UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
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FIFTH THIRD BANCORP
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(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
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38 FOUNTAIN SQUARE PLAZA
CINCINNATI, OHIO 45263
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
March 5, 20156, 2018
To the Shareholders of Fifth Third Bancorp:
You are cordially invited to attend the Annual Meeting of the Shareholders of Fifth Third Bancorp to be held at the Regency Ballroom,Jarson-Kaplan Theater, located onat the third floor ofAronoff Center for the Hyatt Regency Cincinnati,Arts, at 151 West 5th650 Walnut Street, Cincinnati, Ohio on Tuesday, April 14, 201517, 2018 at 11:30 a.m. Easterneastern daylight savingssaving time for the purposes of considering and acting upon the following:
(1) | Election of all members of the Board of Directors to serve until the Annual Meeting of Shareholders in |
(2) | Approval of the appointment of the firm of Deloitte & Touche LLP to serve as the independent external audit firm for the Company for the year |
(3) | An advisory approval of the Company’s executive compensation. |
(4) | An advisory vote to determine whether the shareholder vote on the compensation of the Company’s executives will occur every 1, 2, or 3 years. |
(5) | Transaction of such other business that may properly come before the Annual Meeting or any adjournment thereof. |
Shareholders of record at the close of business on February 23, 20152018 will be entitled to vote at the Annual Meeting.
All shareholders who find it convenient to do so are invitedEven if you plan to attend the Annual Meetingmeeting in person. In any event,person, please vote at your earliest convenience by signing and returning the proxy card you receive or by voting over the internet or by telephone.
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If you plan to attend the Annual Meeting:
Please note that space limitations make it necessary to limit attendance only to shareholders of the Company and the holders of shareholder proxies. Admission to the Annual Meeting will be on afirst-come, first-served basis and will require presentation of a valid driver’s license or other federal or state-issued photo identification card. Shareholders of record must bring the admission ticket attached to their proxy card or the Notice of Internet Availability they receive in order to be admitted to the meeting. “Street name” shareholders must bring a notice regarding the availability of proxy materials, the top portion of a voting instruction form, or a recent proxy or letter from the bank, broker, or other intermediary that holds the beneficial holders’ shares and which confirms the beneficial holders’ ownership of those shares. Registration and seating will begin at approximately 11:00 a.m. eastern daylight saving time. Communication and recording devices will not be permitted at the Annual Meeting. A copy of the regulations for conduct at the Annual Meeting is attached as Annex A to the proxy statement.
If you have any questions or need assistance voting your shares, please call D.F. King & Co., Inc., which is assisting us, toll-free at 1-877-478-5041.1-800-488-8035.
By Order of the Board of Directors
Mary E. TuukJelena McWilliams
BoardCorporate Secretary
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38 Fountain Square Plaza
Cincinnati, Ohio 45263
20152018 Proxy Statement
This proxy statement, notice of the 20152018 Annual Meeting, notice of internet availability, form of proxy, and the Annual Report of the Company for the year 20142017 are first being sent or made available to shareholders on or about March 5, 2015.6, 2018.
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What is this document?
This document is called a proxy statement. This proxy statement includes information regarding the matters to be acted upon at the 20152018 Fifth Third Bancorp Annual Meeting of Shareholders (the “Annual Meeting”) and certain other information required by the Securities and Exchange Commission (the “SEC”) and the rules of the Nasdaq Global Select Market (“Nasdaq”).
When is the Annual Meeting and where will it be held?
The Annual Meeting will be held on Tuesday, April 14, 2015,17, 2018, at the Regency Ballroom,Jarson-Kaplan Theater, located on at
the third floor ofAronoff Center for the Hyatt Regency Cincinnati,Arts, at 151 West 5th650 Walnut Street, Cincinnati, Ohio at 11:30 A.M. Eastern Daylight Savings Time.a.m. eastern daylight saving time.
Why am I being provided this proxy statement?
Fifth Third Bancorp (the “Company” or “Fifth Third”) is required by the SEC to give you, or provide you access to, this proxy statement because it is soliciting your proxy to vote your shares of Fifth Third stock at the Annual Meeting. The enclosed proxy statement summarizes information you need in order to vote at the Annual Meeting.
What is a proxy?
A proxy is your designation of another person to vote stock you own. That other person is called a proxy. If you designate someone as your proxy in a written document, that document also is called a proxy or a proxy card. When you designate a proxy, you may also may direct the proxy how to vote your shares. Three Fifth Third directors, James P. Hackett, Kevin T. KabatEmerson L. Brumback, Greg D. Carmichael, and Marsha C. Williams, have been designated as the proxies to cast the votes of Fifth Third’s shareholders at the Annual Meeting.
What actions are shareholders approving at the Annual Meeting?
Election of DirectorsDirectors.. Twelve director nominees have been recommended for election to the Board of Directors (the “Board”) by the Nominating and Corporate Governance Committee of the Board. The nominees for election are: Nicholas K. Akins, B. Evan Bayh III, Jorge L. Benitez, Katherine B. Blackburn, Ulysses L. Bridgeman, Jr., Emerson L. Brumback, James P. Hackett,Jerry W. Burris, Greg D. Carmichael, Gary R. Heminger, Jewell D. Hoover, Kevin T. Kabat,Eileen A. Mallesch, Michael B. McCallister, Hendrik G. Meijer, and Marsha C. Williams. Information about these nominees may be found in the proxy statement section titled “Election of Directors.”
Company Proposal 1: Ratification of AuditorsAuditors.. This is a proposal to ratify the reappointment of Deloitte & Touche LLP as the Company’sour independent external audit firm for 2015.2018. This approval is not required by law to appoint an independent external audit firm, but this appointment is submitted by the Audit Committee in order to give shareholders a voice in the designation of the independent external audit firm. If this resolution is rejected by the shareholders, then the Audit Committee will reconsider its choice of an independent external audit firm. Even if this resolution is approved, the Audit Committee, at its discretion, may direct the appointment of a different independent external audit firm at any time during the year if it determines that such a change would be in our best interests and the best interestsinterest of the Company and itsour shareholders.
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| QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING |
Company Proposal 2: Advisory Approval of Executive CompensationCompensation.. Proposal 2 is an annual advisory vote to approve the compensation of Fifth Third’sour named executive officers or NEOs.(“NEOs”). The Board will strongly consider the outcome of this advisory vote in determining the compensation of such executives. In 2014, over2017, 94% of Fifth Third’sour shareholders who voted approved the Company’scast a vote on our executive compensation program.program voted to approve it.
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
Company Proposal 3: Advisory Vote to Determine Frequency of Executive Compensation VotesVotes.. Proposal 3 is an advisory vote to determine how often shareholders will be given the opportunity to approve the compensation of the Company’sour NEOs: either every one, every two, or every three years. The Board will strongly consider the outcome of these votes in determining how often the shareholders are provided a say on pay vote. At the 20142017 Annual Meeting, Fifth Third’sour shareholders supported the Board’s recommendation that shareholders be provided the option to cast an advisory vote every one year on the compensation of the Company’sour NEOs. Accordingly, the Board decided to hold a “say on pay” vote annually.
What vote is required to approve the proposals considered at the Annual Meeting?
Election of DirectorsDirectors.
As long as cumulative voting is not in effect, in an uncontested election of directors, those nomineeseach nominee for director receiving a greater number of votes “for” his or her election than votes “against” his or her election will be elected as directors.a director. In the event of a contested election or if cumulative voting is in effect, the twelve nominees receiving the greatest number of votes “for” his or her election shall be elected. SharesAbstentions and shares not voted by brokers and other entities holding shares on behalf of beneficial owners will not be counted and will have no effect on the outcome of the election.
All Other ProposalsProposals.
All other proposals at the Annual Meeting require the affirmative vote of a majority of the votes entitled to be castshares present in person or by the holders of the Company’s common stock present or representedproxy at the Annual Meeting and entitled to vote.vote on the proposal. Abstentions have the same effect as a vote cast against a proposal. Shares not voted by brokers andor other entities holding shares on behalf of beneficial owners will have no effect on the outcome.
It is important to vote your shares at the Annual Meeting.
Who may vote and what constitutes a quorum at the meeting?
Holders of Fifth Third common stock on February 23, 20152018 are entitled to vote on every matter that is to be voted on at the Annual Meeting.
In order to conduct the Annual Meeting, a majority of shares of Fifth Third common stock entitled to vote at the Annual Meeting on every matter that is to be voted on must be present in person or by proxy. This is called a quorum. Shareholders who deliver valid proxies or vote in person at the meeting will be considered part of the quorum. Once a share is represented for any purpose at the meeting, it is deemed present for quorum purposes for the remainder of the meeting and for any adjourned meeting. Abstentions will be counted as present and entitled to vote for purposes of determining a quorum. Broker “non-votes”“non-votes” (which are explained below) are counted as present and entitled to vote for purposes of determining a quorum only for routine matters.quorum.
How many votes do I have?
Each share of Fifth Third common stock outstanding on February 23, 20152018 is entitled to one vote on all proposals at the meeting. As of the close of business on February 23, 2015,2018, there were approximately 815,207,402686,981,953 shares of Fifth Third Common Stockcommon stock outstanding and entitled to vote.
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QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING |
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If notice in writing is given by any shareholder to theour President, a Vice President, or the Secretary of the Company not less than forty-eight (48) hours before the time fixed for holding a meeting of shareholders for the purpose of electing directors that a shareholder desires that the voting at such election shall be cumulative, and if
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
an announcement of the giving of such notice is made upon the convening of the meeting by the ChairmanChair or Secretary or by or on behalf of the shareholder giving such notice, each shareholder shall have the right to cumulate such voting power as he or she possesses in voting for Directors.directors. This will not affect the voting procedures for the other proposals considered at the Annual Meeting.
How do I vote?
Record ShareholdersShareholders.
A shareholder who owns their shares in their own nameFifth Third directly, and not through a broker, bank, or other nominee, (“record holder” or “record shareholder”) may vote in person at the Annual Meeting by filling out a ballot or may authorize a proxy to vote on his or her behalf. There are three ways to authorize a proxy:
1.Internet: You may access the proxy materials on the Internet atwww.cesvote.com and follow the instructions on the proxy card or on the Notice of Internet Availability.
2.Telephone: You may call toll-free 1-888-693-8683, and follow the instructions on the proxy card or on the Notice of Internet Availability.
1. | Internet: You may access the proxy materials on the Internet atwww.cesvote.com and follow the instructions on the proxy card or on the Notice of Internet Availability. |
3.Mail: If you received your proxy materials by mail, you may vote by signing, dating and mailing the enclosed proxy card in the postage-paid envelope provided.
2. | Telephone: You may call toll-free1-888-693-8683 and follow the instructions on the proxy card or on the Notice of Internet Availability. |
3. | Mail: If you received your proxy materials by mail, you may vote by signing, dating, and mailing the enclosed proxy card in the postage-paid envelope provided. |
Shareholders who vote over the Internet may incur costs, such as telephone and Internet access charges, for which the shareholder is responsible. The Internet and telephone voting procedures are designed to authenticate a shareholder’s identity and to allow a shareholder to vote his or her shares and confirm that his or her instructions have been properly recorded. You may use the Internet or telephone to submit your proxy until 11:00 a.m., Easterneastern daylight savingssaving time, on the morning of the Annual Meeting, April 14, 2015.17, 2018.
Street Name ShareholdersShareholders.
Shareholders who hold shares in “street name,” that is, through a broker, bank, or other nominee (“beneficial holder” or “street name shareholder”) should instruct their nominee to vote their shares by following the instructions provided by the nominee. Your vote as a shareholder is important. Please vote as soon as possible to ensure that your vote is recorded. See “Can my broker vote for me?” below.on the following page.
What if I sign and date my proxy but do not provide voting instructions?
A proxy that is signed and dated, but which does not contain voting instructions, will be voted as follows:
“FOR” the election of each of the twelve directors nominated by the Fifth Third Bancorp Nominating and Corporate Governance Committee;
“FOR” the ratification of Deloitte & Touche LLP as Fifth Third’sthe Company’s independent external audit firm (Company Proposal 1);
“FOR” the advisory vote on executive compensation (Company Proposal 2); and
For holding an advisory vote for approval of the compensation of the Company’s executives every “1 Year”YEAR” (Company Proposal 3).
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| QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
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Can my broker vote for me?
If you are a beneficial ownerholder of shares held in street name through a broker, bank or other nominee and do not provide the organization that holds your shares with specific voting instructions then, under applicable rules, the organization that holds your shares may generally has discretionary authority to vote on “routine” matters without receiving instructions from you but cannot vote on “non-routine” matters.“non-routine” matters unless you provide instructions. If the organization that holds your shares does not receive instructions from you on how to vote your shares on anon-routine matter, that organization will inform the inspector of election that it does not have the authority to vote on thisthat matter with respect to your shares. This is generally referred to as a “brokernon-vote.”
All proposals at the Annual Meeting except Company Proposal 1 (Ratification of Auditors) are considerednon-routine matters under applicable rules. A broker, bank, or other nominee cannot vote without instructions onnon-routine matters, and therefore brokernon-votes may exist in connection with the election of directors and Company Proposals 2 and 3. It is important to instruct your broker, bank, or other nominee to vote your shares.
The ratification of Deloitte & Touche LLP as the Company’s independent external audit firm for 20152018 (Company Proposal 1) is considered a routine matter under applicable rules. A broker or other nominee may generally exercises its discretionary authority to vote on routine matters without instructions. Although brokers and thereforeother nominees are not required to exercise discretionary authority, we expect that no brokernon-votes are expected to will exist in connection with Company Proposal 1.
Can I change my vote or revoke my proxy?
You may change your vote or revoke your proxy at any time before it is voted at the Annual Meeting by filing with the Companyus an instrument revoking it, filing a duly executed proxy bearing a later date (including a proxy given over the Internet or by telephone), or by attending the meeting and electing to vote in person.Even if you plan to attend the Annual Meeting, you are encouraged to vote your shares by proxy.
How are proxy materials delivered?
Fifth Third controls itsWe control costs by following SEC rules that allow for the delivery of proxy materials to the Company’sour shareholders primarily through the Internet. In addition to reducing the amount of paper used in producing these materials, this method lowers the costs associated with mailing the proxy materials to shareholders. Shareholders who own shares directly in Fifth Third and not through a bank, broker or intermediary (“record holders”)Record holders will have a Notice of Internet Availability of Proxy Materials delivered directly to their mailing address. Shareholders whose shares are held for them by banks, brokerages or other intermediaries (“beneficial holders”)Beneficial holders will have a Notice of Internet Availability of Proxy Materials forwarded to them by the intermediary that holds the shares. Shareholders who have requested paper copies of all proxy materials and certain institutional and other shareholders will also receive paper copies of the other proxy materials including this proxy statement, the 20142017 Annual Report of Fifth Third Bancorp, and a proxy card or voting instruction sheet.
If you received only a Notice of Internet Availability of Proxy Materials by mail, you will not receive a printed copy of the proxy materials unless you request a copy by following the instructions on the notice. The Notice of Internet Availability of Proxy Materials also contains instructions for accessing and reviewing the proxy materials over the Internet and provides directions for submitting your vote over the Internet.
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QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING |
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What if I share an address and a last name with other Fifth Third shareholders?
To reduce the expenses of delivering duplicate proxy materials to shareholders, the Company iswe are relying upon SEC “householding” rules that permit it to deliverdelivery of only one set of applicable proxy materials to multiple shareholders who share an address and have the same last name, unless the Company receiveswe receive contrary
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
instructions from any shareholder at that address. Shareholders of record who have the same address and last name and have not previously requested electronic delivery of proxy materials will receive a single envelope containing the notices or the proxy statement and proxy card for all shareholders having that address. The notice or proxy card for each shareholder will include that shareholder’s unique control number needed to vote his or her shares. This procedure reduces our printing costs and postage fees. If, in the future, you do not wish to participate in householding and prefer to receive your Notice or Proxy Statement in a separate envelope, or if your household currently receives more than one Notice or Proxy Statement and in the future, you would prefer to participate in householding, please call us toll-free at 1-877-478-50411-800-488-8035 (toll-free) in the U.S., or inform us in writing at: Fifth Third Bancorp, c/o D.F. King & Co., Inc., 48 Wall Street – Street—22nd Floor, New York, NY 10005, or by email atFITB@dfking.com. FITB@dfking.com. We will respond promptly to such requests.
For those shareholders who have the same address and last name and who request to receive a printed copy of the proxy materials by mail, we will send only one copy of such materials to each address unless one or more of those shareholders notifies us, in the same manner described above, that theythe shareholder(s) wish to receive a printed copy for each shareholder at that address.
Beneficial shareholders can request information about householding from their banks, brokers, or other holders of record.
How do I request a paper ore-mail copy of the proxy materials?
Record ShareholdersShareholders.
YouRecord holders may request a paper ore-mail copy of the proxy materials by following the instructions below. You will be asked to provide your11-digit control number located on your proxy card or Notice of Internet Availability.
1. Call the toll-free telephone number 1-800-516-1564 and follow the instructions provided, or
2. Access the websitewww.SendMaterial.com and follow the instructions provided, or
3. Send an e-mail to papercopy@SendMaterial.com with your control number in the Subject line. Unless you instruct otherwise, we will reply to your e-mail with links to the proxy materials in PDF format for this meeting only.
1. | Call the toll-free telephone number1-800-516-1564 and follow the instructions provided; |
2. | Access the website www.SendMaterial.com and follow the instructions provided; or |
3. | Send ane-mail to papercopy@SendMaterial.com with your control number in the Subject line. Unless you instruct otherwise, we will reply to youre-mail with links to the proxy materials in PDF format for this meeting only. |
Please make your request for a copy on or before March 31, 2015April 3, 2018 to facilitate timely delivery.
Street Name ShareholdersShareholders.
Shareholders who hold shares in “streetBeneficial holders, also known as street name” that is, through a broker, bank or other nominee, shareholders, should request copies of the proxy materials by following the instructions provided by thetheir bank, broker, or other nominee.
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| QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING |
Can I attend the Annual Meeting?
You can attend the Annual Meeting if you are a:
1. | Record holder of Fifth Third common |
2. | Beneficial holder of Fifth Third common |
3. | Authorized representative of persons or entities who are beneficial holders of Fifth Third common stock. |
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
In addition to a valid photo ID or other satisfactory proof of identification, you should bring the following items to be admitted to the Annual Meeting:
a) Record holders must present the admission ticket attached to their proxy card or Notice of Internet Availability.
A. | Record holders must present the admission ticket attached to their proxy card or Notice of Internet Availability. |
b) Beneficial holders must present evidence of their ownership. Materials that appropriately evidence ownership include: a notice regarding the availability of proxy materials, the top portion of a voting instruction form or a recent proxy or letter from the bank, broker or other intermediary that holds the beneficial holders’ shares and which confirms the beneficial holders’ ownership of those shares.
B. | Beneficial holders must present evidence of their ownership. Materials that appropriately evidence ownership include: a notice regarding the availability of proxy materials, the top portion of a voting instruction form, or a recent proxy or letter from the bank, broker or other intermediary that holds the beneficial holders’ shares and which confirms the beneficial holders’ ownership of those shares. |
c) In addition to any evidence required under (B) above for beneficial holders, authorized representatives of beneficial holders must present a letter from the record holder certifying as to the beneficial ownership of the entity they representand a letter from the beneficial holder certifying as to their status as an authorized representative.
C. | In addition to any evidence required under (b) above for beneficial holders, authorized representatives of beneficial holders must present a letter from the record holder certifying as to the beneficial ownership of the entity they representand a letter from the beneficial holder certifying as to their status as an authorized representative. |
No recording devices, photographic equipment, or bullhorns will be permitted into the Annual Meeting. No written materials may be distributed by any person at or inwithin physical proximity to the Annual Meeting. The ChairmanChair of the Annual Meeting shall have the power to silence or have removed any person in order to ensure the orderly conduct of the Annual Meeting. Fifth Third representatives will be at the entrance to the Annual Meeting and these representatives will have the authority, on the Company’s behalf, to determine whether the admission policy and procedures are being followed and whether you will be granted admission to the Annual Meeting.
How do I propose actions for the 20162019 Annual Meeting of Shareholders?
Shareholder Proposals to be included in the Company’sour 2019 Proxy StatementStatement.
In order for a shareholder proposal for the 20162019 Annual Meeting of Shareholders to be eligible for inclusion in the Company’sour proxy statement, it must comply with the requirements of Rule14a-8 of the Securities Exchange Act of 1934 (the “Exchange Act”), and must be received by the Companyus on or before November 6, 2015the date provided on page 72 at the following address or facsimile number:
Fifth Third Bancorp
38 Fountain Square Plaza
MD10AT76
Cincinnati, Ohio 45263
Attn: Board Secretary
Facsimile: (513) 534-6757number provided on page 72.
Shareholder Proposals not included in the Company’sour 2019 Proxy StatementStatement.
Any shareholder who intends to propose any matter to be acted upon at the 20162019 Annual Meeting of Shareholders without such proposal being included in the Company’s proxy statement as a shareholder proposal must send a notice to the BoardCorporate Secretary during the period referenced on page 72 using the address and facsimile number listed above no earlier than January 15, 2016 and no later than February 15, 2016. If the notice is not provided by January 20, 2016, the persons named as proxies for the 2016 Annual Meeting will be allowed to exercise discretionary authority to vote upon such additional proposal without describing in the proxy statement for the 2016 Annual Meeting how they intend to vote on it.
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTINGpage 72.
The notice to the Board Secretary must meet the requirements set forth in the Company’s Code of Regulations which are summarized below.
The notice must include:
the name and address of the record shareholder as they appear on the Company’s books and the name and address of any beneficial owner of the shares on whose behalf the record shareholder is acting, and, if different, the current name and address of the shareholder and any beneficial owner;
the class and number of shares of the Company held of record by the shareholder or beneficially owned as of the date of the notice, and a representation that the shareholder will notify the Company in writing within five (5) business days after the record date for such meeting of the class and number of shares of the Company held of record or beneficially owned on such record date;
any other information relating to such shareholder and beneficial owner, if any, that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for the matter proposed;
such shareholder’s and any beneficial owner’s written consent to the public disclosure of information provided to the Company in the notice;
a representation that the shareholder intends to appear at the meeting to bring such nomination or other business before the meeting; and
such other information as may reasonably be required by the Board of Directors and described in this proxy statement.
The notice must also include:
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If the notice relates to the nomination of directors, it must include for each nominee:
all information relating to such nominee that is required to be disclosed in a proxy statement or other filing required to be made in connection with solicitations of proxies for election of directors in a contested election pursuant to Section 14 of the Exchange Act (including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected);
a description of all direct and indirect compensation and other material monetary agreements, arrangements and understandings during the past three (3) years, and any material relationships, between or among the nominating shareholder and beneficial owner, if any, and their respective affiliates and associates, or others acting with them, and each proposed nominee, and his or her
Highlights of 2017 Company Performance
Project NorthStar. In 2017, we made significant progress on initiatives outlined under Project NorthStar. We re-launched our brand, continued to exit non-strategic commercial relationships, and invested in strategic acquisitions and partnerships to help grow fee revenues. We also began to implement a number of other key initiatives to drive improvements in customer service, increase efficiency, and generate revenue growth. On the regulatory front, we received notification that our Community Reinvestment Act (“CRA”) rating was upgraded to outstanding, demonstrating our commitment to the communities we serve. We again created significant value for our shareholders by continuing to monetize our ownership stake in Vantiv Holding LLC, subsidiary of Worldpay, Inc. We were proud to receive important recognition as a leader in customer service and employee satisfaction in several surveys.
Following are highlights of 2017 Company performance results:
net income - non-interest income. - Stable expenses. - Lower provision. | Improved credit metrics Lower net charge-offs, non-performing assets, non-performing loans, and criticized assets. | Strengthened balance sheet - Completed deliberate C&I loan exit initiative. - Continued to reduce exposure to lower- yielding non-relationship business.
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- Return on assets (ROA) - Efficiency ratio
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We are entering 2018 with a strong balance sheet as a result of the significant steps taken in 2017, positioning us well to capitalize on future opportunities.
Adjusted ROTCE was 12.3% and is a measure of adjusted net income available to common shareholders divided by average common equity less average goodwill and intangibles. ROTCE results were 95% our financial plan. ROTCE shows how efficiently we manage capital
Efficiency ratio is a measure of expenses as a percentage of revenue, and reflects how effective we are at generating revenue while managing expenses. Our adjusted efficiency ratio was 60.7% and essentially met our financial plan and showed improvement over the prior year. The Committee believes a lower efficiency ratio reflects better expense management
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| COMPENSATION DISCUSSION AND ANALYSIS
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Compensation Methodology and Structure
Compensation Philosophy.Our compensation methodology and structure centers on our compensation philosophy, which comprises the following guiding principles:
In order to drive our business strategy and human capital plan, compensation must be competitive to
attract and retain essential talent, reward high performance, and be internally equitable. The Company is committed to making compensation decisions that are fiscally responsible, such that we carefully consider the expected return on investment for those decisions. Our expected total compensation opportunities generally reflect the median pay levels of our compensation peer group, with variations based on specific talent needs, experience, and other internal factors. We believe that actual total compensation should
vary with the performance of the organization so that outstanding performance results in above-market compensation. Since a majority of compensation is tied to performance, actual total compensation will vary within a competitive range.
