UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant ☒
Filed by a Party other than the Registrant ☐
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Preliminary Proxy Statement |
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Definitive Proxy Statement |
| ☐ | Definitive Additional Materials |
| ☐ | Soliciting Material Pursuant toSection 240.14a-12 |
FIFTH THIRD BANCORP
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
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ChairmanChair & Lead Independent Director
Joint Letter to our Shareholders
To our Fellow Shareholders:
In 2021, it was once again our pleasure and privilege to continue to lead our Board of Directors, to guide our Company, and to serve our shareholders. We are pleased to invite you to attend our Annual Meeting of Shareholders, which will be held virtually on Tuesday, April 12, 2022.
At each Annual Meeting, we have the opportunity to reflect on how our Board has served you, our shareholders, over the past year. Despite the challenges of the operating environment, we’ve maintained a steadfast and resolute commitment to delivering value to all of our stakeholders. Several years ago, we committed to deliver strong and sustainable results through the cycle, and our 2021 results delivered on that commitment. We believe our risk discipline and governance have provided a foundation on which we can build continued success. Our strong and stable position is bolstered by a focus on peer-leading environmental, social and governance, or ESG, practices; a pledge to community-focused initiatives; and a commitment to robust governance policies and practices. Combined, these approaches bring value to our shareholders and fulfill our purpose and vision. We have a legacy of helping others and being a source of value and trust for our customers, communities, employees and shareholders—and we will never stop doing what’s right for those we serve.
In 2021, Fifth Third delivered record financial results, including record net income driven by record revenue combined with continued expense discipline. In addition, we produced a historical high adjusted return on tangible common equity (“ROTCE”) excluding unrealized gains. From the initial February 2020 pandemic sell-off through year-end 2021, our stock price reflected these record results, outperforming our peers, and the KBW Nasdaq Bank Index (“BKX”) and the S&P 500.
Our strong financial results are coupled with ESG excellence. We continue to receive high ratings relative to peers from independent, third-party ESG ratings agencies. In 2021, we joined the Partnership for Carbon Accounting Financials (“PCAF”) and the Ceres Company Network, signaling our commitment to achieving robust sustainability goals as the economy continues to move toward a lower carbon future. As part of our $8 billion, five-year sustainable finance goal, we extended an additional $1.9 billion in lending and financing to renewable energy projects in 2021. We also issued an inaugural Green Bond, aligning our financing with our investment and lending priorities to provide our customers with liquidity in their transition to a sustainable future. Fifth Third has also developed a Climate Risk Program, and we will soon publish our second Task Force on Climate-related Financial Disclosures (“TCFD”) report. We’ve committed to being an ESG leader in our industry, and we are more confident than ever that the execution of our ESG strategies will continue to produce sustainable value to our shareholders.
We also have remained focused on the communities we serve. We successfully concluded our five-year Community Commitment at the end of 2020, delivering $41.6 billion in lending and investments, a total 30% higher than our targeted commitment. Following the success of our Community Commitment, we’ve committed $2.8 billion over three years to our Accelerating Racial Equity, Equality, and Inclusion initiative. In 2021, as part of that initiative, we embarked upon our Empowering Black Futures neighborhood program. Through this innovative program, we will invest up to $180 million in nine local neighborhoods across our markets with a focus on creating more affordable housing, helping small businesses grow, addressing gaps in financial access and employment, and making infrastructure improvements.
Underpinning our success in each of these areas are strong underlying governance practices that focus on the needs and expectations of our business, our industry and our shareholders. Last year, our shareholders approved management’s proposals to remove supermajority shareholder approval requirements for mergers and amendments to our Articles of Incorporation, thereby further empowering our shareholders. In addition, our Board approved changes to our Corporate Governance Guidelines, reducing the number of public company boards on which our directors may serve in order to better align with shareholder expectations. In response to direct feedback during engagement sessions with many of our largest shareholders, our Board approved the inclusion of an ESG modifier as part of our annual incentive compensation program beginning in 2022. Our Board has also remained committed to ensuring its membership represents the diversity of our key constituencies and has deepened its resolve to recruiting diverse directors.
On behalf of all the members of our Board of Directors, thank you for your continued support and investment in Fifth Third. We invite you to read our Annual Report for more details on our financial highlights and performance in 2021, and we encourage you to review this Proxy Statement carefully and vote your shares according to the instructions provided. We look forward to continuing to deliver on our commitments as a leading institution that is a “Fifth Third Better.”
Faithfully,
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Chairman & Lead Independent Director
Joint Letter to our Shareholders
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Greg D. Carmichael
Chief Executive Officer | Marsha C. Williams Lead Independent Director | |||||||
Notice of 2022 Annual Meeting of Shareholders
To: Holders of Outstanding Common Stock and 6.00% Non-Cumulative Perpetual Class B Preferred Stock, Series A
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Tuesday, April 12, 2022, 11:30 a.m., Eastern daylight saving time
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Virtual www.virtualshareholdermeeting.com/FITB2022
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Shareholders of record at close of business on Friday, February 18, 2022 are entitled to vote
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NoticeItems of 2020 Annual Meeting of the ShareholdersBusiness:
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| Election of all members of the Board of Directors to serve until the Annual Meeting of Shareholders in | ||
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| An advisory approval of the Company’s compensation of its named executive | ||
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| Transaction of such other business that may properly come before the Annual Meeting or any adjournment thereof. | ||
Even if you plan to attend the virtual meeting, 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 virtual Annual Meeting:
Please note that
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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 1-800-870-0653.
