws.intangible assets.
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Date and | 11:00 | |||
| Embassy Suites, 460 North Cherry Street, Winston-Salem, NC 27101 | |||
| Who May Attend: | • | Record holders: Shareholders who own shares of BB&T common stock directly and not through a bank, broker or intermediary.
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• | Beneficial holders: Shareholders whose shares of BB&T common stock are held for them by banks, brokerages or other intermediaries.
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• | Authorized representatives of entities who are beneficial holders of BB&T common stock. | |||
| Required Documentation: | In addition to a valid photo ID,
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• | Record holders: The top portion of your proxy card, which will serve as an admission ticket.
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• | Beneficial holders: Evidence of your ownership,
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• | Authorized representatives of beneficial holders: | |||
| Prohibited Items: | • | The use of cameras (including cellular phones or PDAs with photographic and/or video recording capabilities), recording devices and other electronic devices, cellular phones or PDAs is strictly prohibited.
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• | Knives, firearms, any item that could be used as a weapon and any other device or instrument that may be potentially disruptive are strictly prohibited. | |||
| Admissions: | • | BB&T representatives will be at the entrance to the Annual Meeting and these representatives will have the authority, on BB&T’s behalf, to determine whether the admission policy and procedures are being followed and whether you will be granted admission to the Annual Meeting. | ||
002CSN5D81 | ||
C0001125050 |
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Admission Ticket | |||||||||||
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Electronic Voting Instructions | ||||||||||||
You can vote by Internet or telephone! | ||||||||||||
| Available 24 hours a day, 7 days a week! | ||||||||||||
Instead of mailing your proxy, you may choose one of the two voting methods outlined below to vote your proxy. | ||||||||||||
VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR. | ||||||||||||
Proxies submitted by the Internet or telephone must be received by 11:59 p.m., Eastern Daylight Time, on April | ||||||||||||
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Vote by Internet | |||||||||||
• Go towww.envisionreports.com/BBT | ||||||||||||
• Or scan the QR code with your smartphone | ||||||||||||
• Follow the steps outlined on the | ||||||||||||
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| Vote by telephone
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Using ablack inkpen, mark your votes with anXas shown in this example. Please do not write outside the designated areas. | x | • Call toll free 1-800-652-VOTE (8683) within the USA, US territories & Canada on a touch tone telephone | ||||||||||
• Follow the instructions provided by the recorded message | ||||||||||||
q IF YOU HAVE NOT VOTED VIA THE INTERNETOR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q
A | Election of Directors — The Board of Directors recommends a voteFOR all nominees listed. | |||||||
1. The election of eighteen directors, each for a one-year term expiring at the 2017 Annual Meeting of Shareholders. | + | |||||||||||||||||||||||
| For | Against | Abstain | For | Against | Abstain | For | Against | Abstain | ||||||||||||||||
| 01 - Jennifer S. Banner | ¨ | ¨ | ¨ | 07 - Kelly S. King | ¨ | ¨ | ¨ | 13 - Tollie W. Rich, Jr. | ¨ | ¨ | ¨ | |||||||||||||
| 02 - K. David Boyer, Jr. | ¨ | ¨ | ¨ | 08 - Louis B. Lynn, Ph.D. | ¨ | ¨ | ¨ | 14 - Christine Sears | ¨ | ¨ | ¨ | |||||||||||||
| 03 - Anna R. Cablik | ¨ | ¨ | ¨ | 09 - Edward C. Milligan | ¨ | ¨ | ¨ | 15 - Thomas E. Skains | ¨ | ¨ | ¨ | |||||||||||||
| 04 - James A. Faulkner | ¨ | ¨ | ¨ | 10 - Charles A. Patton | ¨ | ¨ | ¨ | 16 - Thomas N. Thompson | ¨ | ¨ | ¨ | |||||||||||||
| 05 - I. Patricia Henry | ¨ | ¨ | ¨ | 11 - Nido R. Qubein | ¨ | ¨ | ¨ | 17 - Edwin H. Welch, Ph.D. | ¨ | ¨ | ¨ | |||||||||||||
| 06 - Eric C. Kendrick | ¨ | ¨ | ¨ | 12 - William J. Reuter | ¨ | ¨ | ¨ | 18 - Stephen T. Williams | ¨ | ¨ | ¨ | |||||||||||||
B | Management Proposals — The Board of Directors recommends a voteFORProposals 2 and 3. | |||||||
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To ratify the appointment of PricewaterhouseCoopers LLP as the Corporation’s independent registered public accounting firm for 2016. | For
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¨ | Abstain
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To vote on an advisory resolution to approve BB&T’s executive compensation program, commonly referred to as a “say on pay” vote. | For
¨ | Against
¨ | Abstain
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IF VOTING BY MAIL, PLEASE COMPLETE SECTIONS A - D ON BOTH SIDES OF THIS CARD.