Features of our Executive Compensation Program.Our executive compensation program incorporates features such as:
Paying for performance. | |||||||||||||||||||||||||||||||||||
Incorporating risk-balancing features. | |||||||||||||||||||||||||||||||||||
Including double-triggerchange-in-control provisions. | |||||||||||||||||||||||||||||||||||
Providing no excise taxgross-ups to executive officers. | |||||||||||||||||||||||||||||||||||
Maintaining share ownership guidelines and share retention policies. | |||||||||||||||||||||||||||||||||||
Prohibiting speculative trading and hedging strategies by executive officers. | |||||||||||||||||||||||||||||||||||
Utilizing an independent compensation consultant hired and overseen by the Committee. | |||||||||||||||||||||||||||||||||||
Providing minimal perquisites. | |||||||||||||||||||||||||||||||||||
Granting long-term incentives onpre-determined dates. | |||||||||||||||||||||||||||||||||||
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Including claw back features in
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COMPENSATION DISCUSSION AND ANALYSIS |
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Compensation Risk Management.We believe it is critical to bring a multi-faceted strategy toward mitigating risk in incentive plans. We incorporate formulaic and discretionary risk-balancing mechanisms, which include specific metrics for modifying payouts to discourage taking unnecessary or imprudent risks. Senior executive pay also includes a heavy focus on long-term incentives. This facilitates collaboration among business units, ownership in the Company, and a focus on shareholder goals.
To execute the risk mitigation strategies, we conduct yearly review processes, which are documented and incorporate input from business segments including Finance, Human Resources, Risk Management, and business leaders. These processes include:
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Market Reviews | Human Resources use peer benchmark data to ensure that pay programs are competitive. | |
Incentive Plan Reviews | Senior business leaders ensure that incentive plans support the business strategy. | |
Risk Reviews | Senior risk and credit leaders determine whether incentive plans support the Company’s risk culture and the incentive compensation risk framework. | |
Financial Reviews | Senior executives confirm that the incentive plans are fiscally sound, risk-aligned, and contribute to shareholder value. | |
Board Reviews | Independent directors, serving on the Human Capital and Compensation Committee |
We believe it is critical that our people clearly understand how they are rewarded to ensure that pay facilitates the appropriate strategic and risk awareness behaviors. Because of this, we provide ongoing compensation communication and education to our employees through a robust network of Human Resources business partners staffed to each business segment, in addition to employee communications, and online trainings.
In February 2017, the Committee, in conjunction with the Risk and Compliance Committee, reviewed our executive and other incentive programs. Based on the provisions and actions above, the Committee concluded that their design and/or metrics do not encourage taking unnecessary or inappropriate risk.
Committee’s Role.The Committee is composed of independent directors and is responsible for establishing, implementing, and monitoring the administration of compensation and benefits programs in accordance with the Company’s compensation philosophy and strategy, along with approving executive compensation and equity plan awards. The Committee focuses on the attraction and retention of key executives and, when making decisions, considers the Company’s compensation philosophy, the achievement of business goals set by the Company, relevant peer data, recommendations made by the chief executive officer, and the advice of Compensation Advisory Partners LLC (“CAP”), a respected, independent, external executive compensation consulting firm with financial services industry expertise hired by the Committee.
The Committee seeks to establish “Total Rewards” for the Company’s executive officers that are fair, reasonable, risk-balanced, and competitive. The Total Rewards program includes base salary, Variable
Fifth Third Bancorp | 2018 Proxy Statement | 31 |
| COMPENSATION DISCUSSION AND ANALYSIS
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Compensation Plan awards, long-term equity-based incentive compensation, benefits, and certain perquisites. Generally, the types of compensation and benefits paid to Named Executive Officers are similar to those provided to other officers of the Company.
The Committee followed several key processes during 2017 to ensure that it effectively carried out its responsibilities:
Engaged CAP
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Provided oversight of incentive and variable compensation practices and balanced risk-taking across the Company with the Compensation Risk Oversight Committee (a management committee that reports to the Committee).
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Conducted an annual review of the Company’s compensation philosophy to ensure that it remains appropriate given the Company’s strategic
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Reviewed all compensation components for the
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Completed reviews of industry compensation and
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Role of Executive Officers in Compensation Decisions.The Chief Executive Officerchief executive officer annually reviews the performance of each of the other Named Executive Officers, along withwhich includes a risk performance assessment.assessment completed by the Company’s chief risk officer. Based on this review, the Chief Executive Officerchief executive officer makes compensation recommendations to the Committee, including recommendations for salary adjustments, annual cash incentives,Variable Compensation Plan awards, and long-term equity-based incentive awards. In addition, the Chief Executive Officerchief executive officer and certain other members of Management alsomanagement annually assess performance for other executive officers and make compensation recommendations to the Committee. Although the Committee considers these recommendations along with data provided by its other advisors,consultant, it retains full discretion to set all compensation for the Company’s executive officers. The Committee works directly with its consultant, CAP, to determine compensation for the Chief Executive Officer andchief executive officer; the Chief Executive Officerchief executive officer has no input into his own award determinations.
Additionally, the Chief Risk Officerchief risk officer reviews and evaluates with the Committee all executive officer and employee incentive compensation plans. The purpose of the review is to ensureconfirm that the Company’s incentive compensation plans do not incent or pose unnecessary or excessive risks to the Company.
32 | Fifth Third Bancorp | 2018 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS
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The Role of the Third PartyThird-Party Compensation Consultant.The Committee uses the services of anits outside executive compensation consultant, CAP, to provide guidance and advice to the Committee on all matters covered by its charter. This consultant was directly selected and engaged by the Committee to provide a broad set of services pertaining to the compensation of the Company’s executives.
The consultant fulfills the following responsibilities:
Reviews the Company’s compensation philosophyexecutives and competitive positioning for reasonableness and appropriateness
Annually reviews the Committee’s charter and recommends changes as appropriate
Reviews the Committee’s agendas and supporting materials in advance of each meeting
Advises the Committee on management proposals, as requested
Reviews information from a peer group of publicly trading banking and financial institutions (collectively the “Compensation Peer Group”) and survey data for competitive comparisons
Annually reviews the Company’s executive compensation programs and advises the Committee on the design of incentive plans or practices that might be changed to improve the effectiveness of its compensation program
Annually reviews competitive pay practices of the Compensation Peer Group for its Boards of Directors and recommends to the Committee changes required to pay the Company’s Board of Directors, in a competitive fashion
Reviews, analyzes, and summarizes survey data on executive pay practices and amounts that come before the Committee
Attends all of the Committee meetings, including executive sessions with only the Committee members as requested
Advises the Committee on potential practices for Board governance of executive compensation as well as areas of concern and risk in the Company’s programs
Undertakes special projects at the request of the Committee, including Institutional Shareholder Services (“ISS”) test simulation
During 2014, CAP was specifically engaged on the following projects:
Advised the Committee with respect to the appropriateness of compensation structure and actual amounts paid to the Company’s executive officers given the Company’s compensation philosophy, size, and Compensation Peer Group
Actively participated in the review and design of all executive compensation programs, including the Company’s new Executive Change in Control Severance Plan
Advised on the appropriateness of executive performance goals and metrics
Reviewed and advised on the compensation program for the Company’s Board of Directors
Advised on the development of and reviewed the Company’s risk assessment of executive and employee incentive plans
Advised the Committee on market and regulatory trends and developments
Assessed the relationship between the Chief Executive Officer’s compensation and performance on a realizable pay basis
Reviewed the 2014 Compensation Discussion and Analysis and related sections for the proxy statement
COMPENSATION DISCUSSION AND ANALYSISthese key actions:
Advising the Committee on compensation program design, competitive practices, market trends, and peer group composition. |
Providing recommendations to the Committee on the compensation of the chief executive officer. |
Providing advisory recommendations to the Committee and members of management regarding the compensation of the other executive officers. |
Reviewing competitive pay practices in the Compensation Peer Group for their Boards of Directors and recommending to the Committee changes required to pay the Company’s Board of Directors in a competitive fashion. |
Providing an annual review of performance and pay levels for the Company and its Compensation Peer Group. |
Undertaking special projects at the request of the Committee, including during 2017, reviewing the methodology and the process for determining the median employee as required under the CEO Pay Ratio disclosure. |
The Company does not engage CAP for any additional services outside of executive compensation consulting.
The Committee believes that the third party services of CAP are objective and unbiased. The Committee conducted an assessment of potential conflicts of interest ofand independence issues for CAP and no conflicts of interest or independence issues relating to CAP’s services were identified by
the Committee.
The Committee’s Considerations. The Committee considers both the aggregate amounts and mix of an executive officer’s Total Direct Compensation (base salary, annual cash incentive compensation, and long-term equity-based incentive compensation) when making decisions. The Committee generally assesses Total Direct Compensation relative to competitive market data in its November meeting, discusses recommendations for executive compensation in its January meeting, and approves final merit and annual cash incentive (our Variable Compensation Plan (“VCP”)) award recommendations at its February meeting. In 2014, final long-term incentive recommendations were approved at its April meeting.
Based on its most recent review of the competitive data, the Committee has determined that the compensation structure for executive officers is effective and appropriate. The structure reflects the Company’s compensation philosophy, in that its incentive payout ranges are aligned with the competitive market data, it has appropriate leverage to ensure a strong linkage between compensation, risk outcomes and performance, and it drives rewards based on the most relevant performance measures for the Company and shareholders. Also based on this review, the Committee determined that the Company’s aggregate 2014 Total Rewards packages (and potential payouts in the severance and change in control scenarios where applicable) for its Named Executive Officers are reasonable, consistent with industry practices, and not excessive.
The Committee believes that the relative difference between the compensation of the Chief Executive Officer and the compensation of the Company’s other executive officers is consistent with such differences found in the Company’s Compensation Peer Group and external reference labor market. Further, the Committee has reviewed the internal relationships between the compensation for the Chief Executive Officer and for other executive officers and has deemed them to be appropriate.
The remainder of this report outlines the Company’s compensation philosophy and executive compensation structure, and provides an analysis of compensation decisions made during 2014. The discussion of 2014 will focus primarily on the compensation structure established for our Named Executive Officers.
EXECUTIVE COMPENSATION PHILOSOPHY AND RISK MANAGEMENT
Compensation Philosophy. The Company endeavors to attract and retain the best people in the financial services industry, and motivate them to fulfill the Company’s vision of becoming the one bank that people most value and trust. We intend to accomplish this in the way that we consider our shareholders’ long-term interests, by establishing compensation programs that reward our people for delivering products our customers highly value, and avoiding excessive risk. Our compensation philosophy comprises the following guiding principles:
Provide competitive compensation opportunities in order to attract and retain executive talent that will drive the business strategy
Effectively manage risk within incentive programs designed to pay for performance
Align compensation with long-term shareholder interests
Provide strong oversight of executive pay
Conduct recurring processes that ensure strategic and fiscal soundness along with balanced risk taking
Communicate for understanding and transparency
COMPENSATION DISCUSSION AND ANALYSIS
In order to drive our business strategy and human capital plan, compensation must be competitive to attract and retain essential talent, reward high performance, and be internally equitable. In addition, the Company is committed to making compensation decisions that are fiscally responsible, such that we carefully consider those decisions’ expected return on investment. Our expected total compensation opportunities generally reflect the median pay levels of our peer group with variations based on specific talent needs, experience and other internal factors. We believe that actual total compensation should vary with the performance of the organization, such that outstanding performance results in above market compensation. Since a majority of compensation is tied to performance outcomes, actual total compensation will vary within a competitive range.
Compensation Risk Management. The above strategic principles include the integration of sound risk management in all aspects of our compensation programs, particularly incentive compensation. We believe it is critical to bring a multi-faceted strategy toward mitigating risk in incentive plans. We incorporate formulaic and discretionary risk balancing mechanisms, which outline specific metrics for modifying payouts to discourage unnecessary or imprudent risk-taking actions.
Successful risk management requires strong oversight on pay for senior executives, given their role in the Company’s strategic direction. For this reason, senior executives’ pay includes a heavy focus on long-term incentives. This long-term focus facilitates collaboration among business units, ownership in the Company, and a focus on shareholder goals.
To execute the risk mitigation strategies, we conduct yearly review processes, which are documented and incorporate input from Finance, Human Resources, Risk Management, and business leaders. These processes include:
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As a financial institution that is regulated by federal and state banking authorities, the Company has gone through a rigorous process over the past few years to ensure that our compensation programs for our executives do not provide incentives to take excessive risks that could have material adverse impact on the Company. Our compensation program for our Named Executive Officers has several features that help to address potential concerns about risk:
Downward discretionary pay adjustment based on risk performance assessment which includes results of examinations by our banking regulators, internal examinations by our audit staff, and a qualitative review by the Chief Risk Officer
Caps on the maximum payment under our annual cash incentive plan and our performance share plan
COMPENSATION DISCUSSION AND ANALYSIS
Balanced mix of short-term, medium-term, and long-term compensation
Forfeiture provisions related to material risk events
Stock ownership and retention guidelines
Company claw back rights (as outlined under Other Long-term Equity-based Plan Provisions on page 41)
Finally, we believe it is critical that our people clearly understand how they are rewarded to ensure that pay facilitates the appropriate strategic and risk awareness behaviors. Because of this, we provide ongoing compensation communication and education.
In January 2014, the Committee, in conjunction with the Risk and Compliance Committee, reviewed our executive and other incentive programs to determine if their design and/or metrics encourage unnecessary and or material risk taking. The Committee believes, based on the provisions and actions described above, that they do not.
COMPENSATION STRUCTURE AND METHODOLOGY
Compensation Structure. The compensation structure (i.e., each element of pay described below and the respective amounts for each element) for executive officers is reviewed annually. When determining the compensation structure, the following items are considered:
The most recent and prior years’ comparative proxy statement and survey data for similar jobs among the Compensation Peer Group
The 25th percentile, median (i.e., 50th percentile), and 75th percentile peer data for each element of compensation (base salary, target annual cash incentive compensation, and target long-term equity-based incentive compensation, as well as the resulting Total Direct Compensation)
The ability to provide market median (i.e., 50th percentile) Total Cash Compensation (i.e., base salary plus annual cash incentive compensation) for 50th percentile performance relative to the Compensation Peer Group
The ability to provide upper quartile Total Cash Compensation for upper quartile performance (i.e., 75th percentile or better performance relative to the Compensation Peer Group)
Benchmarking Methodology.In making compensation decisions, the Committee compares Company performance and each element of executive officersofficers’ Total Direct Compensation with the Compensation Peer Group. The Committee refers to this Compensation Peer Group for both compensation and performance-related benchmarking.benchmarks. Financial performance data is prepared either by the Committee’s external compensation consultant or by the Company, using publicly available data from public filings. Compensation data is generally prepared by the Committee’s external compensation consultants, using proprietary compensation databases and publicly available data from proxy statements. The Company’sCommittee’s consultant reviews all financial and/orand compensation data that is prepared by the Company and provided to the Committee.
COMPENSATION DISCUSSION AND ANALYSIS
The Compensation Peer Group consists of companies with which the Committee believes the Company competes for talent and for stockholder investment and which are generally similar in asset size and business mix. The following 1211 companies were identified by the Committee as the 20142017 Compensation Peer Group:
BB&T Corporation | The PNC Financial Services Group, Inc. | |
| Regions Financial Corporation | |
Comerica Incorporated | SunTrust Banks, Inc. | |
Huntington Bancshares Incorporated | ||
| U.S. Bancorp | |
KeyCorp | Zions Bancorporation | |
M&T Bank Corporation |
Fifth Third Bancorp | 2018 Proxy Statement | 33 |
| COMPENSATION DISCUSSION AND ANALYSIS |
The Committee annually reviews the Compensation Peer Group and considers changes to the Compensation Peer Group deemed necessary to ensure that the nature and size of the organizations continue to be appropriate. Based on the Committee’s evaluation of the Compensation Peer Group, for 2014, thereWells Fargo and Company and Capital One Financial Corporation were no changesremoved from the prior year.Compensation Peer Group starting in 2017 because of those institutions’ business mix, size, and differences in pay models. Citizens Financial Group Inc. was added based on its similar size and business structure to that of the Company. The Company’s assets were at approximately the 47th55th percentile of its 20142017 Compensation
Peer Group as of September 2014.June 2017.
Pay for Performance. Under the compensation structure, annual cash and long-term incentives comprise the majority of executive officers’ Total Direct Compensation. The actual amounts realized by executive officers under these incentive plans vary based on the performance of the Company and individual performance. Company performance is evaluated from a variety of perspectives, including:
Absolute performance and performance relative to peers
Return measures including total shareholder return
Growth in earnings per share
Efficiency ratio
Stock price growth
Risk performance assessment
Annual cash incentive compensation awards to executive officers are approved from a pool funded on the basis of Company performance relative to the specific goals described below. This pool of available compensation awards is allocated to each participant based on qualitative assessments of individual performance against a set of stated objectives and individual risk assessment. Long-term equity-based incentive compensation awards are also made to each participant based on qualitative assessments of individual performance against a set of stated objectives and individual risk assessment. Long-term equity-based incentive compensation awards derive value based on shareholder return and stock price appreciation. Amounts realizable from prior compensation awards do not influence decisions relative to future awards.
Pay Elements and Pay Mix. Under the pay-for-performance compensation structure, compensation is delivered through three primary elements:
Base Salary
Annual Cash Incentive (delivered through the Variable Compensation Plan)
Long-term Incentives
COMPENSATION DISCUSSION AND ANALYSIS
The 2014 total compensation included a mix of cash and equity awards. The Company typically pays base salary and the annual incentive compensation in cash. All long-term equity-based incentive compensation awards are paid in shares of the Company’s common stock. Generally, our Named Executive Officers have approximately 50% or more of their total compensation delivered in the form of equity-based compensation. The charts below show the mix between cash and equity for our Chief Executive Officer and average pay mix for our other Named Executive Officers:
Tally Sheet. The Company annually prepares a tally sheet of all compensation and potential payouts for
the Committee’s use when approvingconsidering compensation matters. The Committee reviews all components
of compensation for the Company’s Chief Executive Officer, Chief Financial Officer,chief executive officer, chief financial officer, and the other Named Executive Officers’ compensation,
NEOs, including:
Base salary
Annual cash incentive compensation
Long-term equity-based incentive compensation
Accumulated, realized, and unrealized equity award gains
Base salary. |
Variable Compensation Plan compensation. |
Long-term equity-based incentive compensation targets. |
Accumulated, realized, and unrealized equity award gains. |
The dollar value to the executive and cost to the Company of all perquisites and other personal benefits. |
The earnings and accumulated payout obligations under the Company’s nonqualified deferred compensation plan. |
Several potential termination scenarios, includingchange-in-control where applicable. |
The dollar value to the executive and cost to the Company of all perquisites and other personal benefits
The earnings and accumulated payout obligations under the Company’s nonqualified deferred compensation program
Several potential termination scenarios, including change in control where applicable
In February 2015, the Committee reviewed tally sheets containing all the above compensation components and the associated dollar amounts for 20142016 compensation and found that the figures were appropriate and reasonable. Also atin June 2017. At that time, the Committee also reviewed a sensitivity analysis of the relationship between each Named Executive Officer’s 2014NEO’s 2016 Total Direct Compensation and the Company’s performance, (bothincluding both stock price performance and financial results).Company performance results. The Committee was satisfiedwill perform the annual tally sheet review specific to 2017 compensation components later in 2018.
Non-Binding AdvisorySay-on-Pay Proposal.In 2017, our shareholders approved anon-binding advisorysay-on-pay proposal at our 2017 Annual Meeting with 94 percent of the votes cast in favor of that proposal. The Committee reviews the 2014results annually and considers them when approving plan design changes as well as pay decisions. The Committee believes the results of the shareholder vote in 2017 as well as in prior years indicate strong support among shareholders for ourpay-for-performance approach. Future votes cast will be closely monitored to ensure that there is continued support for our pay programs and pay decisions among our shareholders.
Historical Say on Pay Vote
34 | Fifth Third Bancorp | 2018 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS |
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Compensation Structure. The compensation structures provided significant differentiationstructure (including each element of pay described below and the respective amounts for each element) for executive officers is reviewed annually. When determining the compensation structure, the following items are considered:
The most recent and prior years’ comparative proxy statement and survey data for similar positions among the Compensation Peer Group. |
The 25th percentile, median (50th percentile), and 75th percentile peer data for each element of compensation (base salary, Variable Compensation Plan compensation, and target long-term equity-based incentive compensation, as well as the resulting Total Direct Compensation). |
The ability to provide market median (50th percentile) Total Cash Compensation (i.e., base salary plus Variable Compensation Plan awards) for 50th percentile performance relative to the Compensation Peer Group. |
The ability to provide upper quartile Total Cash Compensation for upper quartile (i.e., 75th percentile or better relative to the Compensation Peer Group) performance. |
Pay Mix and Pay for Performance.Generally, our Named Executive Officers have approximately 50 percent or more of their actual total compensation delivered in the payouts for high versus low levelsform of both absolute and relative performance.equity-based compensation, as demonstrated in the charts on the following page.
Determinations.2017 Total Compensation Pay Mix1
(1) The percentages reflect the Named Executive Officer’s base salary as of December 31, 2017, actual Variable Compensation Plan award the executive earned for 2017, and target long-term equity-based incentive for 2017. Actual long-term equity-based incentives granted will vary from target based on 2017 Company and individual performance and were approved by the Committee in January 2018.
The Committee considers several factors and objectives relevant to each specific program when determining compensation, including a risk performance assessment.compensation. The Committee also contemplates the impact of each award’s impactaward on the Total Direct Compensation package. Total Direct Compensation opportunities are intended to target the median (i.e., 50th(50th percentile) of the relevant market data, and actual compensation (both
COMPENSATION DISCUSSION AND ANALYSIS
amount and mix) for executives varies based on their performance, prior experience, and other pertinent factors. In addition, for purposes of attracting and retaining key executives, the Committee may determine that an additional award, an above-mediansign-on package, and/or an incentive guarantee for a new hire, or a Total Direct Compensation package that is above market median, is appropriate.
Fifth Third Bancorp | 2018 Proxy Statement | 35 |
| COMPENSATION DISCUSSION AND ANALYSIS |
As shown in the pay mix charts on the previous page, the Variable Compensation Plan award and long-term equity-based incentives constitute the majority of executive officers’ Total Direct Compensation under ourpay-for-performance structure. The actual amounts realized by executive officers under these incentive plans vary based on individual performance and the performance of the Company.
Company performance under these incentive plans is evaluated from a variety of perspectives, including:
2014 EXECUTIVE COMPENSATION PLAN DESIGN AND AWARD DECISIONS2017 Executive Compensation Plan Design and Award Decisions
As stated above, compensation is delivered through three primary elements: base salary, our Variable Compensation Plan, and long-term equity-based incentives. We review and assess our compensation practices and program on an annual basis, taking into account the Company’s strategic objectives, compensation philosophy, regulatory guidance, risk culture, and external market practices. Each element of the senior executive’s compensation program, along with any changes that were made to the program for 2017, are described in the following paragraphs.
Base SalarySalary..The Committee reviews individual base salaries of the Company’s executive officers annually (and/or at the time of promotion).promotion or hire, as applicable. The objectives of the Company’s base salary program are to provide salaries at a level that allows the Company to attract and retain qualified executives and to recognize and reward individual performance. The following items are considered when determining base salary levels:
Market data provided by the Company’s external compensation consultant. |
The executive officer’s experience, scope of responsibilities, performance, and potential. |
Internal equity in relation to other executives with similar levels of experience, scope of responsibilities, |
Other relevant information, which may include governmental or regulatory considerations. |
Market data provided by the Company’s external compensation consultant
The executive officer’s experience, scope of responsibilities, performance, and potential
Internal equity in relation to other executive officers with similar levels of experience, scope of responsibilities, performance, and potential
Other relevant information, which may include federal programs, regulatory requirements, etc.
Determination of Base Salary.Salary increases, if any, are based on the Company’s overall performance and the executive’s attainment of individual objectives during the preceding year inyear. The annual review and evaluation at the contextbeginning of competitive market data. In establishing 2014 compensation levels for Named Executive Officers, the Committee was guided by these principles and made2017 showed that modest base salary adjustmentsincreases ranging from 0%2 percent to 1.9% versus 20135 percent were needed in order to maintain pay levels competitive with the market. Mr. Carmichael, Chairman, President, and Chief Executive Officer, did not receive a base salary levels for the NEOs. Increases were driven by the market for equivalent executive positions among peers and subjective evaluation of the individual’s responsibilities, tenure, and overall contribution to the Company.increase in 2017.
36 | Fifth Third Bancorp | 2018 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS |
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2014 Annual Cash Incentive2017 Variable Compensation Plan DesignDesign.. The annual cash incentive compensation program’sVariable Compensation Plan’s objective is to reward executives for corporate, business unit, and/orand individual performance. Each year, we review and updateBelow is a graphic presentation of the design of our VCP program to ensure alignment with our business strategy, regulatory guidance and the external market. For 2014, the three primary core funding measures were:2017 Variable Compensation Plan:
It is the view of the Committee that this mix of core funding measures within the VCP program providemetrics provides executives with balanced incentivesincentive to increase the absolute level of earnings while also ensuringgrowth, ensures that shareholdersshareholder capital is used efficiently to generate competitive returns. Efficiency ratio is useful as a complementary measure as it provides an assessment ofreturns, and assesses the cost efficiency of the Company’s operations.
In addition The funding modifiers are useful as complementary metrics to the primary funding measures, there are five funding modifier metrics that the Committee considers to adjust the calculated pool funding up or down, as described in more detail below:
Net charge-offs
Non-performing assets
Return on Risk-Weighted Assets
Capital levels
Available liquidity
COMPENSATION DISCUSSION AND ANALYSIS
For 2014, the only change made to the VCP program compared to 2013 was to replace Pre-tax Pre-Provision Earnings with Return on Risk-Weighted Assets (“RORWA”) as a funding modifier. RORWA provides the appropriateadd focus on balance sheet effectiveness and capital management while managing risk. Consistent with our prior practice used in setting goals and evaluating performance, results for RORWA will be adjusted for certain events to reflect core financial performance in the plan year for annual incentive plan funding purposes.
best-in-class business processes. The Committee retains discretion to adjust pool funding downward based on other factors
as well.