By Order of the Board of Directors, |
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| Joseph C. Alter, Corporate Secretary |
| Table of Contents |
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| Election of Directors (Item 1 on Proxy Card) | |||||||
| Board of Directors, Its Committees, Meetings, and Functions | 29 | ||||||
| Corporate Governance | 37 | ||||||
Shareholder Communication with Investor Relations Department | |||||||
| Board of Directors Compensation | |||||||
| Compensation Discussion and Analysis | |||||||
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| Human Capital and Compensation Committee Report | |||||||
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This highlights section does not contain all the information that you should consider before voting. Please read thethis entire proxy statement carefully. For more information on our 2021 performance, please review our Annual Report on Form 10-K for the year ended December 31, 2021, a copy of which is available at ir.53.com.
Voting matters and Board recommendations:
Proposal | Board | ||||
| Election of Meeting of Shareholders in | ✓ “FOR” all nominees | |||
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the independent external audit firm for Fifth Third Bancorp for | ✓ “FOR” | |||
| Advisory approval of Fifth Third Bancorp’s compensation of its named executive officers. | ✓ “FOR” | |||
| Approval of an amendment to the Fifth Third Bancorp Code of Regulations to establish the exclusive jurisdiction of federal courts for actions brought under the Securities Act of 1933, as amended. | |||||
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Casting your vote:
Our Board of Directors is soliciting proxies and voting instructions for the Annual Meeting of Shareholders to be held at the Renaissance Hotel, located at 36 East Fourth Street, Cincinnati, Ohiovirtually on Tuesday, April 14, 202012, 2022 at 11:30 a.m. eastern daylight saving time. The proxy materials were first made available to shareholders on or about March 4, 2020.1, 2022.
Your vote is important!Please cast your vote as soon as possible, but, if you vote by Internet or phone, you must vote no later than 11 a.m.11:59 p.m. eastern daylight saving time on April 14, 2020:11, 2022 for Common Stock held directly and by 11:59 p.m. eastern daylight saving time on April 7, 2022 for Common Stock held in a Plan and for Series A, Class B Preferred Stock.
Internet:
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Sign, date, and mail the enclosed Proxy card.
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| For more information on how to cast your vote, please see |
Attending the annual meeting:
You can attend the annual meeting if you are a record holder of Fifth Third common stock, a beneficial holder of Fifth Third common stock, or an authorized representative of a beneficial holder of Fifth Third common stock.
Please refer to page 92 for more information on identification needed for admittance to the meeting.
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PROXY STATEMENT HIGHLIGHTS |
About Our Company
Core Values
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| Work as One Bank |
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The Bancorp is a diversified financial services company headquartered in Cincinnati, Ohio and is the indirect holding company of Fifth Third Bank. The Bancorp operates four main businesses: Commercial Banking, Branch Banking, Consumer Lending, and Wealth & Asset Management.
| Proactively collaborate to achieve shared goals. | | Own what you do and speak up if something feels wrong, looks wrong, or is wrong. | |||||||||||||||
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| Respect diversity. Fully integrate ideas from varying perspectives. | | Be honest. Be fair. Do the right thing. | ||||||||||||||||
Attending the Annual Meeting:
The Annual Meeting will start at 11:30 a.m. eastern daylight saving time on April 12, 2022. Shareholders and guests may join the virtual meeting beginning at 11:15 a.m. eastern daylight saving time. Any member of the public is invited to attend as a guest and listen to the Annual Meeting by logging onto www.virtualshareholdermeeting.com/FITB2022 and logging in as a guest. Shareholders of record of Fifth Third Common Stock or of Series A, Class B Preferred Stock, beneficial holders of Fifth Third Common Stock or of Series A, Class B Preferred Stock, or authorized representatives of a beneficial holder of Fifth Third Common Stock or of Series A, Class B Preferred Stock, or their legal proxy holders, as of the close of business on February 18, 2022, the record date, are entitled to vote and/or submit questions at the virtual Annual Meeting. Shareholders may participate by visiting www.virtualshareholdermeeting.com/FITB2022 and choosing the shareholder log-in and entering their 16-digit control number that is printed in the box marked by the arrow on the Notice of Internet Availability of Proxy Materials or your Proxy Card. We encourage shareholders and guests wishing to attend the Annual Meeting to visit www.virtualshareholdermeeting.com/FITB2022 in advance of the meeting to verify their internet
connection, familiarize themselves with the online access process, and update their devices and/or browsers, as appropriate. The virtual Annual Meeting platform is fully supported across browsers and devices equipped with the most updated version of applicable software and plugins. Additionally, shareholders should allow sufficient time after logging in to ensure that they can hear streaming audio prior to the start of the meeting.
Anyone wishing to attend the meeting and encountering difficulty with the Annual Meeting virtual platform during the sign-in process or at any time during the meeting may utilize technical support provided by the Company through Broadridge Financial Solutions, Inc. Technical support information is provided on the sign-in page.