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ADMISSION TICKET | ||||||||
| PLEASE DETACH BELOW AND BRING WITH YOU IF YOU | ||||||||
| PLAN TO ATTEND THE ANNUAL MEETING IN PERSON | ||||||||
VOTE BY INTERNET OR TELEPHONE | ||||||||
| 24 Hours a Day—7 Days a Week | ||||||||
It’s Fast and Convenient | ||||||||
Important notice regarding the Internet availability of
proxy materials for the Annual Meeting of shareholders.
The Proxy Statement, BB&T’s Annual Report and Form 10-K
are available at: www.envisionreports.com/BBT
q IF YOU HAVE NOT VOTED VIA THE INTERNETOR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.q
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¨ | For All EXCEPT - To withhold a vote for one or more nominees, mark the box to the left and the corresponding numbered box(es) to the right.
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| 2. | To ratify the appointment of PricewaterhouseCoopers LLP as the Corporation’s independent registered public accounting firm for 2014. |
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¨ | 3. | To vote on an advisory resolution to approve BB&T’s executive compensation program, commonly referred to as a “say on pay” vote. |
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| 4. | To vote on an amendment to BB&T’s Articles of Incorporation to implement a majority voting standard in uncontested director elections. |
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| For | Against | Abstain | For | Against | Abstain | |||||||||||||
| 5. | To vote on a shareholder proposal requesting reports with respect to BB&T’s political contributions and related policies and procedures, if properly presented at the Annual Meeting. |
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¨ | 6. | To vote on a shareholder proposal regarding recoupment of incentive compensation to senior executives, if properly presented at the Annual Meeting. |
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IF VOTING BY MAIL, PLEASE COMPLETE SECTIONS A - E ON BOTH SIDES OF THIS CARD.
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Important notice regarding the Internet availability of
proxy materials for the Annual Meeting of shareholders.
The Proxy Statement and BB&T’s Annual Report on Form 10-K
are available at: www.envisionreports.com/BBT
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| Proxy — BB&T CORPORATION | + | |||||
ANNUAL MEETING APRIL |
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF BB&T CORPORATION
The undersigned shareholder of BB&T Corporation, a North Carolina corporation (“BB&T”), appoints Kelly S. King, Christopher L. Henson and Robert J. Johnson, Jr., or any of them, with full power to act alone, the true and lawful attorneys-in-fact of the undersigned, with full power of substitution and revocation, to vote all shares of common stock of BB&T that the undersigned is entitled to vote at the annual meeting of shareholders of BB&T to be held at the Embassy Suites, 460 North Cherry Street, Winston-Salem, NCNorth Carolina, 27101, on Tuesday, April 29, 201426, 2016 at 11:00 a.m. Eastern Daylight Time and at any adjournment thereof, with all powers the undersigned would possess if personally present, as stated on the reverse side hereof.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE DIRECTIONS OF THE UNDERSIGNED. IF NO INSTRUCTION TO THE CONTRARY IS GIVEN, THIS PROXY WILL BE VOTED:
“FOR ALL”FOR” EACH OF THE NOMINEES FOR DIRECTOR DESCRIBED IN PROPOSAL 1;
“FOR” PROPOSALS 2 3 AND 4;3; AND
“AGAINST” PROPOSALS 5 AND 6.
IF ANY OTHER BUSINESS IS PRESENTED AT THE ANNUAL MEETING, THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE BEST JUDGMENT OF THE NAMED ATTORNEYS-IN-FACT.
THE TOP PAGE OF THE PROXY CARD SERVES AS YOUR ADMISSION TICKET TO THE ANNUAL MEETING.
The undersigned acknowledges receipt of the Notice of the BB&T Annual Meeting and Proxy Statement.
| Non-Voting Items |
Change of Address— Please print new address below.
| Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below |
Please insert date of signing. Sign exactly as the name appears on the reverse. Where stock is issued in two or more names, all names should sign. If signing as attorney, administrator, executor, trustee or guardian, give full title as such. A corporation should sign by an authorized officer and affix seal.
| Please insert date of signing. Sign exactly as the name appears on the reverse. Where stock is issued in two or more names, all names should sign. If signing as attorney, administrator, executor, trustee or guardian, give full title as such. A corporation should sign by an authorized officer and affix seal. | ||||||||
Date (mm/dd/yyyy) — Please print date below. | Signature 1 — Please keep signature within the box. | Signature 2 — Please keep signature within the box. |
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| IF VOTING BY MAIL, PLEASE COMPLETE SECTIONS A - | ||||||||