Variable Compensation Plan awards to executive officers are approved from a pool funded on the basis of Company performance relative to specific goals. This pool of available compensation awards is allocated to each participant based on qualitative assessments of individual performance against a set of stated objectives and an individual risk assessment. Amounts realizable from prior compensation awards do not influence decisions relative to future awards.
Variable Compensation Plan Performance Goals.The financial plan approved by the Board of Directors includedincludes specific target levels for each of the measures that arecore funding metrics as shown below.below and assumes a Quartile 2 funding pool. Actual performance against these targets wasis considered, in addition to the five primaryfour funding metrics listed above, to determinemodifiers, when determining the available funding for all participants of the VCP.
VCP Performance Goals.Variable Compensation Plan. The Committee set the 2014 performancegoals for the 2017 core funding metrics to exclude certainnon-recurring items not included in the Company’s financial plan and excluded those items when determining the adjusted
Fifth Third Bancorp | 2018 Proxy Statement | 37 |
| COMPENSATION DISCUSSION AND ANALYSIS |
Company performance results.metrics. These exclusions are discussed on the following page. The goals for the senior executive pool under the VCPVariable Compensation Plan, which includes all senior executives designated as Category 1 in accordance with the federal banking interagency guidance on sound incentive compensation practices (which includes all NEOs), were scaled to represent four quartiles of performance. Each quartile contains a performance level range, a score, a score range, and a funding pool range. The funding pool ranges are set starting with Quartile 4 which represents the sum of the maximum opportunity available for each senior executive who participates in the pool, which generally aligns with the 75th percentile of the market for each participant.
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| Company Performance Levels | ||||||||||||||||||||
Below | Quartile 1 Score: 1 | Quartile 2 Score: 2 | Quartile 3 Score: 3 | Quartile 4 Score: 4 | ||||||||||||||||||
Earnings Per Share (EPS) | 50% | $1.54 to $1.63 | $1.64 to $1.72 | $1.73 to $1.81 | ||||||||||||||||||
Return on Assets (ROA) | 25% | 85 to 89 bps | 90 to 95 bps | 96 to 100bps | 101 bps | |||||||||||||||||
Efficiency Ratio (FTE) | ||||||||||||||||||||||
25% |
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65.6% to 64.7% | 64.6% to 63.6% | 63.5% to 62.5% | £ 62.4% | |||||||||||||||||||
Score Range | 0 | < 1.5 | ³ 1.5 < 2.5 | ³ 2.5 | > 3.0 | |||||||||||||||||
Funding Pool Ranges | ||||||||||||||||||||||
$0M | £ $6.8M | £ $9.9M | £ $13.7M | £ $17.8M |
To determine the VCPVariable Compensation Plan funding pool, each performance measurecore funding metric is reviewed to determine the performance quartile that was achieved and the associated score is assigned. The overall funding score represents the sum of the weighted average score for each performance measure.core funding metric. The overall funding score is compared to the quartile score ranges to determine the preliminary funding pool range. The NEOs are included in the senior executive pool, which includes all senior executives designated as Category 1 in accordance with the Federal Reserve’s Interagency Guidance on sound incentive compensation practices.
As mentioned in the above Plan Design section, ranges for the five additional funding modifiers are established based on the financial plan, as approved by the Board of Directors. The Committee may use the funding modifiers to increase or decrease the preliminary funding score. The Committee may exercise discretion to increase a preliminary funding score byup to a maximum of 0.6 points or, use6 points; however, downward discretion is not capped and can be made in any amount deemed appropriate. These measures are outlined below:
Performance Modifier Measures | Financial Plan | Final Results (Adjusted) | ||
Net Charge-Offs | .43% | .54% | ||
Non-Performing Assets | .94% | .85% | ||
RORWA | 1.20% | 1.22% | ||
Capital Levels | Meet Required Regulatory Minimum and Internal Target Levels | Exceeded | ||
Available Liquidity | $20B | $28.8B |
Funding Modifier | Threshold Goal | Target Goal | Exceptional Goal | |||
Non-performing assets | 75th peer percentile | Peer median | 25th peer percentile | |||
Capital levels | Meet required regulatory minimum | Exceed target levels | ||||
Liquidity coverage ratio | Meet required regulatory minimum | Exceed target levels | ||||
Customer experience | > 1 achieved | 3 – 5 achieved | > 5 achieved |
38 | Fifth Third Bancorp | 2018 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS |
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Performance against Variable Compensation Plan Goals.The Company performed well against the goals set for the Variable Compensation Plan for 2017. Consistent with our practice used in setting goals and evaluating performance metrics, we use adjusted Company performance metrics to determine performance against our plan targets. Adjusted Company performance metrics are determined by first excluding financial effects of certain events in order to reflect core financial performance in the plan year. In determining the preliminary 2017 adjusted Company performance metrics for the plan, we excluded:
The net gain resulting from the Company’s third quarter 2017 Vantiv, Inc. share sale; |
A charge related to the valuation of the Company’s Visa total return swap; |
Items resulting from the Tax Cuts and Jobs Act including a remeasurement of deferred tax liability, a remeasurement of portfolio carrying values for leveraged leases, an impairment related to affordable housing investments, a contribution to the Fifth Third Foundation, and aone-time employee bonus; and, |
Treasury securities gains / losses. |
After excluding the items listed above and making further adjustments to account for the effects from a preliminary funding pool greater than Quartile 2, the adjusted Company performance metrics for the Variable Compensation Plan for 2017 would be an adjusted EPS of $1.80, an adjusted ROA of 1.02%, and an adjusted taxable equivalent efficiency ratio of 64.1%.
Adjusted Core Funding Metrics | 2017 Reported Metrics | 2017 Adjusted Metrics (Including effects of preliminary funding pool) | ||
EPS
| $2.83
| $1.80
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ROA
| 1.56%
| 1.02%
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Efficiency Ratio (FTE)
| 56.6%
| 64.1%
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In addition to these key financial performance metrics, we met or exceeded target on the funding modifiers considered by the Committee in assessing annual performance:
Funding Modifier | 2017 Actual | |
Non-performing assets | 38th peer percentile | |
Capital levels | Exceeded | |
Liquidity coverage ratio | Exceeded | |
Customer experience | At target |
Fifth Third Bancorp | 2018 Proxy Statement | 39 |
| COMPENSATION DISCUSSION AND ANALYSIS |
Determination of VCP AwardsVariable Compensation Plan Awards.. As described inon the VCP Performance Goals section,previous page, each core funding metric is assigned a score based on the quartile of its performance and these scores are then weighted to determine an overall funding score which then determines the VCP funding pool, each performance measure is reviewed to determine the performance quartile that was achieved andas well as the associated score is assigned. The overall funding score representsfor the sum of the weighted average score for each performance measure. The overall funding score is compared to the quartile score ranges to determine
COMPENSATION DISCUSSION AND ANALYSIS
thepreliminary funding pool range. For 2014,2017, the overall funding score was a 2.30, resulting3.00, which resulted in a preliminary Quartile 3 funding pool of up to $9.25$13.7 million for the senior executives.
Adjusted Core Funding Metrics
| 2017 Adjusted Metrics
| Quartile Score
| Weight
| Weighted Score (Score * Weight)
| ||||
EPS
| $1.80
| 3
| 50%
| 1.50
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ROA
| 102 bps
| 4
| 25%
| 1.00
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Efficiency Ratio (FTE)
| 64.1%
| 2
| 25%
| 0.50
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Core Funding Score
| 3.00
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Considering this performance, the Committee then performed a quantitative and qualitative assessment of other financial factors and approved a negative adjustment to the preliminary funding pool. The pool funding calculation,decision to approve a negative adjustment was based on a review of overall performance against peers and a qualitative assessment of the adjusted primary metrics, producedfollowing items:
The benefits to planned net interest income from the market interest rate levels; |
A lower than planned fee income growth offset by lower than planned expenses charge related to the valuation of the Company’s Visa total return swap; |
Lower than planned loan growth; and |
The associated impact on loan loss provision combined with lower loan losses. |
This negative adjustment to the preliminary funding pool reduced it to a VCPQuartile 2 funding pool of up to 55%$9.9 million, or 56 percent of the maximum incentive opportunity of the Named Executive Officers. This funding level reflects that the Company’s results on all of the performance metrics relative to our financial plan fell within the second quartile. Additionally, the Committee considered the five funding modifiers and determined that, as a result of the strong performance on four of the five funding modifiers, an adjustment of .30 would be made. The funding modifier adjustment did not change the final pool range of up to $9.25 million. The table below shows the calculation for the 2014 pool.
Perf. Measures | Score | Weight | Weighted Score (Score x Weight) | |||
EPS | 2 | 50% | 1.00 | |||
ROTCE | 2 | 25% | .50 | |||
Efficiency Ratio | 2 | 25% | .50 | |||
Core Funding Score | 2.00 | |||||
Core Funding Pool Range | <= $9.25M Quartile 2 | |||||
Funding Modifier Score Adjustment | .30 | |||||
Final Funding Score | 2.30 | |||||
Final Pool Range | <=9.25M (Quartile 2) |
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COMPENSATION DISCUSSION AND ANALYSIS |
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When making the final determination of individual awards which may reflect an up or down adjustment fromusing the total pool funding percentage, but not exceed the $9.25 million or 55% of the maximumapproved Quartile 2 pool, the Committee had the benefit of information relating to market median and market 75th75th percentile compensation levels as well as performance and 2014 Company financial performance. While financial results were solid, they were just below the goals established in our financial plan. The Committee took this into consideration when making final award decisions of approximately 49% of the maximum pool.
After consideringrisk assessment rating information. Considering each individual’s qualitative performance assessment described below, overall Company financial(described for each NEO in the qualitative performance each individual’sassessments section below) and risk performance assessment, and market compensation levels, the Committee thought it appropriate to make final individual award decisions that totaled approximately 99 percent of the approved $9.9 million pool. These included a VCPVariable Compensation Plan award of 48%63 percent of the CEO’s individual maximum for the Chief Executive Officer and VCPVariable Compensation Plan awards ranging from 41%47 percent to 52%65 percent of the maximumindividual maximums for the other NEO’s.
COMPENSATION DISCUSSION AND ANALYSISNEOs.
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| COMPENSATION DISCUSSION AND ANALYSIS |
20142017 Long-term Equity-based Incentive Compensation Plan Design.The objective of the long-term equity-based incentive programplan is an important piece of the compensation mix for our Named Executive Officers. The objectives of our plan, the types of equity-based awards employed under the plan, and areas included in individual performance assessments used to align executives’ interests with shareholders’ interests, facilitate share ownership amongdetermine award amounts for Named Executive Officers and to link rewards with the long-term performance of the Company. Target award levels are established at the beginning of the year for each executive officer based on market median compensation for each position. Award levels are not automatically made at target. The actual award levels are based on Company performance and the Committee may include qualitative assessments of individual performance of each Named Executive Officer in areas such as:are:
The Company’s revenue and expense results
Plan Objectives | Equity Type Mix | |
Align management and shareholders’ interests | ||
Motivate senior executives to optimize long-term shareholder value | ||
Encourage stock ownership among our employees | ||
Enhance the Company’s ability to retain key talent | ||
Ensure the program design is consistent with our compensation philosophy and reflective of external market trends | ||
Strengthen risk-adjusted pay decisions | ||
Areas of Assessment | ||
The Company’s revenue and expense results | Stock Appreciation Right Awards are calculated by taking 15% of the total LTI award amount divided by the SARs Black-Scholes value on the date of grant Restricted Stock Unit Awards are calculated by taking 40% of the total LTl award amount divided by the Company’s closing stock price on the date of grant Performance Share Awards are calculated by taking 45% of the total LTI award amount divided by the Company’s closing stock price on the date of grant | |
Division revenue and expenses vs. budget | ||
Internal and external customer service levels | ||
Performance relative to the Company’s strategic initiatives | ||
Results related to specific individual responsibilities | ||
Results related to specific individual risk assessments
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The Committee believes that a portion of the long-term equity-based incentive compensation opportunity should come from a growth-oriented incentive, (i.e., SARs)specifically Stock Appreciation Rights, or SARs, that alignsalign executives’ interests with those of the Company’s shareholders. In addition, the Committee believes that full-value share awards (i.e.,in the form of performance shares and restricted stock)stock units complement each other and are important to drivefor driving stronger retention value and enhanced ownership creationownership-creation opportunities, and should therefore be a meaningful portion of the long-term incentive. The Committee also believes that performance shares further the objective of creating a clear connection between results achieved and compensation earned. The Committee determined in 2016 that continuing to shift the mix away from SARs and increasing the weight of performance shares and restricted stocklong-term incentives for grants to be made in 2017 was appropriate based on the Company’s long-term incentive plan objectives, strategic objectives, compensation philosophy, regulatory guidance, risk culture, and competitive practice. The table below shows
Target award levels are established at the changebeginning of the year for each executive officer based on market median compensation for each position. Award levels are not automatically made at target. Actual award levels are based on Company performance, and the Committee includes qualitative assessments of individual performance of each Named Executive Officer in mixareas shown in the graphic display above. Amounts realizable from 2013prior compensation awards do not influence decisions relative to 2014.future awards.
Award Type | 2013 Proportion of long-term incentive value | 2014 Proportion of long-term incentive value | 2014 Calculation of Awards | |||||||
Stock Appreciation Rights | 30 | % | 25 | % | Total award dollar value multiplied by 25% divided by stated 2014 SAR value of $6.53(1) | |||||
Performance Shares | 30 | % | 35 | % | Total award dollar value multiplied by 35% divided by 30-day average beginning share price (i.e., for 30 trading days prior to the grant date) of $22.34 for 2014 | |||||
Restricted Stock | 40 | % | 40 | % | Total award dollar value multiplied by 40% divided by $21.63, the Company’s closing stock price on April 16, 2014 |
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COMPENSATION DISCUSSION AND ANALYSIS |
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Stock Appreciation Rights. SARs for Named Executive Officers have been and will continue to be granted at the closing price of the Company’s common stock on the date of grant, with a 10-year term and generally a4-year graded vesting schedule. These award terms are consistent with the annual grant for all eligible employees at the Company.
The grant date is the date of the Committee’s approval of the awards, which will typically beis at a first quarter meeting of the Committee or at the annual shareholder meeting in April. The grant dates for 2014 awards made in 2017 are detailed in the 20142017 Grants of Plan-Based Awards table. The Company does not adjust the timing of its annual grant based on SEC filings or press releases. Rather, the annual grant date is established and communicated well in advanceadvance.
Stock Appreciation Rights are granted at the closing price of the date.
Performance Share Awards. Performance shares were granted with goals set atCompany’s common stock on the date of grant and with a10-year term. Grants made in 2017 have a three-year graded vesting schedule. The Company does not grant discounted stock options or SARs,re-price previously granted stock options, or SARs, or grant reload stock options.
Restricted stock units have a three-year graded vesting schedule. These grants are eligible for dividend equivalent payments but do not have voting rights during the award grantvesting period.
Performance share grants made in terms of three-year2017 were structured as follows:
In 2017, the performance period for the performance share granted in 2014 ended. Performance was based on the total shareholder return (“TSR”), relative to the Company’s Compensation Peer Group. Total shareholder return was selected as the measure when the plan was introduced in 2004, and subsequently retained, because of its strong alignment with shareholder interests.Group measured from April 1, 2014 through March 31, 2017. The payout table established varying payouts for increasing levels of relative total shareholder return, with payout levels aligned with the Company’s philosophy of tying median pay to median performance with appropriate upside and downside leverage. Based on a review of market practices and regulatory guidance on incentive plan leverage, we reduced the maximum payout from 200% to 150% of target and made a corresponding change to lower the threshold performance level to achieve any payout was set at the 33rd33rd percentile ofrelative to peers. The Company’s performance on TSR over the Compensation Peer Group.three-year performance period was under the 33rd percentile, which resulted in azero-share payout in 2017 for this grant.
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COMPENSATION DISCUSSION AND ANALYSIS
Performance shares are settled 100% in shares. The 2011 performance share award measured performance from April 1, 2011 through March 31, 2014. The Company’s performance over this period was at the 100th percentile of peers, resulting in a payout of 200% of target. The total shareholder returnlong-term equity-based incentive plan provides incentive for the 2012 awards made under this program is currently belowcreation of shareholder value since the threshold level. If the total shareholder return for the 2012 grants remains below the threshold through March 2015, no amount will be earned under the 2012 award.
Restricted Stock Awards. Restricted stock awards vest ratably on the first, second, and third anniversariesfull benefit of the grant date. These awards are full-valueto each Named Executive Officer can be realized only with an appreciation in the price of the Company’s common shares or based on relative return on average common equity, depending on the type of stock that are eligible for dividend payments and receive voting rights during the restriction period.
For senior executives (including NEOs), a performance based vesting requirement was introduced in 2013 using ROTCE as a threshold metric before each annual equity grant vesting tranche is earned. The ROTCE threshold goal for 2014 was 2%. The threshold was put in place to protect against high levels of compensation payouts for poor risk or performance outcomes.award.
Other Long-term Equity-based Plan Provisions. The Variable Compensation Plan and long-term equity-based incentive compensation awards made in 2017 were authorized under the Company’s 2014 Incentive Compensation Plan which was approved and adopted by the Company’s shareholders in 2014.
The Committee has delegated to certain Named Executive Officers, as well as to the chief human resource officer, the authority to grant ordinary course equity awards for recruiting and retention purposes up to specified limits.
Determination of Long-term Equity-based Incentive AwardsAwards.. The Chief Executive Officerchief executive officer recommends the award levels for the othereach Named Executive OfficersOfficer except for himself, and the Committee makes the final award determination for all Named Executive Officers.Officers, including the chief executive officer. The award considerations are not based on a formula. Rather, the Committee may choose to make the actual award higher or lower than the target award based on the qualitative assessment of performance against stated objectives as well as the individual’s risk assessment results. The Committee believes that, by including a performance element as part of the upfrontup-front grant process, the Company is able to reinforce further reinforce thepay-for-performance objective of the long-term incentives.
These grants provide incentive for the creation of shareholder value since the full benefit of the grant to each Named Executive Officer can only be realized with an appreciation in the price of the Company’s common shares or based on relative total shareholder return, depending on the type of award. The Company does not grant discounted stock options or SARs, re-price previously granted stock options or SARs, or grant reload stock options.compensation structure.
When making the final determination to grant long-term equityequity-based incentive compensation awards in April 2014,February 2017, the Committee had the benefit ofconsidered information relating to market medianmarket-median compensation levels, Company financial performance during 2013,2016, the qualitative performance assessment described below, and individual risk performance assessments. After reviewing this information for 2013,2016, the Committee granted a 20142017 long-term equity incentive compensation award of 107%125 percent of target for the Chief Executive Officerchief executive officer and equity awards ranging from 95%100 percent to 105%133 percent of target for each of the NEOs.other Named Executive Officers.
Qualitative Performance Assessments.The individual qualitative performance assessment referenced in the discussions above is a review of how each Named Executive Officer performed against a set of stated objectives. This assessment is performed by the Board of Directors with respect to the Chief Executive Officer’schief executive officer’s performance and by the Chief Executive Officerchief executive officer with respect to the performance of the other Named Executive Officers.NEOs. The specific objectives assessed for each NEO areNamed Executive Officer is as follows:
For Mr. Kabat: Carmichael:Leadership and execution as president and chief executive officer relating to the NorthStar strategy; short and long-term financial results; driving accountability for a culture of strong risk management; customer and talent goals; and promotion of the Bank’s Core Values: Work as One Bank, Take Accountability, Be Respectful & Inclusive and Act with Integrity. The Variable Compensation Plan award was based on Mr. Carmichael’s 2017 performance against these objectives and his overall contribution to our performance.
The long-term equity-based award granted in February 2017 was based on 2016 performance against objectives of leadership and execution as Chief Executive Officerpresident and chief executive officer relating to Company
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COMPENSATION DISCUSSION AND ANALYSIS |
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financial performance in a well-managed risk environment; customer and employee index goals; “One Bank” success; and promotion of the Bank’s Core Values.
For Mr. Tuzun: Leadership and execution as executive vice president and chief financial officer relating to objectives concerning the management of the 2017 financial plan and financial management of NorthStar initiatives in a well-managed risk environment; operational excellence; customer and talent goals; and promotion of the Bank’s Core Values: Work as One Bank, Take Accountability, Be Respectful & Inclusive and Act with Integrity. The Variable Compensation Plan award was based on 2017 performance against these objectives. The long-term equity-based award granted in February 2017 was based on 2016 performance against these objectives.
For Mr. Anderson: Leadership and execution as executive vice president and chief operating officer relating to objectives tied to Companystrategic and financial performancemanagement of line of business and NorthStar initiatives in a well managedwell-managed risk environment,environment; customer and employee index goals, “One Bank” success,talent goals; and promotion of core values of accountability, integrity, respectthe Bank’s Core Values: Work as One Bank, Take Accountability, Be Respectful & Inclusive and inclusion, and teamwork and collaboration. Mr. Kabat’s objectives were consistent in 2013 and 2014.Act with Integrity. The VCPVariable Compensation Plan award was based on 20142017 performance against these objectives. The LTIlong-term equity-based award granted in April 2014February 2017 was based on 20132016 performance against these objectives.
For Mr. Tuzun:Spence: Leadership and execution as Executive Vice Presidentexecutive vice president and Chief Financial Officerhead of payments, strategy, and digital solutions relating to objectives concerning balance sheet, capitaltied to strategic outcomes of NorthStar initiatives, payments and liquidity management,strategy office in a well-managed risk managementenvironment; customer and compliance,
COMPENSATION DISCUSSION AND ANALYSIS
credit loss management, operational excellence, maintaining a strong financial team,talent goals; and promotion of core values of accountability, integrity, respectthe Bank’s Core Values: Work as One Bank, Take Accountability, Be Respectful & Inclusive and inclusion, and teamwork and collaboration.Act with Integrity. The VCPVariable Compensation Plan award was based on 2014Mr. Spence’s 2017 performance against these objectives. The LTIlong-term equity-based award granted in April 2014February 2017 was based on 20132016 performance against similarthese objectives.
For Mr. Poston:Forrest: Leadership and execution as Executive Vice Presidentexecutive vice president and Chief Strategy and Administrative Officerchief risk officer relating to objectives concerning strategic planning, capital management, risk management and compliance,compliance; NorthStar initiatives; operational excellence,excellence; customer and talent goals; and promotion of core values of accountability, integrity, respectthe Bank’s Core Values: Work as One Bank, Take Accountability, Be Respectful & Inclusive and inclusion, and teamwork and collaboration.Act with Integrity. The VCPVariable Compensation Plan award was based on 20142017 performance against these objectives. The LTIlong-term equity-based award granted in April 2014February 2017 was based on 2013 performance against objectives in his prior role.
For Mr. Carmichael: Leadership and execution as President and Chief Operating Officer relating to objectives tied to Company and line of business financial performance in a well managed risk environment, customer service levels, team work across divisional and functional areas, and promotion of core values of accountability, integrity, respect and inclusion, and teamwork and collaboration. Mr. Carmichael’s objectives were consistent for 2013 and 2014. The VCP award was based on 2014 performance against these objectives. The LTI award granted in April 2014 was based on 20132016 performance against these objectives.
For Mr. Sullivan: LeadershipThe Committee’s Considerations.The Committee considers both the aggregate amount and executionmix of an executive officer’s Total Direct Compensation when making the decisions discussed above. The Committee assesses Total Direct Compensation relative to competitive market data annually during its December meeting. Recommendations for executive compensation are reviewed and approved as Executive Vice President and President of Fifth Third Bank (Chicago) relating to objectives concerning loan and deposit growth and overall financial performancefinal during its February meeting.
Based on its most recent review of the Chicago businesscompetitive data, the Committee has determined that the compensation structure for executive officers is effective and appropriate. The structure reflects the Company’s compensation philosophy in that its incentive payout ranges are aligned with the competitive market data; it has appropriate leverage to ensure a well managedstrong linkage between compensation, risk environment, team building, “One Bank” success,outcomes, and effectivenessperformance; and promotion of core values of accountability, integrity, respect & inclusion, and teamwork & collaboration. Mr. Sullivan’s objectives were consistent for 2013 and 2014. The VCP award wasit drives rewards based on 2014the most relevant performance against these objectives. measures for the Company and shareholders.
The LTI award grantedCommittee also has reviewed the internal relationships between the compensation for the chief executive officer and for other executive officers and has deemed them to be appropriate. The Committee
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| COMPENSATION DISCUSSION AND ANALYSIS |
believes that the relative difference between the compensation of the chief executive officer and the compensation of the Company’s other executive officers is consistent with such differences found in April 2014 was based on 2013 performance against these objectives.the Company’s Compensation Peer Group.
Tax and Accounting Impacts of Compensation Programs
Other Long-term Equity-based Plan Provisions.Deductibility of Executive Compensation.Section 162(m) of the Internal Revenue Code limits the deductibility of compensation paid to or earned by certain executive officers of a public company. Section 162(m) limits the annual deductibility of certain executive compensation to $1 million per covered executive officer. Certain other limitations on the deductibility of executive compensation will continue to apply to some forms of compensation earned during the Company’s participation in the Troubled Asset Relief Program’s Capital Purchase Program in addition to the limitation under Section 162(m). While the Company’s compensation philosophy has been to consider the deductibility of executive compensation in approving compensation that may not be deductible, the Committee has determined that the underlying executive compensation programs are appropriate and necessary to attract, retain, and motivate senior executives and that failing to meet these objectives creates more risk for the Company than the financial impact of losing the tax deduction. For the year ending December 31, 2017, the tax impact related tonon-deductible compensation expense was approximately $4.1 million.