Shareholders will have substantially the same opportunities to participate in our virtual Annual Meeting as they would have at an in-person meeting. Shareholders will be able to attend, vote (in the case of holders of Common Stock), examine the shareholder list, and submit questions before and during a portion of the meeting via the online platform. Shareholders may submit questions by signing into the virtual meeting platform at www.virtualshareholdermeeting.com/FITB2022, and by typing a question into the “Ask a Question” field, and clicking submit. Shareholders may submit questions beginning on April 5, 2022 by logging onto proxyvote.com with their 16-digit control number. Questions that are germane to the purpose of the Annual Meeting will be answered during the meeting, subject to time constraints. Questions regarding personal matters or matters not relevant to the Annual Meeting will not be answered. If we receive substantially similar questions, we will group them together.
Shareholders of Common Stock may vote during the Annual Meeting. Shareholders may also vote before the date of the Annual Meeting using the one of the methods provided on the proxy card. Holders of depositary shares representing Preferred Stock may only submit voting instructions prior to the Annual Meeting using one of the methods provided on the proxy card. We recommend that shareholders vote by mail, internet, or telephone prior to the Annual Meeting, even if they plan to attend the Annual Meeting virtually.
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PROXY STATEMENT HIGHLIGHTS |
Corporate Performance Highlights
About Our Company
| Fifth Third is a diversified financial services company headquartered in Cincinnati, Ohio and is the indirect holding company of Fifth Third Bank, National Association. The Bancorp operates four main businesses: Commercial Banking, Branch Banking, Consumer Lending, and Wealth & Asset Management. |  | Core Values 1. Work as One Bank Proactively collaborate to achieve shared goals. 2. Take Accountability Own what you do and speak up if something feels wrong, looks wrong, or is wrong. 3. Be Respectful and Inclusive Respect diversity. Fully integrate ideas from varying perspectives. 4. Act with Integrity Be honest. Be fair. Do the right thing. |
Fifth Third Bank Footprint Map
| Fifth Third 2022 Proxy Statement | 3 |
PROXY STATEMENT HIGHLIGHTS
Corporate Performance Highlights
Strong financial performance, reflecting solid operating results
| • | Record full-year net income of $2.8B, or $3.73 per common share |
| • | Generated record revenue of nearly $8 billion in 2021, which increased 4% compared to 2020 |
| • | Record average core deposits of $162 billion |
| • | Generated consumer household growth in excess of 3% year-over-year |
Environmental, Social, and Governance (ESG) Leadership
| • | Issued an inaugural Green Bond, aligning our financing with our sustainable financing priorities |
| • | Achieved four of the five bold operational sustainability goals announced in 2017 and achieved carbon neutrality in our operations for the second year |
| • | Developed a Climate Risk Program led by Fifth Third’s first climate risk officer, who is focused on integrating climate-related risks in our enterprise risk framework |
| • | Only bank within peer group to have maintained CDP leadership band score for three consecutive years |
| • | Fifth Third’s actions and disclosures are ranked #1 or #2 by several key independent third-party ESG data providers |
| • | Contributing to our communities and celebrating their achievements |
| • | Exceeded our $32 billion 5-year Community Commitment goal by 30% |
| • | Launched our Empowering Black Futures Neighborhood Program with up to $180 million investment in nine neighborhoods across our footprint |
| • | Continued to work closely with customers to support them through PPP and other outreach efforts |
| • | Made second special Covid-19 staffing bonus to front-line employees in 2021 |
Robust capital & liquidity
| • | Maintained strong capital levels with Common Equity Tier 1 of 9.53% |
| • | Heavily core-funded, with loan-to-core deposit ratio near historic lows |
Peer-leading shareholder returns
| • | In 2021, Fifth Third stock price appreciated 58%, which was No. 1 among peers and outperformed the KBW Bank index by 23 percentage points |
| • | For the first time since the financial crisis, Fifth Third is top quartile among peers in key investor valuation metric, price-to-tangible book value, excluding unrealized gains |
Balance sheet management
| • | $15 billion cash flow hedge portfolio to provide protection against low interest rate environment |
| • | Well-positioned to benefit when interest rates rise due to highly asset-sensitive balance sheet and significant excess liquidity position |
| • | Successfully managed interest-bearing core deposits 24 bps lower during the year |
Disciplined risk management
| • | Credit results demonstrate our disciplined client selection, conservative underwriting, and continued benefit from fiscal and monetary government stimulus programs |
| • | Many of our key credit metrics, including nonperforming assets and nonperforming loans, are top quartile among peers |
| • | Historically low full-year net-charge offs of just 16 basis points |
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PROXY STATEMENT HIGHLIGHTS
Item 1: Election of Directors
The Board of Directors proposes the election of 15 Directors to serve until the 2023 Annual Meeting of Shareholders. Our Directors provide robust and effective governance and oversight. The nominees for Director, collectively, represent diverse perspectives and provide a broad range of skills, expertise, and experience to guide the Company.
Our Board of Directors recommends a vote “For” each nominee. For more information on our nominees, please see page 19.
Board of Directors Highlights
2022 Director Nominee Overview
| Name | Age | Gender | Ethnicity | Director Since | Other Public Company Boards* | |||||||||||||||||||||||||
Nicholas K. Akins | 61 | M | White | 2013 | American Electric Power | |||||||||||||||||||||||||
B. Evan Bayh, III | 66 | M | White | 2011 | Marathon Petroleum Company Berry Global Group, Inc. RLJ Lodging Trust | |||||||||||||||||||||||||
Jorge L. Benitez | 62 | M | Hispanic | 2015 | World Fuel Services | |||||||||||||||||||||||||
Katherine B. Blackburn | 56 | F | White | 2014 | None | |||||||||||||||||||||||||
Emerson L. Brumback | 70 | M | White | 2009 | M&T Bank (2007) | |||||||||||||||||||||||||
Greg D. Carmichael | 60 | M | White | 2015 | Encompass Health Corporation | |||||||||||||||||||||||||
Linda W. Clement-Holmes | 59 | F | African American | 2020 | Cincinnati Financial Corporation | |||||||||||||||||||||||||
C. Bryan Daniels | 63 | M | White | 2019 | MB Financial, Inc. (2019) | |||||||||||||||||||||||||
Mitchell S. Feiger | 63 | M | White | 2020 | MB Financial, Inc. (2019) | |||||||||||||||||||||||||
Thomas H. Harvey | 61 | M | White | 2019 | MB Financial, Inc. (2019) | |||||||||||||||||||||||||
Gary R. Heminger | 68 | M | White | 2006 | PPG Industries, Inc. Marathon Petroleum Company (2020) MPLX GP LLC (2020) | |||||||||||||||||||||||||
Jewell D. Hoover | 73 | F | African American | 2009 | None | |||||||||||||||||||||||||
Eileen A. Mallesch | 66 | F | White | 2016 | Arch Capital Group, Ltd. Brighthouse Financial State Auto Financial Corp. (2021) Libbey, Inc. (2020) Bob Evans Farms, Inc. (2018) | |||||||||||||||||||||||||
Michael B. McCallister | 69 | M | White | 2011 | AT&T, Inc. Zoetis, Inc. | |||||||||||||||||||||||||
Marsha C. Williams | 70 | F | White | 2008 | Modine Manufacturing Company Davis Funds McDermott International, Inc. (2020) Chicago Bridge & Iron Company, N.V. (2018) | |||||||||||||||||||||||||
| * | The year in which a public company directorship previously ended is indicated by the parenthetical year following the company name. |
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PROXY STATEMENT HIGHLIGHTS
Diverse Skills and Attributes Among Board Members
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| 12/15 | 10/15 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Governance Highlights
Robust Board Engagement and Oversight
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Governance Highlights
Diverse Skills and Attributes Among Board Members
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Governance Highlights
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PROXY STATEMENT HIGHLIGHTS
Board Diversity Matrix (as of February 18, 2022)
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Total Number of Directors | 15 | |||||||
Part I: Gender Identity |
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Directors | 5 | 10 | ||||||
Part II: Demographic Background |
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Hispanic or Latinx | — | 1 | ||||||
White | 3 | 9 | ||||||
2020 Proxy Statement
| Directors’ Gender | Directors’ Ethnicity | Directors’ Average Tenure | Directors’ Independence | |||||||||||||||
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| Fifth Third 2022 Proxy Statement | 7 |
PROXY STATEMENT HIGHLIGHTS |
Board Independence, Board Accountability, and Board EffectivenessGovernance Overview
Fifth Third’s Board of Directors is committed to strong and effective governance and oversight. Annually, the Board reviews and enhances, as necessary, enhances, its practices in relation tofor Board Independence,independence, Board Accountability,accountability, and Board Effectiveness.effectiveness. Below are some highlights of our Board governance program.
Board Independence
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| • | Engagement with Regulators: Fifth Third’s regulators are invited to meet with independent directors outside the presence of management. |
Board Accountability
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| • | Retirement Age: Our Code of Regulations provides that a director should not stand for re-election at the Annual Meeting following his/her 72nd birthday; provided that the Nominating and Corporate Governance Committee may waive this requirement upon consideration of relevant factors listed in our Corporate Governance Guidelines. |
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| • | Oversight of Strategy: The Board of Directors actively oversees the development of strategic objectives during its September Board meeting and receives updates on the implementation of strategic plans throughout the year at regularly scheduled Board meetings. The Board also reviews the risk assessment of the strategic plan. |
| • | Proxy Access: The Board amended the Bancorp’s Code of Regulations in 2020 to allow proxy access. |
| • | Stock Ownership Requirements: Directors are required to own Fifth Third stock equal in value to six times their annual Board member salary (not including fees for Committee service) within five years of their Board appointment. |
| • | Oversight of Executive Management Succession Planning: The Board engages in an annual executive management succession planning review meeting, in addition to regular succession planning discussions at the Committee level. |
Board Effectiveness
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| • | Director Diversity, Skills, and Expertise: The Board annually |
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| • | Board Succession Planning: The Board, and its relevant Committees, regularly discuss Director succession planning, focusing on business needs, industry trends, diverse perspectives, and shareholder expectations. |
| • | Over-boarding Restrictions:Directors are subject to over-boarding restrictions, |
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PROXY STATEMENT HIGHLIGHTS
Item 2: Ratification of the Appointment of Deloitte & Touche to serve as Independent Auditor
The Board of Directors proposes to ratify the appointment of Deloitte & Touche to serve as the independent external audit firm for Fifth Third Bancorp until the Annual Meeting of Shareholders in 2023. The Audit Committee and the Board of Directors believe Deloitte & Touche’s continued service as Fifth Third’s independent external audit firm is in the best interests of the Company and our shareholders. The Audit Committee will further evaluate the appointment of Deloitte & Touche as independent external audit firm if the appointment is not ratified by a majority of shareholders.