Accounting and Financial Reporting.The annual cash andCompany accounts for long-term equity-based incentive compensation awards madepayments including stock options, SARs, restricted stock, and performance shares in 2014 were authorized under the Company’s 2014 Incentive Compensation Plan. This Plan was approved and adopted by the Company’s shareholders in 2014.
The Company’s Code of Business Conduct and Ethics provides that the Company reserves the right to and, if appropriate, will seek restitution of any bonus, commission, or other compensation received as a result of an employee’s intentional or knowing fraudulent or illegal conduct or misconduct, including the making of a material misrepresentation containedaccordance with accounting principles generally accepted in the Company’s financial statements.United States (U.S. GAAP).
The Committee has delegated to certain Named Executive Officers, as well as to the Chief Human Resource Officer, the authority to grant equity awards for recruiting and retention purposes up to specified limits.
46 | Fifth Third Bancorp | 2018 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS |
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2015 EXECUTIVE COMPENSATION PLAN DESIGN CHANGES2018 Executive Compensation Plan Design Changes
20152018 Variable Compensation Plan Changes. As stated above, theThe Company and the Committee review the variable compensation planVariable Compensation Plan annually to determine if any changes need toshould be made to the plan for the next year. During 2014, the Company reviewed the plan and determined that the core funding metrics and modifiers continue to provide the right business focus and are aligned with business strategy. However, in order to avoid duplicative measures in the VCP and LTI plans, RORWA replaced ROTCE as a core metric. RORWA had been used as a modifier. RORWA will provide focus on balance sheet effectiveness and capital management while managing risk.
2015 Long-term Equity-based Incentive Plan Changes. As stated above2017, the Company and the Committee reviewed the plan to determine that the right core funding metrics were in place to provide strong business focus and alignment with the business strategy. The Committee determined that the existing core funding metrics and funding modifiers are still appropriate, and it made no changes to them. It was determined, however, that modifications could be made to simplify the design of the Category 1 pool funding structure while also aligning the design to that of the broad-based plan. Starting in 2018, there no longer will be two separate Variable Compensation Plan pool structures for executives and broad-based employees, but instead, one pool structure for all employees. The performance quartile structure will be eliminated, and the core funding metrics will be expressed in the same way for executives and broad-based employees. The chart below highlights the key changes made in the new design:
From: | To: | |
Separate VC plans for Category 1 | Same VC plan for Category 1 and broad-based employees. | |
Discretionary pool funding within | Formulaic pool funding based on core performance | |
Pool funding capped at sum of maximums. | Pool funding capped at 150% of target. | |
Discretionary individual award allocations. | Discretionary individual award allocation using | |
Individual award ranges aligned with market. | Individual award targets aligned with market. |
2018 Long-term Equity-based Incentive Plan Changes.The Company and the Committee also review the long-term equity-based incentive plan annually to determine if any changes need to be made to the plan (i.e., award mix, performance measures, modifiers, etc.) for the next year. During 2014,2017, the Company reviewed the long-term
COMPENSATION DISCUSSION AND ANALYSIS
incentive plan and decided to make the following changes to continue to strengthen the governance, reporting, competitiveness, and risk adjustedrisk-adjusted pay decisions to meet evolving regulatory guidance.guidance:
For the Performance Share Plan the payout grid will change so that payout amounts are distributed in 20 point increments in an effort to more evenly spread payout opportunities on the upside as well as the downside of the grid. |
Payouts will continue to be capped at 150 percent for performance starting at the 75th percentile performance of our Compensation Peer Group and no payout will be achieved for performance at or under the 25th percentile. |
These changes will impact any long-term incentives to be granted in 2019 based on 2018 performance. The Committee approved the changes at the January 2014 andits December 2014 meeting dates.
Beginning with the 2015 grant, the mix of award types will change based on the below table.
Award Type | 2014 Proportion of long-term incentive value | 2015 Proportion of long-term incentive value | 2015 Calculation of Awards | |||||||
Stock Appreciation Rights | 25 | % | 15 | % | Total award dollar value multiplied by 15% divided by stated yearly SAR value(1) | |||||
Performance Shares | 35 | % | 45 | % | Total award dollar value multiplied by 45% divided by the Company’s closing stock price on the grant date | |||||
Restricted Stock | 40 | % | 40 | % | Total award dollar value multiplied by 40% divided by the Company’s closing stock price on the grant date |
2015 Performance Share Plan. Relative Total Shareholder Return (“TSR”) has been the metric used since we began granting performance share awards. During the aforementioned long-term incentive plan review process we considered other metrics that better align with long-term shareholder value creation and are indicative of management’s effectiveness in executing value-added tactics and strategies to achieve optimal core performance results and at the same time are key success measures in the banking industry. We also considered our alignment with competitive practices compared to our peer banks. Based on this review, the following changes were made for the 2015 performance share grant:
The primary metric used for our performance share awards will be Return on Average Equity (“ROAE”), as adjusted, relative to our peer banks.
To achieve balance between relative and absolute metrics, two absolute performance hurdles will also be used: ROTCE and Efficiency Ratio.
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COMPENSATION DISCUSSION AND ANALYSIS
Performance shares will continue to be settled in shares.
The performance share plan measurement period will be three years. The 2015 performance period runs from January 1, 2015 to December 31, 2017.
Non-Binding Advisory Say on Pay Proposal. In 2014, our shareholders approved a non-binding advisory say-on-pay proposal at our 2014 Annual Meeting with 94.91% of the votes cast voting in favor of that proposal. The Committee believes the results of the shareholder vote indicate strong support among shareholders for our pay-for-performance approach. We intend to continue to monitor our current compensation structure and future votes to ensure that there is continued support for our pay programs among our shareholders.2017 meeting.
EXECUTIVE BENEFITS AND PERQUISITESExecutive Benefits and Perquisites
Summary of Eligibility for Benefits and Perquisites.The Company provides few benefits and perquisites to executive officers that are not available to the general employee population. Special benefits include an executive physical exam programhealth and fitness programs and a deferred compensation plan. Special perquisites for executives
Fifth Third Bancorp | 2018 Proxy Statement | 47 |
| COMPENSATION DISCUSSION AND ANALYSIS |
include the following: financial planning reimbursement, country club memberships (the Company eliminated the reimbursement of future company club dues to its executive officers in March 2010 but will honor its commitments to pay any existing forgiveness loans entered into to purchase such memberships), nominal holiday gifts, and parking. Additionally, spouses or guests of executive officers may be provided travel and/or entertainment benefits related to business events whereat which their attendance is expected and appropriate-appropriate, such as company recognition events or trips, recruiting meals, or social events held for marketing or other business purposes. These benefits are often provided with little or no incremental cost to the Company. The Company does not provide taxgross-ups for these special perquisites.
Retirement Benefits.The Company’s retirement benefits are designed to assist employees in accumulating wealth to provide income during their retirement years. The retirement benefits are designed to attract and retain employees and to encourage employees to save money for their retirement while maintaining a competitive cost structure for the Company. Based on the Company’s research using two national benefits surveys, its retirement benefits are positioned near the market median for similar employers. The Company’s primary retirement benefit plan is a defined contribution 401(k) plan with a company match and possible additional discretionary contributions, both of which are subject to vesting requirements. The Company also maintains a defined benefit plan that has been frozen and none of the Named Executives participate in the plan.match.
401(k) and Profit-Sharing.The Company maintains athe same 401(k) plan for all eligible employees.employees, including the Named Executive Officers. The 401(k) plan provides a match to employee contributions and may provide an annual discretionary profit-sharing contribution. The Company’s match is 100% of 150 percent on the first 4%2 percent and 100 percent on the next 4 percent of eligible compensation an employee contributes to the plan, and is invested in any of the plan’s existing investment alternatives that the employee selects. The discretionary profit-sharing contributionThis Company match is based on the Company’s performance, and is invested in the participant’s existing 401(k) investment allocations. The discretionary contribution for 2014, paid in 2015, was 2% of eligible compensation based on the Company’s financial results.immediately 100 percent vested. All Named Executive Officers are eligible for this plan up to the IRS wage or contribution limits. Effective June 23, 2017, the option to invest future contributions in Fifth Third stock was discontinued.
Pension Plan.The Company maintains a defined benefit pension plan.plan which was frozen to new participants as of November 15, 1998. Employees who met the age and service requirement wereat that time are “grandfathered” and continue to accrue benefits under that plan. No Named Executives continue to accrue benefits underExecutive Officers are participants in this plan. Mr. Kabat has a frozen benefit for his service while at Old Kent Bank prior to it being acquired by the Company. The Old Kent Bank defined benefit plan was frozen for all participants shortly after the Company acquired Old Kent Financial Corporation. The retirement benefit under the defined benefit pension plan is based on years of service and a percent of an employee’s highest five consecutive years of earnings over the last ten years of employment. Compensation for retirement benefit calculations is defined as the base salary plus variable compensation.
COMPENSATION DISCUSSION AND ANALYSIS
Health and Welfare Benefits.The Company offers medical, dental, vision, life, and disability insurance to its employees. The benefits are designed to attract and retain employees and provide security to employees for their health and welfare needs. Based on the Company’s research using two national benefits surveys, its health and welfare benefits are positioned near the market median for similar employers. These benefits are offered to employees and Named Executive Officers on a uniform basis and are subject to insurance policy limitations. The Company also provides to each Named Executive Officer a comprehensive physical exam program. The Company provides Company-paid life insurance coverage equalprogram and access to an employee’s base salary, up to $1,000,000. The Company’s long-term disability benefit is 60% of an employee’s base salary and the benefit is limited to $20,000 per month. The Company also offers a Company-paid short-term disability benefit with similar benefits to the long-term disability program.fitness facility.
Deferred Compensation.The Company offers some of its employees (atat certain salary band levels, including its executive officers)officers, a nonqualified deferred compensation plan. This plan allows for the deferral of base salary and bonus.awards received under the Variable Compensation Plan. The plan also provides for the Company to make a contribution for loss of qualified plan 401(k) match and/or discretionary contributions due to deferral of pay into this plan or due to wage and/or contribution limitations under the qualified 401(k) plan. The deferred funds receive earnings based on the mutual funds elected by each executive. Executives may alsoThe executives do not earn any preferential or above-market returns on these earnings. Prior to June 23, 2017, executives were able to elect a rate equal to the return on Company common stock. The executives do not earn any preferential or above market returns.Effective June 23, 2017, that option was discontinued for future contributions.
Severance and Change in Control Benefits. Through 2014, the Company maintained change in control agreements for approximately 44 of its officers (including all of the 2014 Named Executive Officers). The severance benefits conferred under these agreements ranged from one to 2.99 times the individual’s base salary plus target annual cash incentive compensation, and other benefits, and were effective only in the event of both a change in control and termination of employment (including a constructive termination). For this purpose, a change in control would occur in any of the following instances:
Any person is or becomes the beneficial owner of 25% or more of the voting power of the Company’s outstanding securities
During any consecutive 2-year period, the directors in office in the beginning of such period (or directors who were approved by 2/3 of such directors) cease to constitute a majority of the Board
The sale or disposition of substantially all of the Company’s assets or the merger or consolidation of the Company with any other corporation unless the voting securities of the Company outstanding prior to such action continue to represent at least 50% of the voting power of the merged or consolidated entity
The Company’s shareholders approve a plan of complete liquidation of the Company
The agreements defer to the applicable Incentive Compensation Plans for treatment of long-term equity-based incentive compensation in the event of a change in control. Since April 2008, we have not granted any awards which provide for single trigger vesting upon a change in control. Instead, the vesting provisions for those awards provide for accelerated vesting only if there is a change in control and a subsequent qualifying termination of employment (i.e. double trigger). Performance-based awards (including performance shares and performance-based restricted stock) would be paid out at the higher of (1) the extent to which the performance goals had been met through the date of the change in control or (2) the value at the date of the change in control of the number of target shares awarded at the grant.
On November 18, 2014, the Committee adopted the Fifth Third Bancorp Executive Change in Control Severance Plan (the “Severance Plan”), to be effective as of January 1, 2015. The purpose of the Severance Plan is to (1) replace all existing change-in-control agreements with executives, which expired on December 31, 2014 in accordance with their terms; (2) eliminate the remaining excise tax gross-up provisions in the expiring change-
COMPENSATION DISCUSSION AND ANALYSIS
in-control agreements; (3) provide market level provides severance benefits to certain officers upon a qualifying termination after a change in control; (4) continuecontrol, subject to condition receipt of such severance benefits upon execution of a release andnon-compete agreement; and (5) allow for a consistent approach to change-in-control severance benefits for covered officers. agreement. The plan covers approximately 44 officers, including all Named Executive Officers.
48 | Fifth Third Bancorp | 2018 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS |
|
Under the Severance Plan, certain executives will receive severance if, in connection with a change in control, the executive’s employment is terminated without Cause (as defined in the Severance Plan) or the executive resigns for Good Reason (as defined in the Severance Plan). Upon a qualifying termination after a change in control, a named executive officer willMessrs. Carmichael, Tuzun, and Anderson are eligible to receive an amount equal to 2.99 times the sum of their Base Salary and Variable Compensation Amount (each asPlan amount (as defined in the Severance Plan)., and Messrs. Spence and Forrest are eligible to receive an amount equal to 2.0 times the same amount. In addition, continued insurance benefits and certain retirement benefits payable to the named executive officers will be paid to the Named Executive Officers for three years. for Messrs. Carmichael, Tuzun, and Anderson and for two years for Messrs. Spence and Forrest. As noted above, no excise taxgross-ups will be provided. Mr. Kabat, Vice Chairman and Chief Executive Officer, and Mr. Carmichael, President and Chief Operating Officer, had been eligible to receive excise tax gross-ups under their existing agreements which expired on December 31, 2014.
TAX AND ACCOUNTING IMPACT OF COMPENSATION PROGRAMS
Deductibility of Executive Compensation. Section 162(m)For this purpose, a change in control would occur in any of the Internal Revenue Code limits the deductibility of compensation paid to or earned by certain executive officers of a public company. Section 162(m) limits the annual deductibility of certain (non-performance based) executive compensation to $1 million per covered executive officer. Certain other limitations on the deductibility of executive compensation will continue to apply to some forms of compensation earned during the Company’s participation in TARP in additionfollowing instances:
Any person is or becomes the beneficial owner of 30 percent or more of the voting power of the Company’s outstanding securities. |
During any consecutive 12 month period, the directors in office in the beginning of such period (or directors who were approved bytwo-thirds of such directors) cease to constitute a majority of the Board. |
The sale or disposition of substantially all of the Company’s assets or the merger or consolidation of the Company with any other corporation unless the voting securities of the Company outstanding prior to such action continue to represent at least 50 percent of the voting power of the merged or consolidated entity. |
The Company’s shareholders approve a plan of complete liquidation of the Company. |
The Severance Plan defers to the limitation under Section 162(m). While the Company’s compensation philosophy has been to, where appropriate, position executive compensation to qualifyapplicable Incentive Compensation Plans for deductibility, in approving compensation that may not be deductible, the Committee has determined that the underlying executive compensation programs are appropriate and necessary to attract, retain, and motivate senior executives, and that failing to meet these objectives creates more risk for the Company than the financial impacttreatment of losing the tax deduction. For the year ending December 31, 2014, the tax impact related to non-deductible compensation expense was approximately $300 thousand.
Accounting and Financial Reporting. The Company accounts for long-term equity-based incentive compensation payments including stock options, SARs, performance-based restricted stock,in the event of a change in control. Since April 2008, we have not granted any awards that provide for “single-trigger” vesting upon a change in control. Instead, the vesting provisions for those awards provide for accelerated vesting only if there is a change in control and a subsequent qualifying termination of employment (“double trigger” vesting). Performance-based awards would be paid out at the higher of (1) the extent to which the performance goals had been met through the date of the change in control or (2) the value on the date of the change in control of the number of target shares awarded on the grant date.
Starting with grants to be made in 2018, the payout provision for performance shares in accordance with accounting principles generally acceptedthe event of a change in control will change. Performance-based awards will be paid out at the United Stateshigher of America.(1) the extent to which the performance goals had been met through the date of the change in control or (2) the value on the date of the change in control of the number of target shares, in each case prorated based on the portion of the performance period elapsed at the time of the change in control.
EXECUTIVE OWNERSHIP AND CAPITAL ACCUMULATIONExecutive Ownership and Capital Accumulation
Share Ownership Guidelines.The executive compensation program is designed in part to provide opportunities for executive officers to build ownership in the Company and to align performance with shareholder interests. Accordingly, the Company has established share ownership guidelines for senior employees in the Company’s salary band structure, including the executive officers. The amount of shares required to be retained varies based upon the assigned salary band and associated multiple of base salary. These employees are expected to use shares net of taxes obtained through awards under the long-term
Fifth Third Bancorp | 2018 Proxy Statement | 49 |
| COMPENSATION DISCUSSION AND ANALYSIS |
equity-based incentive compensation program to establish a significant level of direct ownership. Stock ownership includes:
Shares owned | Restricted stock not yet vested. | Shares held in the | Shares held in the | Shares held in the |
Shares owned individually and by immediate family sharing the same household
Restricted stock not yet vested
Shares held in the 401(k) plan
Shares held in the employee stock purchase plan
Shares held in the nonqualified deferred compensation plan
COMPENSATION DISCUSSION AND ANALYSIS
ExecutiveUntil ownership guidelines are met, executive officers are required to retain 100%100 percent of the netafter-tax shares for one year following exercise or receipt of the shares. In addition, executive officers who have not met the ownership guidelines are required to retain 50% of the net after-tax shares following exercise or receipt of shares under the shares andlong-term equity-based incentive compensation program. Executives have 5five years to achieve the newtheir executive share ownership requirements. Specific ownership guidelines for the Named Executive Officers are:
Share Ownership Guidelines | ||||
| ||||
Chief Executive Officer | 6x Salary | |||
Other Named Executive Officers | 3x Salary |
The Committee reviews progress toward achieving the ownership goal for the Company’s executive officers on an annual basis. Based onAs of the 2014 review and December 31, 2014 share price,performed in June 2017, all of the Named Executive Officers had reached their ownership guideline except Mr. Tuzun. Mr. Tuzun is new to his role and is making appropriate progress toward meeting his ownership guideline.
Beneficial Ownership. The following table sets forth certain information regarding the Named Executive Officers’ beneficial ownership of the Common Stock of the Company as of DecemberJanuary 31, 2014:2018:
Title of Class | Name of Officer | Number of Shares Beneficially Owned(1) | Percent of Class | Name of Officer
|
Number of Shares
| Percent of Class
| ||||||||||
Common Stock | Kevin T. Kabat | 3,092,744 | .3743% |
Greg D. Carmichael
|
1,172,408
|
.1687
| ||||||||||
Common Stock | Tayfun Tuzun | 79,885 | .0097% |
Tayfun Tuzun
|
224,167
|
.0323
| ||||||||||
Common Stock | Greg D. Carmichael | 954,776 | .1158% |
Lars C. Anderson
|
221,457
|
.0319
| ||||||||||
Common Stock | Daniel T. Poston | 560,397 | .0680% |
Timothy N. Spence
|
157,968
|
.0228
| ||||||||||
Common Stock | Robert A. Sullivan | 831,626 | .1009% |
Frank R. Forrest
|
77,856
|
.0112
|
(1) The amounts shown represent the total shares owned outright by such individuals together with shares held in the name of spouses, minor children, certain relatives, trusts, estates, and certain affiliated companies (as to which beneficial ownership may be disclaimed) and SARs and RSAs or RSUs exercisable (or exercisable within 60 days) of January 31, 2018 but unexercised. These individuals have the number of SARs indicated after their names that are exercisable as of January 31, 2018 or will become exercisable within 60 days of January 31, 2018: Mr. Carmichael, 772,860; Mr. Tuzun, 124,571; Mr. Anderson, 39,524; Mr. Spence, 30,238; and Mr. Forrest, 23,115. The amounts listed for SARs represent the number of rights that may be exercised; the actual number of shares delivered will vary based on the stock’s appreciation over the grant price at the time of exercise.
For beneficial ownership of individual directors and all directors and executive officers as a group see “Election of Directors” on pages 12-18.
Prohibition on Hedging.The Company prohibits its executive officers from engaging in speculative trading and hedging shares of Company securities. This includes prohibitions against day trading or short selling of Company securities and in transactions in any derivative of Company securities, including buying and writing options. Executives are restricted from buying Company securities on margin or using Company
50 | Fifth Third Bancorp | 2018 Proxy Statement |
|
securities as collateral for a loan. Additionally, the Company’s insider trading policyInsider Trading Policy prohibits trading during designated blackout periods and requires approval by the Legal Departmentdepartment prior to any trade.
Clawbacks and Recoupments.The Company’s Code of Business Conduct and Ethics provides that the Company reserves the right to and, if appropriate, will seek restitution of any bonus, commission, or other compensation received as a result of an employee’s intentional or knowing fraudulent or illegal conduct or misconduct, including the making of a material misrepresentation contained in the Company’s financial statements.
COMPENSATION OF NAMED EXECUTIVE OFFICERS AND DIRECTORSCOMMITTEE REPORT
The following Report of the Human Capital and Compensation Committee does not constitute soliciting material and should not be deemed filed or incorporated by reference into any other Company filing under the Securities Act or the Exchange Act, except to the extent the Company specifically incorporates this Report by reference therein.
The Human Capital and Compensation Committee has reviewed and discussed with management the preceding Compensation Discussion and Analysis. Based on that discussion, the Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement and incorporated into the Company’s Annual Report on Form10-K for the year ended December 31, 2017.
Michael B McCallister, Chair
Nicholas K. Akins
Gary R. Heminger
Eileen A. Mallesch
Fifth Third Bancorp | 2018 Proxy Statement | 51 |
|
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of RegulationS-K, we are providing information about the relationship of the annual total compensation of Greg D. Carmichael, our chief executive officer (“CEO”), and the median annual total compensation of our employees. The Company believes that the ratio of pay included in this information is a reasonable estimate calculated in a manner consistent with Item 402(u) of RegulationS-K.
As of December 31, 2017:
Based on this information, for 2017 the ratio of the annual total compensation for our CEO to the median of the annual total compensation of our employees was 145 to 1.
In order to determine this ratio, we first identified one of our employees as the median employee. Since only 11 percent of our employees receive equity compensation, we considered total cash compensation as a consistently applied compensation measure. As allowed by the rules, we excluded our CEO and our 13 employees located outside the United States (11 in Canada and 2 in the United Kingdom) who constitute less than 1 percent of our 18,757 employee base. We then examined the total cash compensation (salary, wages, and bonus) for the remaining employees who were employed on December 31, 2017, as reflected in our payroll records and reported to the Internal Revenue Service on FormW-2 for 2017. In making this examination we annualized the salary of approximately 2,909 full-time employees hired in 2017 who did not work the entire year. We did not annualize the pay of any other type of employee (i.e. part-time,co-ops, etc.) or make any other adjustments to the payroll data.
Once we identified the median employee, we then compared all elements of that employee’s 2017 compensation in accordance with the requirements of Item 402(c)(2)(x) of RegulationS-K; the same methodology we used for our named executive officers in the 2017 Summary Compensation Table on page 54 of this proxy statement, to comparable total compensation of our CEO in order to determine the ratio as shown below:
Chairman, President and CEO
|
Median employee
| |||||||||
Base salary
|
|
$1,000,064
|
|
|
$52,892
|
| ||||
Stock awards
|
|
$4,526,248
|
|
|
$0
|
| ||||
Option awards
|
|
$798,750
|
|
|
$0
|
| ||||
Non-equity incentive plan compensation
|
|
$2,000,000
|
|
|
$2,800
|
| ||||
Change in pension value/Nonqualified deferred compensation earnings
|
|
$0
|
|
|
$0
|
| ||||
All other compensation
|
|
$363,230
|
|
|
$4,386
|
| ||||
TOTAL
|
|
$8,688,292
|
|
|
$60,078
|
| ||||
CEO pay ratio
|
|
145 : 1
|
|
52 | Fifth Third Bancorp | 2018 Proxy Statement |
CEO PAY RATIO |
|
December 31, 2017 was the date selected to identify the “median employee” because it is the date consistent with the rest of the discussion included in this proxy statement and because our employee base does not materially change at any point during the year.
As stated earlier in this discussion, we believe compensation must be competitive to attract and retain essential talent, to reward high performance, and to be internally equitable. Our expected total compensation opportunities for our employees are specific to the role they hold at the Company and generally reflect market median pay levels for our broader base of employees and median pay levels of our peer group for our executives, with variations based on specific talent needs, experience, and other internal factors. We believe that actual total compensation should vary with the performance of the organization, such that outstanding performance results in above-market compensation.
Fifth Third Bancorp | 2018 Proxy Statement | 53 |
|
Summary Compensation Table.The table below summarizes the compensation awarded, paid to, or earned by the Company’s Named Executive Officers during 2012-2014.2015-2017. The amounts in the Stock Awards and Option Awards columns indicate the grant date fair value associated with all grants awarded in the corresponding year and do not correspond with the amounts that the Named Executive Officers may eventually realize with respect to these awards. The benefit, if any, actually received from these awards will depend upon the future value of our common stock.