Our Audit Committee and our Board of Directors recommends a vote “For” the ratification of the appointment of Deloitte & Touche as the Company’s independent external audit firm for 2022. For more information on this item, please see page 84. This item appears as Item 2 on your proxy card.
Item 3: Advisory Approval of the Company’s Compensation of its Named Executive Officers
The Board of Directors seeks advisory approval of the compensation for Fifth Third’s Named Executive Officers. The Human Capital and Compensation Committee and our Board of Directors have established a compensation philosophy and a compensation program that rewards employees for delivering the right products to the right customers. Our compensation program considers our shareholders’ long-term interests and align with Fifth Third’s values, while also staying within our risk tolerance.
Our Human Capital and Compensation Committee and our Board of Directors recommends a vote “For” the advisory approval of the compensation of our Named Executive Officers. For more information on this item, please see page 85. This item appears as Item 3 on your proxy card.
Executive Compensation Highlights
Our Named Executive Officers have approximately 50% or more of their target total compensation delivered in the form of long-term, equity-based compensation.
2021 Total Compensation Pay Mix(1)
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| (1) | The percentages reflect the Named Executive Officer’s base salary as of December 31, 2021, target annual cash incentive award for 2021, and target long-term, equity-based incentive award for 2021. |
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Executive Compensation Highlights
We support ourOur compensation program with a number ofincorporates best practices in governance and executive compensation, including the following:
| Compensation matter | Fifth Third’s practice | |
Frequency of pay equity practices review | Annual | |
Frequency of say-on-pay advisory vote | Annual | |
Robust code of business conduct and ethics | ✓ | |
Pay for performance | ✓ | |
ESG modifier included in annual incentive goals | ✓ | |
Employment agreements for executive officers | ✘ | |
Excessive perks | ✘ | |
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PROXY STATEMENT HIGHLIGHTS
Item 4: Approval of an Amendment to the Fifth Third Bancorp Code of Regulations to Establish the Exclusive Jurisdiction of Federal Courts for Actions Brought under the Securities Act of 1933
The Board of Directors proposes that shareholders adopt an amendment to the Company’s Code of Regulations. The proposed amendment would add a new Article XI which provides that, unless the Company consents to the selection of an alternative forum in writing, the federal district courts of the United States will be the exclusive forum for the resolution of any claims arising under the Securities Act of 1933, as amended (the “Securities Act”). The Company believes that the adoption of a federal forum selection provision requiring that all claims arising under the Securities Act be brought in federal court will allow the Company to avoid state court forum shopping, eliminate parallel litigation in state and federal jurisdictions for claims arising out of the same or a similar set of facts, and improve procedural efficiencies in litigating claims arising out of the Securities Act. Based on these considerations and others, the Board of Directors believes it is in the best interests of Company and our shareholders that the Code of Regulations be amended to add the proposed federal forum selection provision.
Our Board of Directors recommends a vote “For” the approval of this amendment to our Code of Regulations. For more information on this item, please see page 86. This item appears as Item 4 on your proxy card.
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PROXY STATEMENT HIGHLIGHTS
ESG Highlights
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PROXY STATEMENT HIGHLIGHTS
| Data | is for fiscal year 2021, unless otherwise noted; |
| 1 | 1/1/2012-12/31/2021; |
| 2 | For Scope 1, Scope 2 and business travel under Scope 3 emissions. Projected full year 2021 CO2e emissions are based on 2021 year-to-date data as well as historical company data from 2014-2020. Final CO2e emissions will be made available in 2022 following independent verification; |
| 3 | In terms of ethnicity or gender; |
| 4 | 2016-2020; |
| 5 | Since 2004. |
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Election of Directors (Item 1 on Proxy Card)
In accordance with our Code of Regulations, directors are each elected annually to a one (1) yearone-year term expiring at the next Annual Meeting of Shareholders. The terms of theour current directors listed below expire at the Annual Meeting on April 14, 2020 and these individuals constitute the nominees12, 2022. Each of our current directors has been nominated to be elected to serve until the Annual Meeting of Shareholders in 2021. Any vacancies that occur after the directors are elected may be filled by the Board of Directors in accordance with law and our Code of Regulations2023.
Process for the remainder of the full term of the vacant directorship.Director Nominations
Director candidates are nominated by the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee’s charter directs itPursuant to investigate and assess the background and skills of potential candidates and to maintain an active file of suitable director candidates. The Nominating and Corporate Governance Committee utilizes its pool of existing subsidiary and regional directors as well as the significant network of business contacts of its existing directors and executive management and also retains third party consultants to aid it in identifying potential director candidates. Upon identifying a candidate for serious consideration, our Chief Executive Officer and one or more members ofCharter, the Nominating and Corporate Governance Committee initially interview such candidate. Ifannually reviews the candidate merits further consideration,current composition of the candidate subsequently interviews with otherBoard, in light of director skills, expertise, diversity, background, and experience, the current and emerging needs of our business, and feedback from directors in the Board’s robust self-evaluation process. In addition, the Nominating and Corporate Governance Committee members (individually or as a group),reviews the background and ultimately meetsskills of director candidates based on the remaining directors. Theneeds of the Company and the Board. Candidates are reviewed by the Nominating and Corporate Governance Committee elicits feedback from persons who meetand the candidate and then determines whether or not to nominate the candidate.
Our Corporate Governance Guidelines set forth the following criteria for directors: independence (in order to compose a Board of Directors that has a majority of its members who are independent); highest personal and professional ethics and integrity; willingnessprior to devote sufficient timenomination or appointment to fulfilling duties as a director; impact on the diversity of the Board’s overall experience in business, government, education, technology, and other areas relevant to our business; impact on the diversity of the Board’s composition in terms of age, skills, ethnicity, and other factors relevant to our business; and the number of other public company boards on which the candidate may serve (generally, a director should not serve on more than three public company boards in addition to Fifth Third). The Board of Directors and Nominating and Corporate Governance Committee believe that diversity on our Board should be a priority and therefore actively seek diverse candidates with regard to gender, race, ethnicity, age, background, and other attributes. Board.
Our Corporate Governance Guidelines provide that shareholders may propose nominees to the Nominating and Corporate Governance Committee by submitting the names and qualifications of such persons to the Nominating and Corporate Governance Committee no later than December 31 of each year. Submissions are to be addressed to the Nominating and Corporate Governance Committee at our executive offices which submissionsand will then be forwarded to the Committee. The Nominating and Corporate Governance Committee will then evaluate the possible nominee using the criteria outlined aboveprovided in our Corporate Governance Guidelines, in the Nominating and Corporate Governance Committee Charter, and other relevant corporate governance disclosures and will consider such person in comparison to all other candidates. The Nominating and Corporate Governance Committee is not obligated to nominate any such individual for election. No such shareholder nominations have been received by Fifth Third for this Annual Meeting. Accordingly, no rejections or refusals of such candidates have been made by Fifth Third. Shareholders may also nominate candidates directly for election by following the procedures in our Code of Regulations. These are summarized in the “2021“2023 Shareholder Proposals” section of this proxy statement.
Pursuant to applicable law and our Code of Regulations, any vacancies that occur after the directors are elected may be filled by the Board of Directors for the remainder of the full term of the vacant directorship or the Board may elect not to fill the vacancy and to reduce the size of the Board. There is no family relationship between and among any of our executive officers or directors. There are no arrangements or understandings between any of our executive officers or directors and any other person pursuant to which any directors are elected director or officers are appointed.
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ELECTION OF DIRECTORS
Criteria for Director Nominations Our Corporate Governance Guidelines set forth the following non-exclusive criteria for directors:
The Board of Directors and Nominating and Corporate Governance Committee value diversity among our directors. The Board believes that diversity on our Board should be a priority and therefore actively seeks diverse candidates with regard to gender, race, ethnicity, age, background, and other attributes. We strive to include candidates who reflect the diverse markets which we serve in our pools from which nominee are chosen. Any third-party search firms engaged to assist in the searches for Director candidates are required to include candidates with diverse characteristics. The Nominating and Corporate Governance Committee reviewed the qualifications of each nominee for election as director and found that each possesses strong personal and professional ethics and integrity and each was committed to representing the interests of Fifth Third and our shareholders. In addition, as a group, the skills, expertise, experience, and diversity of our Board are well-suited to address the current and emerging needs of our business and to achieve our strategic goals. Our Board of Directors believes that each of our directors, including each of our director nominees, has demonstrated the ability to devote sufficient time and attention to board duties and to otherwise fulfill the responsibilities required of directors. Therefore, the Nominating and Corporate Governance Committee has nominated for election as directors the following
Nominating and Corporate Governance Committee members for
The Board of Directors has adopted a Nominating and Corporate Governance Committee charter which may be found in the Corporate Governance section of our website at www.53.com.
Oversight of compliance with all regulatory obligations arising under applicable federal and state banking laws, rules, and regulations Oversight of risk management policies of Fifth Third’s global operations Development and oversight of Fifth Third’s global risk management framework, inclusive of risk appetite Creation of processes and policies for identifying, assessing, managing, monitoring, and reporting risks of all types, including the categories of credit risk, interest rate risk, price risk, liquidity risk, operational risk (including cybersecurity risk), legal and regulatory compliance Development and oversight of risk governance structure Oversight of environmental and social risk activities, including climate change, and monitoring of their impact across all risk types Oversight of the exercise of trust and other fiduciary powers and of the fiduciary structure of Fifth Third Oversight of the Retail Non-deposit Investment Product Program Oversight of efforts to comply with or remediate regulatory findings or supervisory issues
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Risk and Compliance Committee members in 2019 were:
* Mr.2021 were (from left to right) C. Bryan Daniels, Eileen A. Mallesch, Gary R. Heminger, Jewell D. Hoover, Emerson L. Brumback (Chair), and Mr. Harvey joined the Risk and Compliance Committee in September 2019.Linda W. Clement-Holmes.
As Lead Independent Director, Ms. Williams serves as an ex-officoex-officio, non-voting member of the Risk and Compliance Committee. The Board of Directors has adopted a Risk and Compliance Committee charter which may be found in the Corporate Governance section of our website at www.53.com.