2014 Summary Compensation Table | ||||||||||||||||||||||||||||||||||||
Name & Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($)(1) (2) | Option Awards ($)(1) | Non-Equity Incentive Plan Compensation ($)(3) | Change in Pension ($)(4) | All Other Compensation ($)(5) | Total ($) | |||||||||||||||||||||||||||
Kevin T. Kabat Vice Chairman and Chief Executive Officer | 2014 | $ | 1,046,997 | $ | 0 | $ | 3,222,806 | $ | 1,249,999 | $ | 1,545,000 | $ | 120,800 | $ | 241,794 | $ | 7,427,396 | |||||||||||||||||||
2013 | $ | 1,024,227 | $ | 0 | $ | 3,500,933 | $ | 1,499,998 | $ | 1,850,000 | $ | 0 | $ | 289,711 | $ | 8,164,869 | ||||||||||||||||||||
2012 | $ | 1,000,002 | $ | 0 | $ | 3,346,412 | $ | 2,250,000 | $ | 2,115,000 | $ | 80,600 | $ | 195,327 | $ | 8,987,341 | ||||||||||||||||||||
Tayfun Tuzun Executive Vice President and Chief Financial Officer | 2014 | $ | 425,006 | $ | 0 | $ | 580,111 | $ | 224,998 | $ | 367,420 | $ | 0 | $ | 58,114 | $ | 1,655,649 | |||||||||||||||||||
2013 | $ | 313,365 | $ | 0 | $ | 175,050 | $ | 74,998 | $ | 315,000 | $ | 0 | $ | 46,875 | $ | 925,288 | ||||||||||||||||||||
2012 | $ | 274,997 | $ | 0 | $ | 125,004 | $ | 125,001 | $ | 225,000 | $ | 0 | $ | 32,442 | $ | 782,444 | ||||||||||||||||||||
Greg D. Carmichael President and Chief Operating Officer | 2014 | $ | 709,203 | $ | 0 | $ | 1,385,816 | $ | 537,497 | $ | 935,459 | $ | 0 | $ | 345,374 | $ | 3,913,349 | |||||||||||||||||||
2013 | $ | 695,447 | $ | 0 | $ | 1,505,406 | $ | 644,998 | $ | 1,151,720 | $ | 0 | $ | 375,913 | $ | 4,373,484 | ||||||||||||||||||||
2012 | $ | 675,002 | $ | 0 | $ | 1,692,291 | $ | 1,000,002 | $ | 1,350,000 | $ | 0 | $ | 300,092 | $ | 5,017,386 | ||||||||||||||||||||
Daniel T. Poston, Executive Vice President and Chief Strategy and Administrative Officer | 2014 | $ | 544,322 | $ | 0 | $ | 741,815 | $ | 287,718 | $ | 540,000 | $ | 0 | $ | 287,229 | $ | 2,401,084 | |||||||||||||||||||
2013 | $ | 530,281 | $ | 0 | $ | 927,737 | $ | 397,500 | $ | 562,500 | $ | 0 | $ | 306,454 | $ | 2,724,472 | ||||||||||||||||||||
2012 | $ | 499,990 | $ | 0 | $ | 978,690 | $ | 575,001 | $ | 787,500 | $ | 0 | $ | 223,642 | $ | 3,064,823 | ||||||||||||||||||||
Robert A. Sullivan Executive Vice President | 2014 | $ | 570,003 | $ | 0 | $ | 644,565 | $ | 250,001 | $ | 446,196 | $ | 0 | $ | 77,707 | $ | 1,988,472 | |||||||||||||||||||
2013 | $ | 570,003 | $ | 0 | $ | 700,183 | $ | 299,998 | $ | 460,000 | $ | 0 | $ | 108,064 | $ | 2,138,248 | ||||||||||||||||||||
2012 | $ | 570,003 | $ | 0 | $ | 858,753 | $ | 499,999 | $ | 577,500 | $ | 0 | $ | 88,335 | $ | 2,594,590 |
2017 Summary Compensation Table
| ||||||||||||||||||||||||||||||||
Name & Principal Position
| Year
| Salary ($)
| Bonus ($)(1)
| Stock ($)(2)
| Option ($)(3)
| Non-Equity ($)(4)
| All Other ($)(5)
| Total ($)
| ||||||||||||||||||||||||
Greg D. Carmichael, Chairman, President and Chief
|
|
2017 |
|
|
$1,000,064 |
|
|
$0 |
|
|
$4,526,248 |
|
|
$798,750 |
|
|
$2,000,000 |
|
|
$363,230 |
|
|
$8,688,292 |
| ||||||||
2016 | $994,287 | $0 | $3,612,503 | $637,501 | $2,000,000 | $310,790 | $7,555,081 | |||||||||||||||||||||||||
| 2015
|
|
| $806,986
|
|
| $0
|
|
| $3,748,629
|
|
| $308,577
|
|
| $1,336,000
|
|
| $250,858
|
|
| $6,451,050
|
| |||||||||
Tayfun Tuzun, |
|
2017 |
|
|
$553,426 |
|
|
$0 |
|
|
$1,190,006 |
|
|
$209,997 |
|
|
$630,000 |
|
|
$129,575 |
|
|
$2,713,004 |
| ||||||||
Executive Vice President | 2016 | $519,342 | $0 | $849,999 | $150,001 | $900,000 | $127,359 | $2,546,701 | ||||||||||||||||||||||||
and Chief Financial Officer |
| 2015
|
|
| $452,632
|
|
| $0
|
|
| $688,494
|
|
| $121,500
|
|
| $800,000
|
|
| $95,681
|
|
| $2,158,307
|
| ||||||||
Lars C. Anderson, |
|
2017 |
|
|
$686,943 |
|
|
$0 |
|
|
$1,444,996 |
|
|
$255,004 |
|
|
$637,500 |
|
|
$251,669 |
|
|
$3,276,112 |
| ||||||||
Executive Vice President | 2016 | $675,002 | $0 | $1,445,007 | $255,001 | $900,000 | $223,111 | $3,498,121 | ||||||||||||||||||||||||
and Chief Operating Officer |
| 2015
|
|
| $272,597
|
|
| $3,750,000
|
|
| $2,999,992
|
|
| $0
|
|
| $0
|
|
| $60,159
|
|
| $7,082,748
|
| ||||||||
Timothy N. Spence, Executive Vice President and Digital Solutions
|
|
2017 |
|
|
$461,950 |
|
|
$0 |
|
|
$1,359,999 |
|
|
$239,999 |
|
|
$715,000 |
|
|
$318,772 |
|
|
$3,095,720 |
| ||||||||
2016 | $450,008 | $12,200 | $1,020,008 | $179,999 | $900,000 | $252,621 | $2,814,836 | |||||||||||||||||||||||||
| 2015
|
|
| $131,541
|
| $712,829 | $3,674,982 | $0 | $217,230 | $2,372 | $4,738,954 | |||||||||||||||||||||
Frank R. Forrest, Executive Vice President
|
|
2017 |
|
|
$534,796 |
|
|
$0 |
|
|
$1,190,006 |
|
|
$209,997 |
|
|
$600,000 |
|
|
$148,245 |
|
|
$2,683,044 |
| ||||||||
2016 | $519,713 | $0 | $849,999 | $150,001 | $900,000 | $142,614 | $2,562,327 | |||||||||||||||||||||||||
| 2015
|
|
| $528,093
|
|
| $0
|
|
| $1,264,977
|
|
| $135,001
|
|
| $750,000
|
|
| $109,627
|
|
| $2,787,698
|
|
(1) The amount shown for Mr. Anderson in 2015 includes a $3 million signing bonus and a $750,000 Variable Compensation Plan payment guaranteed as part of his new hire offer. The amounts shown for Mr. Spence in 2015 and 2016 comprise a signing bonus payable over two years as part of his new hire offer.
(2) The values included for performance share awards for 2017 in both the Summary Compensation Table and the table below reflect the grant date fair value of $26.52 which was also the closing price on the February 3, 2017 grant date and the price used to calculate the number of performance shares awarded. The values shown for performance share awards for 2016 reflect the grant date fair value of $14.87 which was also the closing price on the February 12, 2016 grant date and the price used to calculate the number of performance shares awarded. The values shown for performance share awards for 2015 reflect the grant date fair value of $18.78 which was also the closing price on the February 11, 2015 grant date and the price used to calculate the number of performance shares awarded. Fair value for 2015, 2016, and 2017 performance share awards assume target performance achievement as of the date of grant. Fair values assuming maximum performance as of the date of grant are as follows:
Executive
| Fair Value at Maximum Performance
| |||||
2015
| 2016
| 2017
| ||||
Greg D. Carmichael
|
$1,388,612
|
$2,868,758
|
$3,594,362
| |||
Tayfun Tuzun
|
$546,752
|
$674,994
|
$945,014
| |||
Lars C. Anderson
|
n/a
|
$1,147,503
|
$1,147,494
| |||
Timothy N. Spence
|
n/a
|
$810,006
|
$1,080,000
| |||
Frank R. Forrest
|
$607,486
|
$674,994
|
$945,014
|
(3) Amounts reflect the aggregate grant date fair value of awards granted during the year valued in accordance with statement of accounting principles generally accepted in the United States. Assumptions used in determining fair value are disclosed in note 24 “Stock Based Compensation” located on pages 156-159 of the Company’s Annual Report on FormCOMPENSATION OF NAMED EXECUTIVE OFFICERS AND DIRECTORS10-K
for the year ended December 31, 2017.
54 | Fifth Third Bancorp | 2018 Proxy Statement |
COMPENSATION OF NAMED EXECUTIVE OFFICERS |
|
Fair Value at Maximum Performance | ||||||||||||
Executive | 2012 | 2013 | 2014 | |||||||||
Kevin T. Kabat | $ | 2,327,813 | $ | 3,001,865 | $ | 1,834,214 | ||||||
Tayfun Tuzun | — | $ | 150,098 | $ | 330,152 | |||||||
Greg D. Carmichael | $ | 1,034,581 | $ | 1,290,805 | $ | 788,711 | ||||||
Daniel T. Poston | $ | 594,877 | $ | 795,484 | $ | 422,196 | ||||||
Robert A. Sullivan | $ | 517,305 | $ | 600,360 | $ | 366,843 |
(4) Amounts reflect the Variable Compensation Plan award paid in cash to each NEO.
(5) The amounts reflected in the All Other Compensation column consist of the benefits provided to the Company’s Named Executive Officers as described above under “Compensation Discussion and Analysis—Executive Benefits and Perquisites.” The following table reflects the costs of these benefits for 2017:
Executive
| Perquisites
| Registrant Contributions to Defined Contribution
| Tax Insurance
| Severance
| Other(G)
| Total
| ||||||
Greg D. Carmichael | $11,395(A) | $210,004 | $672 | $0 | $141,159 | $363,230 | ||||||
Tayfun Tuzun | $5,900(B) | $96,179 | $356 | $0 | $27,140 | $129,575 | ||||||
Lars C. Anderson | $14,809(C) | $111,086 | $454 | $0 | $125,320 | $251,669 | ||||||
Timothy N. Spence | $113,979(D) | $95,336 | $303 | $0 | $109,154 | $318,772 | ||||||
Frank R. Forrest | $2,400(E) | $100,436 | $350 | $0 | $45,059 | $148,245 |
Name | Perquisites and Other Personal Benefits | Registrant Contributions to Defined Contribution Plans | Insurance Premiums | Other(F) | Total | |||||||||||||||
Kevin T. Kabat | $ | 23,075 | (A) | $ | 102,270 | $ | 804 | $ | 115,645 | $ | 241,794 | |||||||||
Tayfun Tuzun | $ | 5,968 | (B) | $ | 36,906 | $ | 241 | $ | 14,999 | $ | 58,114 | |||||||||
Greg D. Carmichael | $ | 22,153 | (C) | $ | 68,036 | $ | 564 | $ | 254,621 | $ | 345,374 | |||||||||
Daniel T. Poston | $ | 7,468 | (D) | $ | 45,750 | $ | 433 | $ | 233,578 | $ | 287,229 | |||||||||
Robert A. Sullivan | $ | 3,366 | (E) | $ | 45,850 | $ | 459 | $ | 28,032 | $ | 77,707 |
COMPENSATION OF NAMED EXECUTIVE OFFICERS AND DIRECTORS(B) The amount shown for Mr. Tuzun represents trust and estate planning fees and parking.
(C) The amount shown for Mr. Anderson represents trust and estate planning fees, parking, and the incremental cost of travel and entertainment benefits provided to Mr. Anderson’s guest at business functions.
(D) The amount shown for Mr. Spence represents parking, an executive physical, relocation expenses, and $96,075 in housing and commuting expenses.
(E) The amount shown for Mr. Forrest represents parking.
(F) Fifth Third does not provide tax reimbursements to executive officers. The amounts shown in this column represent payments for insurance premiums only.
(G) The amount shown for Mr. Carmichael represents wellness rewards, a company Health Savings Account contribution, and dividends of $138,659 paid on unvested restricted stock awards. The amount shown for Mr. Tuzun represents a company Health Savings Account contribution, and dividends of $26,640 paid on unvested restricted stock awards. The amount shown for Mr. Anderson represents wellness rewards, a company Health Savings Account contribution, and dividends of $122,820 paid on unvested restricted stock awards. The amount shown for Mr. Spence represents wellness rewards and dividends of $107,154 paid on unvested restricted stock awards. The amount shown for Mr. Forrest represents wellness rewards, a company Health Savings Account contribution, and dividends of $42,559 paid on unvested restricted stock awards.
Fifth Third | 55 |
| COMPENSATION OF NAMED EXECUTIVE OFFICERS |
Grants of Plan-Based Awards.The following table illustrates the long-term equity-based incentive compensation awards made to Named Executive Officers during 2014.2017. The table reflects the full grant date fair value of awards made in 2014.
2017. On April 15, 2014,February 3, 2017, each of the Named Executive Officers received grants of performance shares that will vest three years from the grant date (contingent on meeting the performance threshold), restricted stockSARs that will vest in three equal annual installments from the date of grant, and SARsrestricted stock units that will vest in fourthree equal annual installments from the date of grant.
Dividends are paid on unvested restricted stock;stock units. None of these awards have beenre-priced or modified.
Performance shares are reported in the Estimated Future Payouts Under Equity Incentive Plan Award columns below; restricted stock units are reported in the All Other Stock Awards: Number of Shares of Stock or Units column below. None of these awards have been repriced or modified. As describedbelow; and SARs are reported in the Compensation Discussion and Analysis section,All Other Option Awards: Number of Securities Underlying Options column below.
2017 Grants of Plan-Based Awards | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name
| Grant
| Date Grant
| Estimated Future Payouts Under Non-Equity Incentive Plan Awards(2) | Estimated Future Payouts Under Equity Incentive Plan Awards(3) | All (#)
| All Other
| Exercise ($ / Sh)
| Grant Date Fair ($)
| ||||||||||||||||||||||||||||||||||||||||||||||||
Number Units
| Threshold
| Target ($)
| Maximum ($)
| Number
| Threshold (#)
| Target (#)
| Maxi- mum (#)
| |||||||||||||||||||||||||||||||||||||||||||||||||
Greg D. Carmichael | — | — | $ | 3,200,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
2/3/2017 | 2/3/2017 | 90,356 | 45,178 | 90,356 | 135,534 | $2,396,241 | ||||||||||||||||||||||||||||||||||||||||||||||||||
2/3/2017 | 2/3/2017 | 93,421 | $ | 26.52 | $798,750 | |||||||||||||||||||||||||||||||||||||||||||||||||||
2/3/2017 | 2/3/2017 | 80,317 | $2,130,007 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Tayfun Tuzun | — | — | $ | 1,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
2/3/2017 | 2/3/2017 | 23,756 | 11,878 | 23,756 | 35,634 | $630,009 | ||||||||||||||||||||||||||||||||||||||||||||||||||
2/3/2017 | 2/3/2017 | 24,561 | $ | 26.52 | $209,997 | |||||||||||||||||||||||||||||||||||||||||||||||||||
2/3/2017 | 2/3/2017 | 21,116 | $559,996 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Lars C. Anderson | — | — | $ | 1,350,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
2/3/2017 | 2/3/2017 | 28,846 | 14,423 | 28,846 | 43,269 | $764,996 | ||||||||||||||||||||||||||||||||||||||||||||||||||
2/3/2017 | 2/3/2017 | 29,825 | $ | 26.52 | $255,004 | |||||||||||||||||||||||||||||||||||||||||||||||||||
2/3/2017 | 2/3/2017 | 25,641 | $679,999 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Timothy N. Spence | — | — | $ | 1,100,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
2/3/2017 | 2/3/2017 | 27,149 | 13,575 | 27,149 | 40,724 | $719,991 | ||||||||||||||||||||||||||||||||||||||||||||||||||
2/3/2017 | 2/3/2017 | 28,070 | $ | 26.52 | $239,999 | |||||||||||||||||||||||||||||||||||||||||||||||||||
2/3/2017 | 2/3/2017 | 24,133 | $640,007 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Frank R. Forrest | — | — | $ | 1,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
2/3/2017 | 2/3/2017 | 23,756 | 11,878 | 23,756 | 35,364 | $630,009 | ||||||||||||||||||||||||||||||||||||||||||||||||||
2/3/2017 | 2/3/2017 | 24,561 | $ | 26.52 | $209,997 | |||||||||||||||||||||||||||||||||||||||||||||||||||
2/3/2017 | 2/3/2017 | 21,116 | $559,996 |
(1) Awards were made under the provisions of the 2014 Incentive Compensation Plan these awardsas approved by shareholders on April 15, 2014.
(2) NEOs do not have assigned Variable Compensation Plan targets or thresholds; rather, each NEO has an incentive opportunity range up to an established maximum.
(3) Comprises performance shares that are subject to accelerated vestingsettled in Company common stock, only after threshold performance or greater is achieved.
(4) Grant Date Fair Value of Option Awards granted on February 3, 2017, calculated as the eventtotal number of a change in control followedshares multiplied by a qualifying termination$8.55. Grant Date Fair Value of employment.Stock Awards granted (including performance shares) on February 3, 2017, calculated as the total number of shares multiplied by $26.52.
COMPENSATION OF NAMED EXECUTIVE OFFICERS AND DIRECTORS
2014 Grants of Plan-Based Awards | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Estimated Future Payouts Under Non-Equity Incentive Plan Awards(2) | Estimated Future Payouts Under Equity Incentive Plan Awards(3) | All Other Shares of Stock or | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($ / Sh) | Grant Date Fair | |||||||||||||||||||||||||||||||||||||||||||||||||
Name | Grant Date(1) | Date Grant Approved by Compensation Committee | Number of Units | Threshold ($) | Target ($) | Maximum ($) | Number of Units | Threshold (#) | Target (#) | Maximum (#) | ||||||||||||||||||||||||||||||||||||||||||||
Kevin T. Kabat | $ | 0 | — | $ | 3,200,000 | |||||||||||||||||||||||||||||||||||||||||||||||||
4/15/2014 | 4/15/2014 | 78,335 | 19,584 | 78,335 | 117,503 | $ | 1,222,809 | |||||||||||||||||||||||||||||||||||||||||||||||
4/15/2014 | 4/15/2014 | 191,424 | $ | 21.63 | $ | 1,249,999 | ||||||||||||||||||||||||||||||||||||||||||||||||
4/15/2014 | 4/15/2014 | 92,464 | $ | 1,999,996 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Tayfun Tuzun | $ | 0 | — | $ | 900,000 | |||||||||||||||||||||||||||||||||||||||||||||||||
4/15/2014 | 4/15/2014 | 14,100 | 3,525 | 14,100 | 21,150 | $ | 220,101 | |||||||||||||||||||||||||||||||||||||||||||||||
4/15/2014 | 4/15/2014 | 34,456 | $ | 21.63 | $ | 224,998 | ||||||||||||||||||||||||||||||||||||||||||||||||
4/15/2014 | 4/15/2014 | 16,644 | $ | 360,010 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Greg D. Carmichael | $ | 0 | — | $ | 1,800,000 | |||||||||||||||||||||||||||||||||||||||||||||||||
4/15/2014 | 4/15/2014 | 33,684 | 8,421 | 33,684 | 50,526 | $ | 525,807 | |||||||||||||||||||||||||||||||||||||||||||||||
4/15/2014 | 4/15/2014 | 82,312 | $ | 21.63 | $ | 537,497 | ||||||||||||||||||||||||||||||||||||||||||||||||
4/15/2014 | 4/15/2014 | 39,760 | $ | 860,009 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Daniel T. Poston | $ | 0 | — | $ | 1,200,000 | |||||||||||||||||||||||||||||||||||||||||||||||||
4/15/2014 | 4/15/2014 | 18,031 | 4,508 | 18,031 | 27,047 | $ | 281,464 | |||||||||||||||||||||||||||||||||||||||||||||||
4/15/2014 | 4/15/2014 | 44,061 | $ | 21.63 | $ | 287,718 | ||||||||||||||||||||||||||||||||||||||||||||||||
4/15/2014 | 4/15/2014 | 21,283 | $ | 460,351 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Robert A. Sullivan | $ | 0 | — | $ | 900,000 | |||||||||||||||||||||||||||||||||||||||||||||||||
4/15/2014 | 4/15/2014 | 15,667 | 3,917 | 15,667 | 23,501 | $ | 244,562 | |||||||||||||||||||||||||||||||||||||||||||||||
4/15/2014 | 4/15/2014 | 38,285 | $ | 21.63 | $ | 250,001 | ||||||||||||||||||||||||||||||||||||||||||||||||
4/15/2014 | 4/15/2014 | 18,493 | $ | 400,004 |
56 | Fifth Third Bancorp | 2018 Proxy Statement |
COMPENSATION OF NAMED EXECUTIVE OFFICERS AND DIRECTORS
Outstanding Equity Awards atYear-End.The following table outlines outstanding long-term equity-based incentive compensation awards for the Named Executive Officers as of December 31, 2014.2017. Each outstanding award is shown separately. The Option AwardAwards columns reflect stock appreciation rights. The Stock AwardAwards columns include restricted stock awards, restricted stock units, and performance share awards,shares, with performance share awardsshares listed in the Equity Incentive Plan Award columns. Performance shares settle entirely in shares of Company common stock only after threshold performance or greater is achieved. The vesting schedule for each award is described in the footnotes to this table.
Outstanding Equity Awards at December 31, 2014 | ||||||||||||||||||||||||||||||||||||||||||||||||
Option Awards | Stock Awards(16) | |||||||||||||||||||||||||||||||||||||||||||||||
Name | 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 ($) | Option Expiration Date | Number of Shares or Units of Stock Have Not Vested (#) | Market ($) | Equity (#) | Equity ($) | |||||||||||||||||||||||||||||||||||||||
Kevin T. Kabat | 62,377 | — | — | $ | 42.90 | 4/8/2015 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
60,000 | — | — | $ | 37.58 | 1/23/2016 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
71,100 | — | — | $ | 39.36 | 4/7/2016 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
233,333 | — | — | $ | 38.27 | 4/9/2017 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
500,000 | — | — | $ | 40.10 | 4/23/2017 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
269,231 | — | — | $ | 19.26 | 4/15/2018 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
350,000 | — | (1) | — | $ | 3.96 | 4/21/2019 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
321,429 | 107,142 | (2) | — | $ | 13.36 | 4/19/2021 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
265,958 | 265,957 | (3) | — | $ | 14.36 | 4/17/2022 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
82,237 | 246,710 | (4) | — | $ | 16.15 | 4/16/2023 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
— | 191,424 | (5) | $ | 21.63 | 4/15/2024 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | 3,414 | (6) | $ | 69,577 | — | — | ||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | 26,111 | (7) | $ | 532,142 | — | — | ||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | 14,722 | (8) | $ | 300,034 | — | — | ||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | 82,551 | (9) | $ | 1,682,389 | — | — | ||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | 92,464 | (10) | $ | 1,884,416 | — | — | ||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | — | — | 81,052 | (13) | $ | 1,651,840 | ||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | — | — | 92,937 | (14) | $ | 1,894,056 | ||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | — | — | 78,335 | (15) | $ | 1,596,467 | ||||||||||||||||||||||||||||||||||||||
Tayfun Tuzun | 3,923 | — | — | $ | 19.26 | 4/15/2018 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
6,000 | — | (1) | — | $ | 3.96 | 4/21/2019 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
4,615 | — | — | $ | 14.80 | 4/20/2020 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
4,286 | 1,428 | (2) | — | $ | 13.36 | 4/19/2021 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
14,776 | 14,775 | (3) | — | $ | 14.36 | 4/17/2022 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
4,112 | 12,335 | (4) | — | $ | 16.15 | 4/16/2023 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
— | 34,456 | (5) | — | $ | 21.63 | 4/15/2024 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | 561 | (11) | $ | 11,433 | — | — | ||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | 4,352 | (7) | $ | 88,694 | — | — | ||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | 1,566 | (8) | $ | 31,915 | — | — | ||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | 4,127 | (9) | $ | 84,108 | — | — | ||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | 16,644 | (10) | $ | 339,205 | — | — | ||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | — | — | — | 4,647 | (14) | $ | 94,706 | |||||||||||||||||||||||||||||||||||||
— | — | — | — | — | — | — | — | 14,100 | (15) | $ | 287,358 |
COMPENSATION OF NAMED EXECUTIVE OFFICERS AND DIRECTORS
Option Awards | Stock Awards(16) | |||||||||||||||||||||||||||||||||||||||||||||||
Name | 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 ($) | Option Expiration Date | Number of Shares or Units of Stock Have Not Vested (#) | Market ($) | Equity (#) | Equity ($) | |||||||||||||||||||||||||||||||||||||||
Greg D. Carmichael | 62,377 | — | — | $ | 42.90 | 4/8/2015 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
60,000 | — | — | $ | 37.58 | 1/23/2016 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
71,100 | — | — | $ | 39.36 | 4/7/2016 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
66,667 | — | — | $ | 38.27 | 4/9/2017 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
84,615 | — | — | $ | 19.26 | 4/15/2018 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
125,000 | — | (1) | — | $ | 3.96 | 4/21/2019 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
139,107 | 46,369 | (2) | — | $ | 13.36 | 4/19/2021 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
118,204 | 118,203 | (3) | — | $ | 14.36 | 4/17/2022 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
35,362 | 106,085 | (4) | — | $ | 16.15 | 4/16/2023 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
— | 82,312 | (5) | — | $ | 21.63 | 4/15/2024 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | 2,433 | (6) | $ | 49,585 | — | — | ||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | 11,605 | (7) | $ | 236,510 | — | — | ||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | 9,397 | (8) | $ | 191,511 | — | — | ||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | 35,497 | (9) | $ | 723,429 | — | — | ||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | 39,760 | (10) | $ | 810,309 | — | — | ||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | — | — | 36,023 | (13) | $ | 734,149 | ||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | — | — | 39,963 | (14) | $ | 814,446 | ||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | — | — | 33,684 | (15) | $ | 686,480 | ||||||||||||||||||||||||||||||||||||||
Daniel T. Poston | 36,058 | — | — | $ | 42.90 | 4/8/2015 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
30,000 | — | — | $ | 37.58 | 1/23/2016 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
35,550 | — | — | $ | 39.36 | 4/7/2016 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
26,667 | — | — | $ | 38.27 | 4/9/2017 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
30,769 | — | — | $ | 19.26 | 4/15/2018 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
40,000 | — | (1) | — | $ | 3.96 | 4/21/2019 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
78,572 | 26,190 | (2) | — | $ | 13.36 | 4/19/2021 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
67,968 | 67,966 | (3) | $ | 14.36 | 4/17/2022 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
21,793 | 65,378 | (4) | — | $ | 16.15 | 4/16/2023 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
— | 44,061 | (5) | — | $ | 21.63 | 4/15/2024 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | 1,334 | (6) | $ | 27,187 | — | — | ||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | 6,672 | (7) | $ | 135,975 | — | — | ||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | 5,482 | (8) | $ | 111,723 | — | — | ||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | 21,875 | (9) | $ | 445,813 | — | — | ||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | 21,283 | (10) | $ | 433,748 | — | — | ||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | — | — | 20,713 | (13) | $ | 422,131 | ||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | — | — | 24,628 | (14) | $ | 501,919 | ||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | — | — | 18,031 | (15) | $ | 367,472 |
COMPENSATION OF NAMED EXECUTIVE OFFICERS AND DIRECTORS
Outstanding Equity Awards at December 31, 2017
|
Outstanding Equity Awards at December 31, 2017
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Option Awards | Stock Awards(16) | Option Awards | Stock Awards(15) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name | 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 ($) | Option Expiration Date | Number of Shares or Units of Stock Have Not Vested (#) | Market ($) | Equity (#) | Equity ($) | Number of Securities Underlying Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Robert A. Sullivan | 62,377 | — | — | $ | 42.90 | 4/8/2015 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Greg D. Carmichael | 185,476 | — | — | $ | 13.36 | 4/19/2021 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
60,000 | — | — | $ | 37.58 | 1/23/2016 | — | — | — | — | 236,407 | — | — | $ | 14.36 | 4/17/2022 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
71,100 | — | — | $ | 39.36 | 4/7/2016 | — | — | — | — | 141,447 | — | $ | 16.15 | 4/16/2023 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
66,667 | — | — | $ | 38.27 | 4/9/2017 | — | — | — | — | 61,734 | 20,578 | (1 | ) | — | $ | 21.63 | 4/15/2024 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
80,769 | — | — | $ | 19.26 | 4/15/2018 | — | — | — | — | 28,467 | 28,466 | (2 | ) | — | $ | 18.78 | 2/11/2025 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
87,500 | — | (1) | — | $ | 3.96 | 4/21/2019 | — | — | — | — | 36,978 | 110,934 | (3 | ) | — | $ | 14.87 | 2/12/2026 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
71,429 | 23,809 | (2) | — | $ | 13.36 | 4/19/2021 | — | — | — | — | — | 93,421 | (4 | ) | — | $ | 26.52 | 2/3/2027 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
59,102 | 59,101 | (3) | — | $ | 14.36 | 4/17/2022 | — | — | — | — | — | — | — | — | — | 14,604 | (5 | ) | $443,085 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
16,448 | 49,341 | (4) | — | $ | 16.15 | 4/16/2023 | — | — | — | — | — | — | — | — | — | 34,101 | (6 | ) | $ | 1,034,624 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
— | 38,285 | (5) | — | $ | 21.63 | 4/15/2024 | — | — | — | — | — | — | — | — | — | 76,208 | (7 | ) | $ | 2,312,151 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | 1,525 | (6) | $ | 31,080 | — | — | — | — | — | — | — | 80,317 | (8 | ) | $ | 2,436,818 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | 5,802 | (7) | $ | 118,245 | — | — | — | — | — | — | — | — | — | 49,294 | (12 | ) | $ | 1,495,580 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | 4,020 | (8) | $ | 81,928 | — | — | — | — | — | — | — | — | — | 128,615 | (13 | ) | $ | 3,902,179 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
— | — | — | — | 16,510 | (9) | $ | 336,474 | — | — | — | — | — | — | — | — | — | 90,356 | (14 | ) | $ | 2,741,401 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Tayfun Tuzun | 4,615 | — | — | $ | 14.80 | 4/20/2020 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | 18,493 | (10) | $ | 376,887 | — | — | 5,714 | — | — | $ | 13.36 | 4/19/2021 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | — | — | 18,012 | (13) | $ | 367,085 | 29,551 | — | — | $ | 14.36 | 4/17/2022 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | — | — | 18,587 | (14) | $ | 378,803 | 16,447 | — | — | $ | 16.15 | 4/16/2023 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | — | — | 15,667 | (15) | $ | 319,293 | 25,842 | 8,614 | (1 | ) | — | $ | 21.63 | 4/15/2024 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
11,209 | 11,208 | (2 | ) | — | $ | 18.78 | 2/11/2025 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
8,701 | 26,102 | (3 | ) | — | $ | 14.87 | 2/12/2026 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
— | 24,561 | (4 | ) | — | $ | 26.52 | 2/3/2027 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | 5,750 | (5 | ) | $174,455 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | 17,931 | (7 | ) | $544,027 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | 21,116 | (8 | ) | $640,659 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | — | — | 19,409 | (12 | ) | $588,869 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | — | — | 30,262 | (13 | ) | $918,149 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | — | — | 23,756 | (14 | ) | $720,757 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lars C. Anderson | 14,792 | 44,373 | (3 | ) | — | $ | 14.87 | 2/12/2026 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
— | 29,825 | (4 | ) | — | $ | 26.52 | 2/3/2027 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | 30,483 | (7 | ) | $924,854 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | 25,641 | (8 | ) | $777,948 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | 158,144 | (9 | ) | $ | 4,798,089 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | — | — | 51,446 | (13 | ) | $ | 1,560,872 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
— | — | 28,846 | (14 | ) | $875,188 |
Fifth Third Bancorp | 2018 Proxy Statement | 57 |
| COMPENSATION OF NAMED EXECUTIVE OFFICERS |
Outstanding Equity Awards at December 31, 2017
| ||||||||||||||||||||||||||||||||||||||||||||||||
Option Awards | Stock Awards(15) | |||||||||||||||||||||||||||||||||||||||||||||||
Name | Number of Securities Underlying Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock Have Not Vested (#) | Market Value of Shares or Units of Stock That Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | |||||||||||||||||||||||||||||||||||||||
Timothy N. Spence | 10,441 | 31,322 | (3 | ) | — | $ | 14.87 | 2/12/2026 | — | — | ||||||||||||||||||||||||||||||||||||||
— | 28,070 | (4 | ) | — | $ | 26.52 | 2/3/2027 | — | — | |||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | 21,517 | (7) | $652,826 | — | — | |||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | 24,133 | (8) | $732,195 | — | — | |||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | 11,859 | (10) | $359,802 | — | — | |||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | 79,072 | (11) | $2,399,044 | — | — | |||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | 36,315 | (13 | ) | $ | 1,101,797 | |||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | — | — | 27,149 | (14 | ) | $823,701 | ||||||||||||||||||||||||||||||||||||||
Frank R. Forrest | — | 9,571 | (1 | ) | — | $ | 21.63 | 4/15/2024 | — | — | — | — | ||||||||||||||||||||||||||||||||||||
— | 12,454 | (2 | ) | — | $ | 18.78 | 2/11/2025 | — | — | — | — | |||||||||||||||||||||||||||||||||||||
— | 26,102 | (3 | ) | — | $ | 14.87 | 2/12/2026 | — | — | — | — | |||||||||||||||||||||||||||||||||||||
— | 24,561 | (4 | ) | — | $ | 26.52 | 2/3/2027 | 6,389 | (5) | $193,842 | — | — | ||||||||||||||||||||||||||||||||||||
— | — | — | — | — | 17,931 | (7) | $544,027 | — | — | |||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | 21,116 | (8) | $640,659 | — | — | |||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | 26,357 | (10) | $799,671 | — | — | |||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | 21,565 | (12 | ) | $654,282 | ||||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | — | — | 30,262 | (13 | ) | $918,149 | ||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | — | — | 23,756 | (14 | ) | $720,757 |
(1) All of the granted shares will vest on April 15, 2018.
(2) One-fourth of the granted shares will vest on each of February 11, 2018 and 2019.
(3) One-fourth of the granted shares will vest on each of February 12, 2018, 2019 and 2020.
(4) One-fourth of the granted shares will vest on each of February 3, 2018, 2019, 2020 and 2021.
(5) All unvested shares are scheduled to vest on February 11, 2018.
(6) All unvested shares are scheduled to vest on November 2, 2018.
(7) One-third of the granted shares will vest on each of February 12, 2018 and 2019.
(8) One-third of the granted shares will vest on each of February 3, 2018, 2019 and 2020.
(9) All unvested shares are scheduled to vest on October 1, 2019.
(10) All unvested shares are scheduled to vest on October 1, 2018.
(11) One-fourth of the granted shares will vest on each of October 1, 2018 and 2019.
(12) All unvested shares are scheduled to vest on February 11, 2018, subject to achievement of stated performance goals.
(13) All unvested shares are scheduled to vest on February 12, 2019, subject to achievement of stated performance goals.
(14) All unvested shares are scheduled to vest on February 3, 2020, subject to achievement of stated performance goals.
(15) Values are based on the December 29, 2017, closing price of the Company’s common stock of $30.34 with performance shares valued as if target performance was achieved.
58 | Fifth Third Bancorp | 2018 Proxy Statement |
COMPENSATION OF NAMED EXECUTIVE OFFICERS AND DIRECTORS
Option Exercises and Stock Vested.The following table outlines stock appreciation rights and stock options exercised and restricted stock performance share awards, and long-term cash that vested during 2014.2017.
2014 Option Exercises & Stock Vested | ||||||||||||||||
Option Awards(1) | Stock Awards(2) | |||||||||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized ($) | ||||||||||||
Kevin T. Kabat | — | — | 266,731 | $ | 5,952,075 | |||||||||||
Tayfun Tuzun | — | — | 6,092 | $ | 135,768 | |||||||||||
Greg D. Carmichael | — | — | 118,093 | $ | 2,632,514 | |||||||||||
Daniel T. Poston | — | — | 67,782 | $ | 1,510,374 | |||||||||||
Robert A. Sullivan | — | — | 59,497 | $ | 1,327,050 |
2017 Option Exercises & Stock Vested | ||||||||||
Option Awards(1) | Stock Awards(2) | |||||||||
Executive | Number of | Value on Exercise ($) | Number of Shares | Value Realized | ||||||
Greg D. Carmichael
|
100,073
|
|
$2,712,523
|
| ||||||
Tayfun Tuzun
|
9,923
|
$143,102
|
20,266
|
|
$522,940
|
| ||||
Lars C. Anderson
|
15,247
|
|
$404,198
|
| ||||||
Timothy N. Spence
|
62,158
|
|
$1,723,359
|
| ||||||
Frank R. Forrest
|
49,869
|
$346,151
|
21,521
|
|
$554,621
|
|
(1) |
(2) | The dollar figures in the table represent the value on the vest date for stock awards. |
Pension Benefits. The following table illustrates the payments in connection with retirement, shown for each retirement plan. The table shows the present value of accumulated benefits payable to each of the Named Executive Officers, including the number of years of service credited to each such Named Executive Officer under The Fifth Third Bancorp Master Retirement Plan (the “Master Retirement Plan”) determined using interest rates and mortality rate assumptions consistent with those used in the Company’s Financial Statements (disclosed in footnote 21 “Retirement and Benefit Plans” located on pages 138-142 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2014).
The Master Retirement Plan was frozen as of November 15, 1998 except for employees who were at least age 50 and had 15 years of credited service as of December 31, 1998. For the purpose of computing a benefit under these plans on December 31, 2014, Mr. Kabat has a frozen benefit related to his service with Old Kent Financial Corporation. His annual benefit at age 65 would be approximately $65,400. Messrs. Poston, Carmichael, Sullivan and Tuzun joined the Company after these plans were frozen and therefore are not eligible to participate.
The figures in the table below were calculated as of December 31, 2014 using the earliest age (or current age, if older) at which the Named Executive Officer may retire under the plan without a reduction of benefits due to age.
The benefits under the Master Retirement Plan for Mr. Kabat are calculated using the highest five out of the last 10 years of eligible wages, which generally includes W-2 pay including pre-tax deferrals. The normal benefit is equal to 1.68% of average monthly compensation plus 0.625% of average monthly earnings in excess of his Social Security covered compensation. This monthly benefit was converted to a present value in the table below. Mr. Kabat became eligible for early retirement upon attainment of age 55.
COMPENSATION OF NAMED EXECUTIVE OFFICERS AND DIRECTORS
Mr. Kabat’s credited service is as of the date the Old Kent Retirement Income Plan was frozen on March 10, 2002. His actual service with the Company is over 32 years. There is no additional value on a termination basis for Mr. Kabat.
2014 Pension Benefits | ||||||||||||||
Name | Plan Name | Number of Years Credited Service (#) | Present Value of Accumulated Benefit ($) | Payments ($) | ||||||||||
Kevin T. Kabat | Master Retirement Plan | 19.75 | $ | 685,600 | — | |||||||||
Tayfun Tuzun | — | — | — | — | ||||||||||
Daniel T. Poston | — | — | — | — | ||||||||||
Greg D. Carmichael | — | — | — | — | ||||||||||
Robert A. Sullivan | — | — | — | — |
Nonqualified Deferred Compensation.The Company maintains a Nonqualified Deferred Compensation Plan (“NQDCP”) that allows participant and Company contributions.
Participants are able to defer all but $50,000 of their base salary and 100%100 percent of their annual cash incentive compensationVariable Compensation Plan award. BeginningThe plan was amended effective January 1, 2007,2018 to allow participants were able to diversifydefer up to 70 percent of their investments into investment alternatives that are similar to those that are available in the Company’s 401(k) plan.base salary. The allowable deferral amount for Variable Compensation awards remained 100 percent.
In addition, the Company makes contributions for loss of qualified 401(k) plan matching and/or discretionary contributions due to base salary or annual cash incentive compensationVariable Compensation Plan award deferrals or due to wage and/or contribution limitations under the qualified 401(k) plan. The Company’s contribution to this plan is determined by taking the participant’s eligible wages above the qualified 401(k) plan compensation limits ($260,000270,000 for 2014)2017) and applying the Company’s 401(k) match (4%) and discretionary contribution (2% for 2014) percent.(7 percent). If other qualified plan 401(k) limitations applied, the participants would also have contributions made to the plan for those limitations.
Distributions are made in a lump sum or in up to ten10 annual installments. The Named Executive Officers may elect when the payments commence. The earliest distribution is August of the calendar year following the year of retirement. The entire distribution may be made no later than the tenth10th calendar year following the year of retirement. This plan is intended to comply with the requirements of Section 409(A) of the Internal Revenue Code.
Fifth Third Bancorp | 2018 Proxy Statement | 59 |
| COMPENSATION OF NAMED EXECUTIVE OFFICERS
|
The following table illustrates the nonqualified deferred compensation benefits by plan.plan benefits. It includes each Named Executive Officer’s and the Company’s contributions (each of which are reflected in the amounts disclosed in the 20142017 Summary Compensation Table) under the nonqualified deferred compensation plan as well as the earnings during 2014 but it2017. It does not reflect matching 401(k) or discretionary contributions made under the qualified plan.
2014 Nonqualified Deferred Compensation | ||||||||||||||||||||||
Name | Plan | Executive ($) | Registrant ($) | Aggregate ($) | Aggregate Withdrawals / Distributions ($) | Aggregate Balance at December 31, 2014 ($) | ||||||||||||||||
Kevin T. Kabat | NQDCP(1) | $ | 567,200 | $ | 84,220 | $ | 99,634 | — | $ | 2,789,131 | ||||||||||||
Tayfun Tuzun | NQDCP(1) | $ | 115,750 | $ | 16,200 | $ | 25,928 | — | $ | 673,574 | ||||||||||||
Greg D. Carmichael | NQDCP(1) | $ | 450,988 | $ | 49,986 | $ | 326,915 | — | $ | 3,737,306 | ||||||||||||
Daniel T. Poston | NQDCP(1) | — | $ | 28,309 | $ | 3,348 | — | $ | 230,940 | |||||||||||||
Robert A. Sullivan | NQDCP(1) | — | $ | 27,800 | $ | 13,735 | — | $ | 457,024 |
2017 Nonqualified Deferred Compensation | ||||||||||||||||||||||
Executive
| Plan | Executive Contributions in 2017 ($) | Company Contributions in 2017 ($) | Aggregate Earnings in 2017 ($) | Aggregate Withdrawals / Distributions | Aggregate Balance at 12/31/17 | ||||||||||||||||
Greg D. Carmichael
|
| NQDCP(1)
|
|
| -
|
|
| $191,104
|
|
| $967,974
|
| -
|
| $6,062,788
|
| ||||||
Tayfun Tuzun
|
| NQDCP(1)
|
|
| $280,343
|
|
| $82,840
|
|
| $233,098
|
| -
|
| $1,824,818
|
| ||||||
Lars C. Anderson
|
| NQDCP(1)
|
|
| $95,217
|
|
| $92,186
|
|
| $40,328
|
| -
|
| $350,212
|
| ||||||
Timothy N. Spence
|
| NQDCP(1)
|
|
| -
|
|
| $76,436
|
|
| $7,113
|
| -
|
| $111,268
|
| ||||||
Frank R. Forrest
|
| NQDCP(1)
|
|
| -
|
|
| $81,536
|
|
| $22,789
|
| -
|
| $252,402
|
|
(1) The investments under this plan would produce earnings equal to those of any other investor who invested like money in like investments for the same time period during the year.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROLPotential Payments Upon Termination or Change in Control.
The treatment of long-term equity-based awards issued as of December 31, 2017, under all termination scenarios, is dictated by the 2004, 2008, 2011, and 2014 Incentive Compensation Plans, which were approved by shareholders on March 23, 2004, April 15, 2008,2008; April 19, 2011,2011; and April 15, 2014, respectively. The design of the 2004 plan, including the vesting provisions under which equity awards continue to vest upon retirement and accelerate upon a change in control, was determined by the Committee to be appropriate and consistent with competitive practice among the Company’s peers at that time. The 2008, 2011 and 2014 plans provide immediate vesting upon a change in control only upon involuntary separation from service within two years after a change in control (i.e., a double-trigger).
The Company’s change in control agreementspolicies were also determined by the Committee to provide appropriate benefits based on a competitive review of the Compensation Peer Group and published guidance at the time of their adoption from institutional shareholder groups such as ISS and CalPERS. Although these agreements expired on December 31, 2014, the tables below reflect the payouts that would have been made on termination after a change in control.
These arrangements fit into the Company’s overall compensation objectives as they are viewed to be competitive, but not excessive, relative to our Compensation Peer Group, and they allow us to attract and retain qualified senior executives. However, these arrangements impact neither the compensation target levels that are based on market median compensation nor the compensation awards that are based on a variety of performance factors as described in this proxy statement.
The estimated payouts under a variety of termination scenarios for the Named Executive Officers are showndiscussed below. For allExcept in a change in control scenario, the Named Executive Officer’s termination scenarios, the figures reflect unvested long-term equity-based incentive compensation awards as of December 31, 2014, and at the closing stock price of $20.38 on that date.would not result in enhanced retirement benefits.
Voluntary or Without Cause.The Company does not currently have contracts with its Named Executive Officers that would require cash severance payments upon voluntary termination. IfUnder the terms of the 2008, 2011, and 2014 Incentive Compensation Plans, if the Named Executive Officer weremeets certain retirement eligible, heeligibility criteria, any exercisable stock appreciation rights would continue vesting inremain outstanding and under certain other criteria outstanding equity awards themay continue to vest. These values, of whichas applicable, are included in the table below. The Named Executive Officer’s termination would not result in enhanced retirement benefits beyond the benefits described in the Pension Benefits Section. Eligibility for other payments would be determined in a manner consistent with all officers of the Company.
COMPENSATION OF NAMED EXECUTIVE OFFICERS AND DIRECTORS
60 | Fifth Third Bancorp | 2018 Proxy Statement |
COMPENSATION OF NAMED EXECUTIVE OFFICERS |
|
With Cause. The Company does not currently have contracts with its Named Executive Officers that would require cash severance payments upon involuntary termination. Under the terms of the 2004, 2008, 2011 and 2014 Incentive Compensation Plans, if the Named Executive Officer is retirement eligible he may continue vesting in outstanding equity awards, the values of which are included in the table below. The Named Executive Officer’s termination would not result in enhanced retirement benefits. Eligibility for other payments would be determined in a manner consistent with all officers of the Company.
Death and Disability. Under the terms of the 2004,Company’s 2008, 2011, and 2014 Incentive Compensation Plans, all outstandingequity-based awards would be immediately forfeited.
Death and Disability.Under the terms of the 2008, 2011, and 2014 Incentive Compensation Plans, all unvested stock and option awards vest immediately.immediately and option awards remain outstanding for the remaining term of the grant. Performance shares are earned on a prorated basis based ondetermined by the Named Executive Officer’s full months of service and are adjusted based on the achievement of the performance goals for the full performance period. The table below reflects an assumed payout each Named Executive Officers’ terminationOfficer would not result in enhanced retirement benefits, beyondbe eligible to receive if the benefits described in the Pension Benefits section.Company achieved 100 percent of its performance goals for each outstanding performance share award and paid out effective December 31, 2017. In the event of death, the defined benefit pension would bepays a 50%50 percent joint and survivor payoutbenefit and the 401(k) Plan wouldplan immediately vest. Eligibility for other payouts would be determined in a manner consistent with all other officers.vests.
Change in Control Agreements.Control.As described in the “Severance and Change in Control Benefits” section, the Company maintained agreements with all of the NamedCompany’s Executive Officers, among others, providingChange in Control Severance Plan provides for the payment of benefits upon a qualifying termination following a change in control (a “triggering event”). for the Named Executive Officers and other officers of the Company. In exchange for the payments and benefits ofunder the agreement,plan, the eligible Named Executive Officer would have beenbe required to sign an agreement at the time of the triggering event not to not compete with, nor solicit employees or customers from, the Company for a period of three years following the officer’s termination.termination for Messrs. Carmichael, Tuzun, and Anderson and for a period of two years for Messrs. Spence and Forrest. Forms of these agreements were previouslywould be filed with the Company’s securities filings.
The cash severance payment would be equal to 2.99 times the Named Executive Officer’s base salary plus his/her target annual cash incentive compensation award.his Variable Compensation amount for Messrs. Carmichael, Tuzun, and Anderson and 2 times base salary plus his Variable Compensation amount for Messrs. Spence and Forrest (each as defined in the Severance Plan). In addition, the Named Executive Officer would earn a pro-rated VCPprorated Variable Compensation award for the fiscal year of the termination. The table below reflects an assumed full-year VCPVariable Compensation award at the amount each Named Executive Officer would be eligible to receive if the Company achieves 100%100 percent of its annualVariable Compensation Plan performance incentive target under the Annual Incentive Plan.targets.
Upon a change in control, as defined in our Incentive Compensation Plans approved by shareholders, any outstanding equity awardslong-term equity-based award (stock options, stock appreciation rights, and restricted stock awards) granted prior to April 15, 2008 would vest immediately. Thisimmediately only if there is true for all equity award recipients, not just fora change in control and a subsequent qualifying termination of employment (“double trigger” vesting). Performance Share Awards would be deemed earned and paid out based on the Company’s Named Executive Officers.greater of the extent to which applicable performance goals have been met through and including the effective date of the change in control, or the target number of performance share awards determined at the date of grant. The value of performance sharesshare awards would be calculated based on the current market value of the Company’s stock on the date of the change in control times the targetearned number of performance shares determined on the date(s) of grant. Awards granted after April 15, 2008, contain double-trigger vesting provisions under which accelerated vesting will apply in the event of involuntary termination of employment within two years after the change in control.
shares. The table below reflects an assumed payout each Named Executive Officer would be eligible to receive if the Company achieved 100 percent of its performance goals for each outstanding performance share award and paid out effective December 31, 2017. The treatment of equity awards applies to all long-term equity-based award recipients eligible for change in control benefits, not just for the Company’s Named Executive Officers.
Upon a triggering event, Messrs. Carmichael, Tuzun, and Anderson would receive three, and Messrs. Spence and Forrest would receive two, additional years of age and service credit under the qualified and
Fifth Third Bancorp | 2018 Proxy Statement | 61 |
| COMPENSATION OF NAMED EXECUTIVE OFFICERS |
nonqualified defined contribution plans, three years ofplans; medical, dental, and life insurance benefits,benefits; and the additional value, if any, of the pension benefit at age 60 (which60. These benefits are reflected in the Other Benefits and Potential Excise Tax Gross-Up category below) upon a triggering event.below. The Named Executive Officers’NEO’s termination would not result in enhanced retirement benefits beyond the benefits described in the Pension Benefits section.