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BOARD OF DIRECTORS, ITS COMMITTEES, MEETINGS, AND FUNCTIONS
Technology Committee Our Technology Committee serves in a dual capacity as the Technology Committee of Fifth Third Bancorp and Fifth Third Bank, National Association and is comprised entirely of independent directors. The Technology Committee was created by the Board of Directors in 2021. | Technology Committee meetings in 2021
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The Technology Committee’s functions include:
Oversight of technology and innovation strategy and operations
Oversight of strategy for information security, cybersecurity, and third-party technology risk management
Oversight of technology policies, standards, and controls
Oversight of enterprise data management program and strategy
Technology Committee members in 2021 were (from left to right) C. Bryan Daniels, B. Evan Bayh, III, Linda W. Clement-Holmes, Thomas H. Harvey, Jorge L. Benitez (Chair), and Nicholas K. Akins.
As Lead Independent Director, Ms. Williams serves as an ex-officio, non-voting member of the Technology Committee. The Board of Directors has adopted a Technology Committee charter which may be found in the Corporate Governance section of our website at www.53.com.
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The Board of Directors has adopted the Fifth Third Bancorp Corporate Governance Guidelines and the Fifth Third Bancorp Code of Business Conduct and Ethics, which applies to our directors;directors and all of our employees, including our Chief Executive Officer, Chief Financial Officer, and Controller; and our other employees.Controller. The Corporate Governance Guidelines delineate the responsibilities of our directors, Board, and Board Committees as well as standards for Board composition, service, and meetings, and are reviewed annually to ensure standards remain consistent with evolving business needs and best practices. The
Our principal Corporate Governance Guidelines and the Code of Business Conduct and Ethicsdocuments may be found in the Corporate Governance section of our website at www.53.com.
| • | Corporate Governance Guidelines |
| • | Code of Business Conduct and Ethics |
| • | Articles of Incorporation |
| • | Code of Regulations |
| • | Information Disclosure Policy |
| • | Government Affairs Policy |
| • | Stock Ownership and Retention Guidelines |
| • | Charter for each standing committee |
Board Performance Evaluations.Evaluations
The Board of Directors and the Nominating and Corporate Governance (“NCG”) Committee annually review directors’ skills and expertise to ensure the Board represents a diverse skill set oriented to the historical and emerging needs of our business. The comprehensive evaluation process also seeks to enhance the business. ThisBoard’s effectiveness through the identification of opportunities for improvement. Our evaluation tools include both written questionnaires and individual interviews with the Lead Independent Director. The evaluations focus on function, organization, practices, and performance of the Board and each committee. The directors’ anonymous responses and comments, along with feedback from the Lead Independent Director interviews, are analyzed by the committee chairs, who identify specific opportunities for improvement. Management develops and implements action plans to address opportunities for improvement and provides updates to the Nominating and Corporate Governance Committee.
The following is an outlinea timeline of our basic performancethe evaluation process:
Purpose, Scope, and Focus
The Nominating and Corporate Governance Committee reviews and approves the self-assessment questionnaires for the Board of Directors and each committee, as well as suggested areas of discussion for the Lead Independent Director’s interviews with individual directors. |
Evaluation and Discussion
Each director completes a written assessment of the Board of Directors and each committee on which he/she serves. |
The Lead Independent Director conducts individual interviews with each independent director. |
| Fifth Third 2022 Proxy Statement | 37 |
CORPORATE GOVERNANCE
Review and Analysis
Anonymous results from the Board and committee assessments and from the Lead Independent Director’s interviews are aggregated and analyzed. The results are provided to the Nominating and Corporate Governance Committee and each committee chair and are later discussed by the full Board. |
Development and Implementation of Action Plans
The Board and each Committee identify and prioritize opportunities for improvement based on the aggregated evaluation and interview responses and provide these opportunities to management. |
Management develops and implements action plans to address the opportunities identified by the Board and each of its committees. |
Management provides updates on the action plans and implementation thereof to the Nominating and Corporate Governance Committee as appropriate through the year and at the conclusion of each year before the next review cycle begins. The Nominating and Corporate Governance Committee provides feedback as appropriate. |
The following year’s evaluation process solicits feedback on the implementation of action items from the previous year. |
Board Training and Education
The Director Onboarding Program and Director Education Program are reviewed and approved each year by our Nominating and Corporate Governance Committee and Board of Directors. Our directors participate in a broad onboarding program upon their appointment to the Board and receive continued education throughout the year pursuant to Fifth Third’s Director Education Program. Our onboarding program aims to integrate new directors into the overall function of the Board of Directors, so that new directors may meaningfully contribute to the Board, while increasing and enhancing the background, experience, and perspective of new directors. The Onboarding Program covers organization structure, corporate culture, lines of business, functional areas, operations, strategic planning, risk, director responsibilities, committee roles, regulatory landscape, and other senior management responsibilities.
The goal of the Director Education Program is to enhance director effectiveness by providing education on issues that are relevant to oversight and management of Fifth Third in order to create long-term value and reflect shareholder and regulatory expectations that directors continually enhance their knowledge and skills. Our Director Education Program provides training on a wide array of relevant topics, such as complex products and services, lines of business, legal and regulatory developments, human capital and executive compensation trends, finance practices, audit methodologies, areas of historical, current, and anticipated risk, cybersecurity trends, and strategy. Education sessions are offered consistently at both the Board and Committee levels and include both internal and external presenters. During 2021, the Board participated in at least one, and typically multiple, director education sessions at every regularly scheduled Board meeting, providing a consistent, ongoing forum for broadening and deepening directors’ knowledge of salient topics. Our directors also participate in forums and education sessions hosted by regulatory agencies and public company director organizations.