The agreements signed with Messrs. Kabat, Sullivan and Carmichael were signed before 2012 and contained Eligibility for these benefits, as well as any other benefits in a provision that in the event that the change in control benefits subject them to excise tax on excess parachute payments as outlined under Sections 280G and 4999 ofscenario, is determined in a manner consistent with all eligible employees, not just the Internal Revenue Code, if a 10% reduction in the benefits would eliminate the excise tax, their benefits would be reduced to the extent necessary to avoid the excise tax. If the payment exceeded the limit by more than 10%, the Company would make a tax gross-up
COMPENSATION OF NAMED EXECUTIVE OFFICERS AND DIRECTORS
payment to reimburse them for the excise tax and associated income taxes. These agreements expired on December 31, 2014 and, under our Severance Plan, all excise tax gross-ups have been eliminated effective as of January 1, 2015.
The agreements with Messrs. Poston and Tuzun were signed after 2012 and contained provisions to limit the benefits to these executives if they would be subject to excise taxes under Section 4999 of the Internal Revenue Code or a deduction limitation under Section 280G of the Internal Revenue Code and did not contain provisions to make any gross-up payments to reimburse them.Company’s Named Executive Officers.
Material differences in circumstances relate to retirement eligibility, as described above. As of December 31, 2014, each2017, Messrs. Carmichael and Tuzun met one or more of our Named Executive Officers, other than Mr. Tuzun , arethe retirement eligible for some equityeligibility criteria under outstanding long-term equity-based compensation award agreements, which provideagreements. Both have met the criteria in order to retain the exercisability of all vested stock appreciation rights, except in a termination for continuing vesting of their outstanding equity awards.cause scenario. In addition, Mr. Carmichael has met the criteria to allow all awards granted after January 1, 2016, to continue to vest, except in a termination for cause scenario.
The tables below contain the total payments one would receive under each termination scenario if the Named Executive Officer separated on December 31, 2017.For all termination scenarios, the figures for long-term equity-based incentive compensation awards are as of December 29, 2017, at
the closing stock price of $30.34 on that date.
Termination Scenarios1 | ||||||||||||
Name | Voluntary or Without Cause | With Cause | Death or Disability | |||||||||
Kevin T. Kabat | — | — | $ | 14,596,846 | ||||||||
Tayfun Tuzun | — | — | $ | 2,195,182 | ||||||||
Greg D. Carmichael | — | — | $ | 8,887,869 | ||||||||
Daniel T. Poston | — | — | $ | 3,529,129 | ||||||||
Robert A. Sullivan | — | — | $ | 3,497,658 |
Termination Scenarios | ||||||||||||
Executive | Voluntary or Without Cause(1) | With Cause | Death or Disability(2) | |||||||||
Greg D. Carmichael
|
|
$22,429,577
|
|
|
—
|
|
|
$24,007,417
|
| |||
Tayfun Tuzun
|
| $1,363,613
|
|
| —
|
|
| $4,820,663
|
| |||
Lars C. Anderson
|
|
—
|
|
|
—
|
|
|
$8,794,747
|
| |||
Timothy N. Spence
|
|
—
|
|
|
—
|
|
|
$5,852,781
|
| |||
Frank R. Forrest
|
|
—
|
|
|
—
|
|
|
$4,364,262
|
|
Involuntary Termination Upon a Change in Control | ||||||||||||||||
Name | Cash Severance | Unvested Equity | Other Benefits and Potential Excise Tax Gross-Up | Total | ||||||||||||
Kevin T. Kabat | $ | 9,304,313 | $ | 8,338,855 | $ | 5,381,112 | $ | 23,024,280 | ||||||||
Tayfun Tuzun | $ | 2,930,085 | $ | 730,179 | $ | 1,238,109 | $ | 4,898,373 | ||||||||
Greg D. Carmichael | $ | 5,731,611 | $ | 3,700,786 | $ | 4,668,421 | $ | 14,100,818 | ||||||||
Daniel T. Poston | $ | 3,686,083 | $ | 2,149,483 | $ | 1,145,123 | $ | 6,980,690 | ||||||||
Robert A. Sullivan | $ | 3,578,323 | $ | 1,770,953 | $ | 1,498,998 | $ | 6,848,275 |
COMPENSATION OF NAMED EXECUTIVE OFFICERS AND DIRECTORS(2) Amounts in this column include the total amount of long-term equity-based compensation each NEO is entitled either to retain or to have the vesting accelerated because of a death or disability scenario.
The following table illustrates the 2014 compensation structure for non-employee directors. Employee directors receive no compensation for their Board service. In addition to the compensation described below, each director is reimbursed for reasonable out-of-pocket expenses incurred for travel and attendance related to meetings of the Board of Directors or its committees.
Element of Compensation | 2014 Amount | |||
Annual retainer (cash)1 | $ | 50,000 | ||
Annual committee chair retainer (cash)2 | $ $ | 10,000 to 50,000 | | |
Board meeting fees – per meeting (cash)3 | $ | 2,000 | ||
Committee meeting fees – per meeting (cash)3 | $ | 2,000 | ||
Restricted stock units4 | $ | 100,000 |
The Company’s 2014 Incentive Compensation Plan provides that the Committee has full authority to provide equity-based or other incentive awards to non-employee directors. Equity-based awards shown in the table below were granted under the 2014 Incentive Compensation Plan. The Company has a stock ownership guideline for its directors of shares having a value equal to at least $250,000.
Pursuant to a Deferred Compensation Plan, directors may annually defer from one-half to all of their cash compensation as directors. The deferred funds receive earnings based on the mutual fund(s) elected by each director or the directors may elect a rate equal to the rate of return on the Company’s common stock. The directors do not receive any above-market or preferential earnings.
COMPENSATION OF NAMED EXECUTIVE OFFICERS AND DIRECTORS
The following table summarizes the compensation earned by or awarded to each non-employee director who served on the Board of Directors during 2014. The Stock Awards and Option Awards columns in the table display the grant date fair value associated with the equity awards. The amounts listed in the Stock Awards column represent a restricted stock unit award which vests once service as a director ends. The award relates to the fiscal year in which it was granted. Directors did not receive any Option Awards or Non-Equity Incentive Plan Compensation in 2014.
2014 Director Compensation | ||||||||||||||||||||||||||||
Name | Fees Earned or Paid in Cash ($)(1) | Stock Awards(2)(4)(5) ($) | Option Awards(3) ($) | Non-Equity Incentive Plan Compensation ($) | Change in ($) | All Other Compensation(6) ($) | Total ($) | |||||||||||||||||||||
Nicholas K. Akins | $ | 108,000 | $ | 100,000 | — | — | — | $ | 2,779 | $ | 210,779 | |||||||||||||||||
Darryl F. Allen | $ | 63,750 | — | $ | 10,512 | $ | 74,262 | |||||||||||||||||||||
B. Evan Bayh | $ | 110,000 | $ | 100,000 | — | — | — | $ | 11,278 | $ | 221,278 | |||||||||||||||||
Ulysses L. Bridgeman, Jr. | $ | 112,000 | $ | 100,000 | — | — | — | $ | 10,806 | $ | 222,806 | |||||||||||||||||
Emerson L. Brumback | $ | 176,750 | $ | 100,000 | — | — | — | $ | 14,753 | $ | 291,503 | |||||||||||||||||
James P. Hackett | $ | 196,000 | $ | 250,000 | — | — | — | $ | 13,467 | $ | 459,467 | |||||||||||||||||
Gary R. Heminger | $ | 184,500 | $ | 100,000 | — | — | — | $ | 10,806 | $ | 295,306 | |||||||||||||||||
Jewell D. Hoover | $ | 119,500 | $ | 100,000 | — | — | — | $ | 16,194 | $ | 235,694 | |||||||||||||||||
William Isaac | $ | 87,500 | — | — | — | — | $ | 33,871 | $ | 121,371 | ||||||||||||||||||
Mitchel D. Livingston, Ph.D. | $ | 124,200 | $ | 100,000 | — | — | — | $ | 10,806 | $ | 235,006 | |||||||||||||||||
Michael B. McCallister | $ | 108,000 | $ | 100,000 | — | — | — | $ | 23,386 | $ | 231,386 | |||||||||||||||||
Hendrik G. Meijer | $ | 118,000 | $ | 100,000 | — | — | — | $ | 10,806 | $ | 228,806 | |||||||||||||||||
John J. Schiff, Jr. | $ | 59,000 | — | — | — | — | $ | 6,668 | $ | 65,668 | ||||||||||||||||||
Marsha C. Williams | $ | 204,000 | $ | 100,000 | — | — | — | $ | 25,295 | $ | 329,295 |
COMPENSATION OF NAMED EXECUTIVE OFFICERS AND DIRECTORS
Involuntary Termination Upon a Change in Control | ||||||||||||||||
Executive | Cash Severance | Unvested Equity | Potential Excise TaxGross-Up | Other Benefits | Total | |||||||||||
Greg D. Carmichael
|
|
$10,271,941
|
|
|
$16,947,157
|
|
$0
|
|
$644,676
|
|
$27,863,774
| |||||
Tayfun Tuzun
|
|
$4,057,884
|
|
|
$4,289,129
|
|
$0
|
|
$294,497
|
|
$8,641,510
| |||||
Lars C. Anderson
|
|
$5,051,118
|
|
|
$9,737,332
|
|
$0
|
|
$353,816
|
|
$15,142,266
| |||||
Timothy N. Spence
|
|
$2,877,014
|
|
|
$6,661,145
|
|
$0
|
|
$197,417
|
|
$9,735,576
| |||||
Frank R. Forrest
|
|
$2,873,196
|
|
|
$5,196,341
|
|
$0
|
|
$181,856
|
|
$8,251,393
|
62 |
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| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
|
Director | Grant Date | Shares Granted | Grant Date Fair Value of Restricted Stock Awards | |||||||||
Nicholas K. Akins | 4/15/2014 | 4,623 | $ | 100,000 | ||||||||
Darryl F. Allen | — | — | — | |||||||||
B. Evan Bayh | 4/15/2014 | 4,623 | $ | 100,000 | ||||||||
Ulysses L. Bridgeman, Jr. | 4/15/2014 | 4,623 | $ | 100,000 | ||||||||
Emerson L. Brumback | 4/15/2014 | 4,623 | $ | 100,000 | ||||||||
James P. Hackett | 4/15/2014 | 6,935 | $ | 150,000 | ||||||||
James P. Hackett | 6/24/2014 | 4,660 | $ | 100,000 | ||||||||
Gary R. Heminger | 4/15/2014 | 4,623 | $ | 100,000 | ||||||||
Jewell D. Hoover | 4/15/2014 | 4,623 | $ | 100,000 | ||||||||
William Isaac | — | — | — | |||||||||
Mitchel D. Livingston, Ph.D. | 4/15/2014 | 4,623 | $ | 100,000 | ||||||||
Michael B. McCallister | 4/15/2014 | 4,623 | $ | 100,000 | ||||||||
Hendrik G. Meijer | 4/15/2014 | 4,623 | $ | 100,000 | ||||||||
John J. Schiff, Jr. | — | — | — | |||||||||
Marsha C. Williams | 4/15/2014 | 4,623 | $ | 100,000 |
COMPENSATION OF NAMED EXECUTIVE OFFICERS AND DIRECTORS
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
In 2014,2017, the Human Capital and Compensation Committee members were Messrs. Akins, Heminger, Livingston, Meijer, Akins,and McCallister and Ms. Williams.Mallesch. Former director Hendrik G. Meijer also served on the Committee from January through April 2017. No Executive Officerexecutive officer of the CompanyFifth Third serves on any board of directors or compensation committee of anyan entity that compensates any member of the Human Capital and Compensation Committee.
Fifth Third Bancorp | 2018 Proxy Statement | 63 |
The following Report of the Human Capital and Compensation Committee does not constitute soliciting material and should not be deemed filed or incorporated by reference into any other Company filing under the Securities Act or the Exchange Act, except to the extent the Company specifically incorporates this Report by reference therein.
The Human Capital and Compensation Committee has reviewed and discussed with management the preceding Compensation Discussion and Analysis (“CD&A”) as well as the accompanying tables set forth in the section titled “Compensation of Named Executive Officers and Directors.” Based on that discussion, the Committee recommended to the Board of Directors that the CD&A be included in this proxy statement and incorporated into the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.
Marsha C. Williams, Chair
Nicholas K. Akins
Gary R. Heminger
Hendrik G. Meijer
Mitchel D. Livingston, Ph.D.
|
The Charter of the Company’s Human Capital and Compensation Committee requires that the Human Capital and Compensation Committeepre-approve all related party or affiliate transactions between the CompanyFifth Third Bancorp and any of its affiliates, directors, officers, and/or employees or in which any of such persons directly or indirectly is interested or benefited, other than for extensions of credit otherwise covered by policies and procedures governed by Federal Reserve Regulation O.
Certain of these related party transactions are required to be disclosed by the CompanyFifth Third Bancorp in this
proxy statement:
One of the Company’sour directors, Katherine B. Blackburn, is the Executive Vice President of the Cincinnati Bengals professional football team. She and members of her immediate family own substantially all of the equity interests in the parent company of the Cincinnati Bengals. During 2014, the Company2017, we paid the Cincinnati Bengals approximately $1.8$1.7 million for sponsorship arrangements, tickets, and advertising expenses. Prior to Ms. Blackburn’s appointment to the Board in September 2014, the CompanyFifth Third and the Cincinnati Bengals signed a 5five year contract extension for these arrangements that call for total payments by the CompanyFifth Third Bancorp during that period of over $7.9 million. By virtue of Ms. Blackburn’s being an executive officer and a principal owner of the Cincinnati Bengals, she is deemed to be a related party having a direct material interest in these arrangements.
Also, Joshua LivingstonKevin Hipskind is employed by Fifth Third Bank as aan Executive Vice President. He is thebrother-in-law of Philip R. McHugh, who is an Executive Vice President and Large Corporate Healthcare Relationship Manager III. He is the son of one of the Company’s retiring directors, Dr. Mitchel D. Livingston.Fifth Third Bancorp. In 2014 Joshua Livingston2017, Mr. Hipskind received compensation of approximately $150,000$567,280 including base salary and incentive compensation as well as benefits generally available to similarly situated employees. This
Timothy Smith, Jr. was employed by Fifth Third Bank as an Assistant Vice President. He is the brother of Teresa J. Tanner, who is an Executive Vice President of Fifth Third Bancorp. In 2017, Mr. Smith received compensation package wasof approximately $124,865 including base salary and incentive compensation as well as benefits generally available to similarly situated employees.
The compensation packages of Kevin Hipskind and Timothy Smith, Jr. were each established by the CompanyFifth Third Bancorp in accordance with its employment and compensation policies and practices applicable to employees with equivalent qualifications and responsibilities in similar positions.
We have also engaged in transactions with certain entities that have reported beneficial ownership of over 5% of our common stock. We paid State Street Bank and Trust Company approximately $537,218 in 2017 for custody, accounting, and trustee services for certain private funds. Additionally, in 2017 we paid BlackRock Financial Management, Inc. approximately $2,641,214 for advisory services and tools used to manage investment portfolios, to measure risk weighted assets, and to analyze risks in certain investment securities and mortgage servicing rights. All of these business relationships and transactions were conducted at arm’s length in our ordinary course of business.
Additionally, Fifth Third Bancorp has engaged and intends to continue to engage in the lending of money through its subsidiary bank to various of its directors, executive officers and shareholders, and
64 | Fifth Third Bancorp | 2018 Proxy Statement |
CERTAIN TRANSACTIONS |
|
corporations or other entities in which they may own a controlling interest. The loans to such persons and/or entities (i) were made in the ordinary course of business, (ii) were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans with persons not related to the lender, and (iii) did not involve more than a normal risk of collectability or did not present other features unfavorable to the Company.
Fifth Third Bancorp | 2018 Proxy Statement | 65 |
|
The following Report of the Audit Committee does not constitute soliciting material and should not be deemed filed or incorporated by reference into any other Company filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent the Company specifically incorporates this Report by reference therein.
In accordance with its written charter adopted by the Board of Directors, (“Board”), which may be found in the Corporate Governance Section of the Company’s website atwww.53.com,, the Audit Committee of the Board assists the Board in fulfilling its responsibility for oversight of the quality and integrity of the accounting, auditing, and financial reporting practices of the Company. During 2014,2017, the Audit Committee met twelve (12) times, and the Audit Committee discussed the interim financial and other information contained in each quarterly earnings announcement and periodic filings to the Securities and Exchange Commission with the Chief Executive Officer, Chief Financial Officer, Controller, and the independent external audit firm prior to public release.
In discharging its oversight responsibility as to the audit process, the Audit Committee obtained from the independent external audit firm a formal written statement describing all relationships between the firm and the Company that might bear on the firm’s independence consistent with applicable requirements of the Public Company Accounting Oversight Board (United States) regarding the independent accountant’s communications with the audit committee concerning independence, and has discussed with the independent accountant the independent accountant’s independence and satisfied itself as to the firm’s independence. The Audit Committee also discussed with management, the internal auditors, and the independent external audit firm the quality and adequacy of the Company’s internal controls and the internal audit function’s organization, responsibilities, budget, and staffing. The Audit Committee reviewed both with the independent external audit firm and internal auditors, their audit plans, audit scope, and identification of audit risks.
The Audit Committee discussed and reviewed with the independent external audit firm all communications required by standards of the Public Company Accounting Oversight Board, including the matters required to be discussed by Auditing Standard No. 16,1301,Communications with Audit Committees, and Rule2-07,Communication with Audit Committees, of RegulationS-X, and, with and without management present, discussed and reviewed the results of the independent external audit firm’s examination of the financial statements. The Audit Committee also discussed the results of internal audits.
The Audit Committee reviewed and discussed the audited consolidated financial statements of the Company as of and for the year ended December 31, 2014,2017 and management’s assertion onassessment as to the design and effectiveness of the Company’s internal control over financial reporting as of December 31, 20142017 with management and the independent external audit firm. Management has the responsibility for the preparation of the Company’s consolidated financial statements and their assertion onassessment of the design and effectiveness of the Company’s internal control over financial reporting and the independent external audit firm has the responsibility for the audits of those consolidated statements and of the effectiveness of internal control over financial reporting.
Based on the above-mentioned reviews and discussions with management and the independent external audit firm, the Audit Committee recommended to the Board that the Company’s audited consolidated financial statements and report on the effectiveness of internal control over financial reporting be included in its
66 | Fifth Third Bancorp | 2018 Proxy Statement |
REPORT OF THE AUDIT COMMITTEE |
|
Annual Report on Form10-K for the year ended December 31, 2014,2017, for filing with the Securities and Exchange Commission. The Audit Committee also appointed the independent external audit firm for 2015.2018.
Emerson L. Brumback, ChairmanChair
Nicholas K. AkinsKatherine B. Blackburn
Jerry W. Burris
Jewell D. Hoover
Michael B. McCallister
Fifth Third Bancorp | 2018 Proxy Statement | 67 |
|
The following table sets forth the aggregate fees billed to Fifth Third Bancorp for the fiscal years ended December 31, 20142017 and December 31, 20132016 by the Company’s independent external audit firm Deloitte & Touche LLP.
December 31, | ||||||||
2014 | 2013 | |||||||
Audit Fees | $ | 3,875,775 | $ | 3,736,856 | ||||
Audit-Related Fees(a) | 1,076,175 | 883,794 | ||||||
Tax Fees(b) | 163,119 | 220,374 | ||||||
All Other Fees(c) | 182,934 | 160,636 | ||||||
|
|
|
| |||||
$ | 5,298,003 | $ | 5,001,660 | |||||
|
|
|
|
December 31, | ||||||||
2017 | 2016 | |||||||
Audit fees | $ | 4,053,900 | $ | 3,982,212 | ||||
Audit-related fees(a) | $ | 1,194,300 | $ | 1,161,300 | ||||
Tax fees(b) | $ | 354,902 | $ | 258,175 | ||||
All other fees(c) | $ | 577,661 | $ | 79,287 | ||||
|
| |||||||
$ | 6,180,763 | $ | 5,480,974 |
(a) Includes fees for services related to benefit plan audits, private and other common trust fund audits, stand-alone statutory audits, examinations of management’s assertion, reports pursuant to Statement on Standards for Attestation Engagements No. 18, loan servicing reports, and trust compliance.
(b) Includes fees for services related to tax compliance and tax consulting and planning. Of these amounts, for 2017, $234,956 represents fees for tax compliance services and $119,946 represents fees for tax consulting and planning services, and for 2016, $138,750 represents fees for tax compliance services and $119,425 represents fees for tax consulting and planning services.
(c) Includes fees for management consulting, accounting and human resources subscription services in 2017 and fees for accounting and human resource subscription services in 2016. The Audit Committee has concluded that the provision of these services is compatible with maintaining the principal accountant’s independence.
The Audit Committee is responsible forpre-approving all auditing services and permittednon-audit services to be performed by the independent external audit firm, except as described below.
The Audit Committee will establish general guidelines for the permissible scope and nature of any permittednon-audit services in connection with its annual review of the audit plan and will review such guidelines with the Board of Directors.Pre-approval may be granted by action of the full Audit Committee or, in the absence of such Audit Committee action, by the Audit Committee Chair whose action shall be considered to be that of the entire Committee.Pre-approval shall not be required for the provision ofnon-audit services if (1) the aggregate amount of all suchnon-audit services constitute no more than 5% of the total amount of fees paid by the Company to the auditors during the fiscal year in which thenon-audit services are provided, (2) such services were not recognized by the Company at the time of engagement to benon-audit services, and (3) such services are promptly brought to the attention of the Audit Committee and approved prior to the completion of the audit. No services were provided by Deloitte & Touche LLP during 20142017 or 20132016 pursuant to this exception.
68 | Fifth Third Bancorp | 2018 Proxy Statement |
COMPANY PROPOSAL 1 |
|
COMPANY PROPOSALCompany Proposal 1: Independent External Audit Firm
INDEPENDENT EXTERNAL AUDIT FIRM
(Item 2 on Proxy Card)
The Audit Committee of the Board of Directors proposes and recommends that the shareholders approve the selection by the Audit Committee of the firm of Deloitte & Touche LLP to serve as its independent external audit firm for the Company for the year 2015.2018. The firm has served as the independent external audit firm for theFifth Third Bank since 1970 and the Company since 1975. Representatives of Deloitte & Touche LLP will be present at the Annual Meeting to make such comments as they desire and to respond to questions from shareholders of the Company. Action by the shareholders is not required by law in the appointment of an independent external audit firm, but their appointment is submitted by the Audit Committee in order to give the shareholders a voice in the designation of the independent external audit firm. If the resolution approving Deloitte & Touche LLP as the Company’s independent external audit firm is rejected by the shareholders, then the Audit Committee will reconsider its choice of independent external audit firm. Even if the resolution is approved, the Audit Committee at its discretion may direct the appointment of a different independent external audit firm at any time during the year if it determines that such a change would be in the best interests of the Company and its shareholders.
The Audit Committee is directly responsible for the appointment, compensation, retention, and oversight of the Company’s independent external audit firm. The Audit Committee is also responsible for the audit fee negotiations associated with the Company’s retention of Deloitte & Touche LLP. In order to assure continuing auditor independence, the Audit Committee periodically considers whether there should be a regular rotation of the independent external audit firm. Additionally, the Audit Committee and its Chair are directly involved in the selection and mandated rotation of the lead engagement partner from Deloitte & Touche LLP.
The members of the Audit Committee believe that the continued retention of Deloitte & Touche LLP to serve as the Company’s independent external audit firm is in the best interest of the Company and its investors.
Vote Required
Proxies inreceived by Fifth Third Bancorp and not revoked prior to or at the form solicited hereby which are returned to the CompanyAnnual Meeting will be voted in favor of the resolution unless otherwise instructed by the shareholder. Pursuant to the Company’sour Code of Regulations, the affirmative vote of the holders of a majority of the votes entitled to be castshares of our common stock present in person or by the holders of the Company’s Common Stock present or representedproxy at the Annual Meeting and entitled to vote on this proposal is required to approve the appointment of Deloitte & Touche LLP. Abstentions will have the same effect as a vote cast against thethis proposal. Shares not voted on this proposal by brokers and other entities holding shares on behalf of beneficial owners will not be counted as present to vote on this proposal and will have no effect on the outcome.
THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
RECOMMENDS THE ADOPTION OF THE RESOLUTION.
Fifth Third Bancorp | 2018 Proxy Statement | 69 |
| COMPANY PROPOSAL 2 |
COMPANY PROPOSAL 2Company Proposal 2: Advisory Vote on Executive Compensation:
ADVISORY VOTE ON EXECUTIVE COMPENSATION
(Item 3 on Proxy Card)
As required by Section 14A of the Exchange Act, we are seeking advisory shareholder approval of the compensation of the Named Executive Officers as disclosed in this proxy statement. This proposal, commonly known as a “Say-on-Pay”“Say-on-Pay” proposal, gives you, as a shareholder, the opportunity to endorse or not endorse our executive pay program through the following resolution:
RESOLVED, that the shareholders advise that they approve the compensation of the Company’sFifth Third Bancorp’s Named Executive Officers, as disclosed pursuant to the disclosure rules of the Securities and Exchange Commission (which disclosure shall include the “Compensation Discussion and Analysis” section and the compensation tables and any related material in the “Compensation of Named Executive Officers and Directors” section of this proxy statement for its 20152018 Annual Meeting).
Because your vote is advisory, it will not be binding upon the Board. However, the Human Capital and Compensation Committee will take into account the outcome of the vote when considering future executive compensation arrangements.
As discussed in “Compensation Discussion and Analysis”Analysis,” the Human Capital and Compensation Committee has determined that the compensation structure for executive officers is effective and appropriate and has determined that the Company’s aggregate 20142017 Total Rewards package (and potential payouts in the severance andchange-in-control scenarios) for its Named Executive Officers are reasonable and appropriate. Shareholders are encouraged to read the section of this proxy statement titled “Compensation Discussion and Analysis” as well as the tabular disclosure regarding Named Executive Officer compensation together with the accompanying narrative disclosure.
The Company isWe are currently conducting “Say-on-Pay”“Say-on-Pay” advisory votes on an annual basis. The next “Say-on-Pay”“Say-on-Pay” vote is currently scheduled for the 20162019 Annual Meeting. However, please see Company Proposal 3 regarding an advisory vote on the frequency of these “Say-on-Pay”“Say-on-Pay” votes.
VOTE REQUIREDVote Required
Pursuant to the Company’s Code of Regulations, the affirmative vote of a majority of the votes entitled to be cast by the holders of the Company’s Common Stock present or represented at the Annual Meeting and entitled to vote is required to approve this advisory proposal. Proxies received by the CompanyFifth Third Bancorp and not revoked prior to or at the Annual Meeting will be voted in favor of thisnon-binding advisory proposal unless otherwise instructed by the shareholder. Abstentions, andPursuant to our Code of Regulations, the affirmative vote of the holders of a majority of the shares not votedof our common stock present in person or by shareholders of record present or representedproxy at the Annual Meeting and entitled to vote on this proposal is required to approve this advisory proposal. Abstentions will have the same effect as a vote cast against thethis advisory proposal. Shares not voted on this advisory proposal by brokers and other entities holding shares on behalf of beneficial owners will not be counted as present to vote on this proposal and will have no effect on the outcome.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” ADVISORY APPROVAL OF
THE COMPENSATION OF THE NAMED EXECUTIVE OFFICERS AS DISCLOSED PURSUANT TO THE DISCLOSURE RULES OF THE SECURITIES AND EXCHANGE COMMISSIONCOMMISSION.
70 | Fifth Third Bancorp | 2018 Proxy Statement |
COMPANY PROPOSAL 3 |
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COMPANY PROPOSAL 3Company Proposal 3: Advisory Vote on Frequency of Votes on:
ADVISORY VOTE ON FREQUENCY OF VOTES ON EXECUTIVE COMPENSATIONExecutive Compensation
(Item 4 on Proxy Card)
As required by Section 14A of the Exchange Act, we are seeking advisory shareholder approval of the frequency of advisory shareholder votes on compensation of the named executive officersNamed Executive Officers through the following resolution:
RESOLVED, that the shareholders advise that an advisory resolution with respect to executive compensation should be presented to the shareholders every one, two, or three years as reflected by their votes for each of these alternatives in connection with this resolution.
In voting on this resolution, you should mark your proxy for one, two, or three years based on your preference as to the frequency with which an advisory vote on executive compensation should be held. If you have no preference, you should abstain.
The Board believes that current best corporate practices and governance trends favor an annual advisory vote and has determined to hold an annual advisory vote. This would give shareholders the opportunity to react promptly to emerging trends in compensation, and give the Board and the Human Capital and Compensation Committee the opportunity to evaluate compensation decisions in light of yearly feedback from shareholders.
Because your vote is advisory, it will not be binding upon the Board. However, the Board will take into account the outcome of the vote when considering the frequency of advisory shareholder approval of the compensation of named executive officers.
Although we are only required to conduct an advisory vote on the frequency of votes on executive compensation every six years, we believe that holding an annual vote will allow the shareholders and our Board to promptly consider this frequency as emerging corporate practices and governance trends develop.
VOTE REQUIREDVote Required
Pursuant to the Company’s Code of Regulations, the affirmative vote of a majority of the votes entitled to be cast by the holders of the Company’s Common Stock present or represented at the Annual Meeting and entitled to vote is required to approve one of the selections under this advisory proposal. Proxies received by the CompanyFifth Third Bancorp and not revoked prior to or at the Annual Meeting will be voted in favor of “every 1 year” unless otherwise instructed by the shareholder. Abstentions, andPursuant to our Code of Regulations, the affirmative vote of the holders of a majority of the shares not votedof our common stock present in person or by shareholders of record present or representedproxy at the Annual Meeting and entitled to vote on this proposal is required to approve one of the selections under this advisory proposal. Abstentions will have the same effect as a vote cast against each of the time periods presented in this advisory proposal. Shares not voted on this advisory proposal by brokers and other entities holding shares on behalf of beneficial owners will not be counted as present to vote on this proposal and will have no effect on the outcome.
THE BOARD OF DIRECTORS RECOMMENDS HOLDING AN ADVISORY VOTE
FOR THE APPROVAL OF THE COMPENSATION OF THE NAMED
EXECUTIVE OFFICERS EVERY “1 YEAR”YEAR.”
Fifth Third Bancorp | 2018 Proxy Statement | 71 |
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Shareholder Proposals to be included in the Company’sFifth Third Bancorp’s Proxy Statement
.In order for a shareholder proposal for the 20162019 Annual Meeting of Shareholders to be eligible for inclusion in the Company’sour proxy statement, it must comply with the requirements of Rule14a-8 of the Securities Exchange Act of 1934 (the “Exchange Act”), and must be received by the CompanyFifth Third Bancorp on or before November 6, 20152018 at the following address or facsimile number:
Fifth Third Bancorp
c/o Fifth Third Legal Department
Office of the Corporate Secretary
38 Fountain Square Plaza
MD10AT76MD10909F
Cincinnati, Ohio 45263
Attn: BoardCorporate Secretary
Facsimile: (513)534-6757
Shareholder Proposals not included in the Company’sFifth Third Bancorp’s Proxy Statement
.Any shareholder who intends to propose any matter to be acted upon at the 20162019 Annual Meeting of Shareholders without such proposal being included in the Company’sour proxy statement as a shareholder proposal must send a notice to the BoardCorporate Secretary using the address and facsimile number listed above no earlier than January 15, 201617, 2019 and no later than February 15, 2016.16, 2019. If the notice is not provided by January 20, 2016,February 16, 2019, and the proposal is voted upon, SEC rules permit the persons named as proxies for the 20162019 Annual Meeting will be allowed to exercise discretionary authority to vote upon such additional proposal without describingif we advise shareholders in the proxy statement for the 20162019 Annual Meeting how they intend to vote on it.
The notice to the BoardCorporate Secretary must meet the requirements set forth in the Company’sour Code of Regulations which are summarized below.
The notice must include:
the name and address of the record shareholder as they appear on the Company’sin Fifth Third Bancorp’s books and the name and address of any beneficial owner of the shares on whose behalf the record shareholder is acting, and, if different, the current name and address of the shareholder and any beneficial owner;
the class and number of shares of the CompanyFifth Third Bancorp held of record by the shareholder or beneficially owned as of the date of the notice, and a representation that the shareholder will notify the CompanyFifth Third Bancorp in writing within five (5) business days after the record date for such meeting of the class and number of shares of the CompanyFifth Third Bancorp held of record or beneficially owned on such record date;
any other information relating to such shareholder and beneficial owner, if any, that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for the matter proposed;
such shareholder’s and any beneficial owner’s written consent to the public disclosure of information provided to the CompanyFifth Third Bancorp in the notice;
72 | Fifth Third Bancorp | 2018 Proxy Statement |
2019 SHAREHOLDER PROPOSALS |
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such other information as may reasonably be required by the Board of Directors and described in this proxy statement .
The notice must also include:
a) | any agreements, arrangements or understandings entered into by the shareholder or beneficial owner and their affiliates with respect to equity securities of |
2016 SHAREHOLDER PROPOSALS
specifying in each case the effect of such agreements, arrangements or understandings on any voting or economic rights of equity securities of |
b) | to the extent not covered in clause (a) above, any disclosures that would be required pursuant to Item 5 or Item 6 of Schedule 13D (regardless of whether the requirement to file a Schedule 13D is applicable to the shareholder or beneficial owner); and |
c) | a representation that the shareholder will notify the Company in writing within five (5) business days after the record date for such meeting of the information set forth in clauses (a) and (b) above as of the record date. |
If the notice relates to the nomination of directors, it must include for each nominee:
all information relating to such nominee that is required to be disclosed in a proxy statement or other filing required to be made in connection with solicitations of proxies for election of directors in a contested election pursuant to Section 14 of the Exchange Act (including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected);
a description of all direct and indirect compensation and other material monetary agreements, arrangements and understandings during the past three (3) years, and any material relationships, between or among the nominating shareholder and beneficial owner, if any, and their respective affiliates and associates, or others acting with them, and each proposed nominee, and his or her respective affiliates and associates, or others acting with them, including all information that would be required to be disclosed under Item 404 of RegulationS-K if the nominating shareholder and any beneficial owner, or any affiliate or associate or any person acting with them, were the “registrant” for purposes of such rule and the nominee were a director or executive officer of the registrant; and
information necessary to make a determination of the eligibility of the nominee to serve as an independent director of Fifth Third Bancorp as defined by Rule 5605(a)(2) of the National Association of Securities Dealers listing standards and to meet the requirements of membership for each of the Committees of the Fifth Third Bancorp’s Board of Directors (which are contained in the charters of the Committees and are accessible on our website at www.53.com) and such
Fifth Third Bancorp | 2018 Proxy Statement | 73 |
| 2019 SHAREHOLDER PROPOSALS |
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If the notice relates to any business other than nomination of directors, it must contain:
a description in reasonable detail of the business to be brought before the meeting, the reasons for conducting such business at the meeting, and any material interest of the proposing shareholder and any beneficial owner in such business;
the text of the proposal or business (including the text of any resolutions proposed for consideration and, if the business includes a proposal to amend the Company’sour Code of Regulations or Articles of Incorporation, the language of the proposed amendment); and
a description of all agreements, arrangements and understandings between the proposing shareholder, any beneficial owner, and any other person or persons (including their names) acting in connection with them in bringing the proposal of such business.
74 | Fifth Third Bancorp | 2018 Proxy Statement |
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Our Code of Regulations provides that only such business will be conducted as is properly brought before the meeting in accordance with the procedures set forth in Article II, Section 11 of the Code of Regulations. Except as otherwise provided by law, our Articles or the Code of Regulations, the determination of whether any business sought to be brought before the Annual Meeting of Shareholders is properly brought before such meeting will be made by the Chair of such meeting. If the Chair determines that any business is not properly brought before the meeting, then any such business will not be conducted or considered.
Discretion of Proxies
.The Board of Directors does not know of any other business to be presented toat the Annual Meeting and does not intend to bring other matters before the Annual Meeting. However, if any other matters properly come before the Annual Meeting, it is intended that the persons named in the Proxy will vote thereon according to their best judgment and interest of the Company.Fifth Third Bancorp. No other shareholder has informed the Companyus of any intention to propose any other matter to be acted upon at the Annual Meeting. Accordingly, the persons named in the accompanying Proxy are allowed to exercise their discretionary authority to vote upon any such proposal without the matter having been discussed in this proxy statement.
HouseholdingHouseholding.
Shareholders of record who have the same address and last name and have not previously requested electronic delivery of proxy materials will receive a single envelope containing the notices or the proxy statement and proxy card for all shareholders having that address. The notice or proxy card for each shareholder will include that shareholder’s unique control number needed to vote his or her shares. This procedure reduces our printing costs and postage fees. If, in the future, you do not wish to participate in householding and prefer to receive your notice or proxy statement in a separate envelope, or if your household currently receives more than one Notice or Proxy Statement and in the future, you would prefer to participate in householding, please call us toll-free at 1-877-478-50411-800-488-8035 in the U.S., or inform us in writing at: Fifth Third Bancorp, c/o D.F. King & Co., Inc., 48 Wall Street – 22nd Floor, New York, NY 10005, or by email atFITB@dfking.com. FITB@dfking.com. We will respond promptly to such requests.
For those shareholders who have the same address and last name and who request to receive a printed copy of the proxy materials by mail, we will send only one copy of such materials to each address unless one or more of those shareholders notifies us, in the same manner described above, that they wish to receive a printed copy for each shareholder at that address.
Beneficial shareholders can request information about householding from their banks, brokersbank, broker or other holders of record.nominee.
CopiesCopies.
A copy of the Company’sour Annual Report onForm 10-K for the most recent fiscal year, as filed with the Securities and Exchange Commission, not including exhibits, will be mailed without charge to shareholders upon written request. Requests should be addressed to Investor Relations, 38 Fountain Square Plaza, MD 1090QC, Cincinnati, OH 45263 or by emailingir@53.com. ir@53.com. You can also view information and request documents from the Investor Relations page of Fifth Third’s website atwww.53.com. www.53.com. TheForm 10-K includes certain listed exhibits, which will be provided upon payment of a fee covering the Company’sour reasonable expenses.
By Order of the Board of Directors
Mary E. TuukJelena McWilliams
BoardCorporate Secretary
Fifth Third Bancorp | 2018 Proxy Statement | 75 |
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REGULATIONS FOR CONDUCT AT THE APRIL 14, 201517, 2018 ANNUAL MEETING
OF SHAREHOLDERS OF FIFTH THIRD BANCORP
We welcome you to the 20152018 Annual Meeting of Shareholders of Fifth Third Bancorp. In order to provide a fair and informative Meeting, we ask you to honor the following regulations for the Meeting.
1. GENERAL ORDER OF BUSINESS. The business of the Meeting will be taken up as set forth in the Agenda attached to these Regulations. Annual Meetings are business meetings, and they can be effective only if conducted in an orderly, business-like manner. Strict rules of parliamentary procedure will not be followed. The Chairman of the Meeting will controlhas sole authority to preside over the meetingMeeting and make any required procedural rulings. Please followand all determinations with respect to the instructionsconduct of the Chairman. Thank you for your cooperation.
1.ELECTION OF DIRECTORS. Every shareholder havingMeeting. Any action taken by the right to vote shallChairman at the Meeting will be entitled to vote in person or by proxy. Each shareholder of record shall be entitled to one vote for each share of common stock registered in his or her namefinal, conclusive and binding on the booksall persons. The Secretary of the Company. All uncontested elections where cumulative voting is not in effectBancorp shall be determined by a majority voting standard whereby a director will only be elected if he or she receives more votes “for” election than votes “against” election. All other elections shall be determined by a plurality vote.
The Company has adopted provisions of its Corporate Governance Guidelines stating that,act as long as cumulative voting is not in effect, in an uncontested election of directors (i.e., an election where the only nominees are those recommended by the Board of Directors), any nominee for director who receives a greater number of votes “against” his or her election than votes “for” his or her election will promptly tender his or her resignation to the Chairmansecretary of the Board following certification of the shareholder vote. The Nominating and Corporate Governance Committee will promptly consider the tendered resignation and will recommend to the Board whether to accept or reject the tendered resignation no later than 60 days following the date of the shareholders’ meeting at which the election occurred. In considering whether to accept or reject the tendered resignation, the Nominating and Corporate Governance Committee will consider factors deemed relevant by the Committee members including, without limitation, the director’s length of service, the director’s particular qualifications and contributions to Fifth Third, the reasons underlying the majority against vote (if known) and whether these reasons can be cured, and compliance with stock exchange listing standards and the Corporate Governance Guidelines. The Board will act on the Nominating and Corporate Governance Committee’s recommendation no later than 90 days following the date of the shareholders’ meeting at which the election occurred. In considering the Nominating and Corporate Governance Committee’s recommendation, the Board will consider the factors considered by the Committee and such additional information and factors the Board believes to be relevant.Meeting.
2.VOTING AT THE MEETING. Every shareholder having the right to vote shall be entitled to vote in person or by proxy at the Meeting.If you have already voted by proxy, there is no need to vote by ballot, unless you wish to change your vote.vote. The polls shall be opened immediately after completion of the nominations, and shall remain open until closed by the Chairman. After the closing of the polls, no further voting shall be permitted and no further proxies, ballots or evidence shall be accepted by the Inspectors of Election. Except as otherwise stated in the proxy materials for this Meeting or as required by Ohio law, each matter brought before this Meeting for a vote shall require the affirmative vote of a majority of the votes entitled to be cast by the holders of the Company’s common stock at this Meeting and entitled to vote on such matter.
3.ITEMS OF BUSINESS; SHAREHOLDER PROPOSALS – THREE MINUTE LIMIT. The items of business listed on the accompanying Agenda are expected to be properly introduced at the Meeting and taken up in the orderMatters not set forth in the Agenda. A shareholderAgenda may be proposed by shareholders of record entitled to vote at this Meeting may make a proposal or director nomination only if such shareholder timely submitted the proposal or nomination in advance of the Meeting in complianceaccordance with the requirements contained infederal securities laws, the Company’sOhio Revised Code and our Code of Regulations. ToShareholder proposals will be timely, a shareholder notice must be delivered or mailed toentertained in the Company’s Secretary atfollowing order: first, any proposals of which the principal executive offices of the Company not less than 60 nor more than 90 daysBancorp was informed prior to the first anniversarycommencement of the preceding year’s annual
meeting of shareholders. For this Meeting, aMeeting; and then, any other proposals properly made in accordance with these Regulations. Each proposing shareholder proposal or nomination had to be received by the Company between January 15 and February 14, 2015. Any shareholder who complied with the advance notice requirements will be allotted three minutes in which to present the proposal or nomination and to make any desired remarks in support thereof. No shareholder proposals or nominations were properly submitted forProperly introduced motions need not be seconded in order to be considered by the shareholders at this Meeting.
4.QUESTIONS/STATEMENTS BY SHAREHOLDERS – ONE MINUTE LIMIT. To ask a question or to speak at the Meeting you must be either a shareholder of record as of February 23, 20152018 or a person named in a proxy given by such a shareholder. No other persons will be permitted to speak at the Meeting. There will be one period for questions and statements by shareholders as set forth on the Agenda attached to these Regulations.
In order that we may give as many shareholders as possible the opportunity to speak, remarks Remarks and questions will be limited to one minute per shareholder. You must restrict yourselfshareholder and to one comment or question at a time so that others may have an opportunitytime. Additional turns to be heard. Each shareholder may have only one turn to speak until all shareholders who wish to speak have had the opportunity to do so- additional turns may be allowed as time permits.
If you wish to speak, please raise your hand and wait until you are recognized. Please do not address the Meeting until recognized by the Chairman. When you are recognized, please state your name, place of residence, and whether you are a Fifth Third shareholder or a holder of a shareholder proxy, and, in the latter case, identify the shareholder on whose behalf you are speaking. All questions should be directed to the Chairman, who may call on other persons to respond or further direct questions when appropriate.
If you have a matter of individual concern which is not an appropriate subject for general discussion, please defer discussion until after the Meeting at which time officers of the Company will be available. The Chairman will stop discussions which are repetitive, derogatory, over the time limit, irrelevant to the business of the CompanyBancorp or the items on the Agenda for the Meeting, related to pending or threatened litigation, regulatory proceedings or similar actions or otherwise inappropriate. Derogatory references to personalities, comments that are in bad taste, the airing of personal grievances, the injection of irrelevant controversy, personal attacks, refusal to follow these Regulations or interference with any speaker will not be permitted and will be a basis for silencing or removal from the Meeting.
76 | Fifth Third Bancorp | 2018 Proxy Statement |
ANNEX A: REGULATIONS FOR CONDUCT |
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5.MISCELLANEOUS. No recording devices, photographic equipment, or bullhorns will be permitted into the Meeting. No written materials may be distributed by any person at or in physical proximity to the Meeting. The Chairman of the Meeting shall have the power to silence or have removed any person in order to ensure the orderly conduct of the Meeting.
6.ADMINISTRATION AND INTERPRETATION. The Chairman of the Meeting has sole authority to preside over the Meeting and make any and all determinations with respect to the conduct of the Meeting, including, without limitation, the administration and interpretation of these regulations and procedures. The Chairman also has sole authority to create such additional regulations and procedures and to waive full or partial compliance with any regulation or procedure as the reasonably determines. Any action taken by the Chairman at the Meeting will be final, conclusive and binding on all persons. The Secretary of the Company shall act as secretary of the Meeting.
THANK YOU FOR YOUR COOPERATION AND ENJOY THE MEETING.
Fifth Third Bancorp | 2018 Proxy Statement | 77 |
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Annual Meeting of Shareholders
APRIL 14, 2015
AGENDA17, 2018
Call to Order
Introductions
Approval of 20142017 Minutes
Nomination and Election of Directors
Ratification of Auditors
Approval of executive compensationExecutive Compensation
Determination of frequencyFrequency of votesVotes on executive compensationExecutive Compensation
Presentation of 20142017 Results
Question and Answer Session
Announcement of Voting Results on all matters presentedAll Matters Presented
Adjournment
38 Fountain Square PlazaFOUNTAIN SQUARE PLAZA
Cincinnati, OhioCINCINNATI, OHIO 45263
(800)972-3030
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VOTEBY INTERNET | WWW.CESVOTE.COM | |||
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Use the Internet to submit your proxy until 11:00 a.m.,
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VOTEBY TELEPHONE | 1-888-693-8683 | |||
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Use any touch-tone telephone to submit your proxy until 11:00 a.m.,
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VOTEBY MAIL | ||||
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Please mark, sign, date and promptly mail your proxy card using thepostage-paid envelopeprovided or return your proxy card to: Fifth Third Bancorp, c/o Corporate Election Services, PO Box 3230, Pittsburgh PA 15230 to ensure that your vote is received prior to the Annual Meeting on April |
Vote by Telephone | Vote by Internet | Vote by Mail | ||||||||
Call Toll-Free using a | Access the Website and | Sign and return your proxy | ||||||||
touch-tone telephone: | submit your proxy: | in the postage-paid | ||||||||
1-888-693-8683 | www.cesvote.com
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NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL:
The Notice of meeting, proxy statement, and proxy card are available at www.ViewMaterial.com/fitb
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IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, DETACH ALONG THE PERFORATION,
MARK, SIGN, DATE, AND RETURN THE BOTTOM PORTION USING THE ENCLOSED ENVELOPE.
FIFTH THIRD BANCORP | ANNUAL MEETING PROXY CARD |
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints James P. Hackett, Kevin T. KabatEmerson L. Brumback, Greg D. Carmichael and Marsha C. Williams, and each of them, with full power of substitution and power to act alone, as proxies to vote all shares of stock of FIFTH THIRD BANCORP which the undersigned would be entitled to vote if personally present and acting at the Annual Meeting of the Shareholders of Fifth Third Bancorp, to be held April 14, 201517, 2018 at the Hyatt Regency Cincinnati, Regency Ballroom, 151 West 5thJarson-Kaplan Theater, located at the Aronoff Center for the Arts, 650 Walnut Street, Cincinnati, Ohio, and at any adjournments or postponements thereof.
In their discretion, the PROXIES are authorized to vote upon such other business as may properly come before the meeting. This PROXY when executed will be voted in the manner directed herein by the undersigned SHAREHOLDER(S).If no direction is made, this PROXY will be voted FOR Items 1, 2, and 3, and 1 Year on Item 4.
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Shareholder Sign Here | Date | |||||||
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Shareholder (Joint Owner) Sign Here | Date | |||||||
Please sign exactly as name appears on this proxy card. If shares are held jointly, each holder should sign. When signing as attorney, executor, administrator, corporation, trustee, guardian, or custodian, please give full title as such. If a corporation, please sign in full corporate name by President or other authorized officer. If a partnership, please sign in partnership name by authorized person. |
Annual Meeting of Shareholders of
FIFTH THIRD BANCORP
Hyatt Regency Cincinnati, Regency BallroomJarson-Kaplan Theater, located at the Aronoff Center for the Arts,
151 West 5th650 Walnut Street, Cincinnati, Ohio, at 11:30 a.m., E.D.S.T.,eastern daylight saving time, April 14, 2015.17, 2018.
Upon arrival, please present this
admission ticket and photo identification
at the registration desk.
Please tear off this Admission Ticket. If you plan to attend the Annual Meeting of shareholders,Shareholders, you will need this ticket to gain entrance to the meeting. This ticket is valid to admit the shareholder to the Annual Meeting.
The Annual Meeting of shareholdersShareholders will be held at the following address:
Hyatt Regency Cincinnati, Regency Ballroom, 151 West 5thThe Aronoff Center for the Arts, Jarson-Kaplan Theater, 650 Walnut Street, Cincinnati, Ohio,
at 11:30 a.m., E.D.S.T.,eastern daylight saving time, April 14, 2015.17, 2018. You must present this ticket
to gain admission to the meeting. You should send in your proxy
or vote electronically even if you plan to attend the meeting.
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IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, DETACH ALONG THE PERFORATION,
MARK, SIGN, DATE, AND RETURN THE BOTTOM PORTION USING THE ENCLOSED ENVELOPE.
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The Board of Directors recommends a vote “FOR”For the election of Directors, “FOR”For Items 2 and 3, and “1 YEAR” on Item 4.
1. | Election of all members of the Board of Directors to serve until the Annual Meeting of Shareholders in |
Nominees: | FOR | AGAINST | ABSTAIN | FOR | AGAINST | ABSTAIN | ||||||||||
(01) Nicholas K. Akins | (07) | |||||||||||||||
(02) B. Evan Bayh III | (08) | |||||||||||||||
(03) Jorge L. Benitez | ❑ | ❑ | ❑ | (09) Jewell D. Hoover | ❑ | ❑ | ❑ | |||||||||
| (04) Katherine B. Blackburn |
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(05) Emerson L. Brumback | (11) | |||||||||||||||
(06) | (12) Marsha C. Williams |
2. | Approval of the appointment of the firm of Deloitte & Touche LLP to serve as the independent external audit firm for the Company for the year |
¨ FOR¨AGAINST ¨ABSTAIN
❑ FOR | ❑ AGAINST | ❑ ABSTAIN |
3. | An advisory approval of the Company’s executive |
¨FOR ¨AGAINST ¨ABSTAIN
❑ FOR | ❑ AGAINST | ❑ ABSTAIN |
4. | An advisory vote to determine whether the shareholder vote on the compensation of the Company’s executives will occur every 1, 2, or 3 |
¨1 YEAR ¨2 YEARS ¨3 YEARS¨ABSTAIN
❑ 1 YEAR | ❑ 2 YEARS | ❑ 3 YEARS | ❑ ABSTAIN |
(Continued, and please sign on reverse side.)