The Board believes that our shareholders are best served by a Board that has the flexibility to establish a leadership structure that fits our needs at any particular point in time. Accordingly, under our Code of Regulations and Corporate Governance Guidelines, the Board of Directors has the authority to combine or separate the positions of Chair and Chief Executive Officer as well as determine whether, if the positions are separated, the Chair is an affiliated director or an independent director.
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CORPORATE GOVERNANCE |
The Board’s Chair is currently Fifth Third’s Chief Executive Officer, Mr. Carmichael, and Ms. Williams is currently serves as the Lead Independent Director. The Board believes that this leadership structure is appropriate at this time given the contributions Mr. Carmichael has given to date in his roleCarmichael’s experience as CEO and his ability to provide strategic and operational leadership. The Board determined that leadership by our CEO, coupled with oversight from our strong Lead Independent Director, experienced Committee Chairs, and our other well-qualified directors, almost all of whom are independent, will allow Fifth Third to grow and meet the challenges facing itthe industry and the industry.expectations of our shareholders.
The Lead Independent Director is nominated by the Nominating and Corporate Governance Committee and annually elected by all independent directors. When nominating and electing a Lead Independent Director, our Board considers candidates’ independence in accordance with Nasdaq listing standards and other applicable laws and regulations; knowledge of the Board, Company, and financial services industry; leadership experience in public companies; familiarity with corporate governance best practices and procedures; ability to achieve consensus and alignment among independent directors and among independent directors and the Chair; and, ability to work effectively and constructively with and advise the Chair. The Committee may also consider other factors, relevant to the Board’s oversight, Fifth Third’s business and industry, and/or Company strategy when considering candidates for Lead Independent Director. The Board believes Ms. Williams, in her role as Lead Independent Director, provides the Board with strong independent leadership among both independent directors and with the Chair, possesses significant knowledge of the Board, Company, and financial services industry, possesses expertise in corporate governance practices and procedures, and exhibits appropriate independent oversight of management.
| Fifth Third 2022 Proxy Statement | 39 |
CORPORATE GOVERNANCE
Under our Code of Regulations and Corporate Governance Guidelines, our Lead Independent Director will:will exercise the following duties:
Leadership
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Communication
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Agendas
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Special Meetings
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Executive Sessions
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Consultants
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Board Composition
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Corporate Governance Guidelines
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CEO and Board Performance Evaluations
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Culture
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CORPORATE GOVERNANCE
Risk Management Oversight.TheAn important role of the Board of Directors is to provide oversight to ensure an enterprise risk management program is implemented and operating effectively, including an appropriate enterprise risk management framework and related governance structure. The Board sets our overallBancorp establishes a risk appetite includingin alignment with its strategic, financial and capital plans. The Bancorp’s risk appetite is defined using quantitative metrics and qualitative measures to ensure prudent risk taking and drive balanced decision making. The Bancorp’s goal is to ensure that aggregate residual risks do not exceed the establishmentBancorp’s risk appetite, and monitoring of risk tolerances. Tolerancesthat risks taken are the maximum amount of risk applicable to eachsupportive of the eight specificBancorp’s portfolio diversification and profitability objectives. The Board and executive management approve the risk categories includedappetite, which is considered in the development of business strategies and forms the basis for enterprise risk management framework.management. Through their oversight role, directors also ensure that the risk management processes designed and implemented under thisdefined in the framework and governance structure are aligned to the Board’s corporate strategy and are functioning as directed.intended. The Board also considers the optimal organizational structure at both the Board and management levels. This may include delegating responsibility through Board committees, management committees, the Chief Executive Officer, the Chief Risk Officer, and the Chief RiskCredit Officer.
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The Board’s risk oversight responsibility is primarily carried out through its standing committees, as follows:
The Risk and Compliance Committee currently consists of sevensix outside directors and has responsibility for the oversight of our risk management, including credit, interest rate, liquidity, market, credit,price, operational, (including technology), legal reputational, strategic, and regulatory compliance, risk.reputational, and strategic risks. The Risk and Compliance Committee also has responsibility to ensure that risks are properly controlled and quantified and are within our risk appetite. The Chief Risk Officer hasand Chief Credit Officer have a direct reporting relationship to the Chief Executive Officer and the Risk and Compliance Committee. The
| Fifth Third 2022 Proxy Statement | 41 |
CORPORATE GOVERNANCE
Each of the Chief Risk Officer hasand the Chief Credit Officer have regular executive sessions with the Risk and Compliance Committee without other members of management present. In addition, the Director of Credit Risk Review reports directlyprovides reporting and has direct access to the Risk and Compliance Committee.
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The Bancorp’s risk governance structure ensures proper oversight of risk across the firm and provides a path for escalation of risks and issues to management and board-level committees to drive effective risk decisioning. The Risk and Compliance Committee oversees a robust management-level risk committee structure which allows the Board and management to assess the company’s risk exposure and to ensure it is aligned with the Bancorp’s appetite for risk.
During times when there may be elevated levels of risk, the Board monitors the impact on the risk profile by regularly reviewing and reporting on management’s response and actions taken to mitigate risks, including financial and non-financial risks, business continuity, and human capital risks.
TheEnterprise Risk Management Committee is the executive-level management committee chaired by the Chief Risk Officer. Membership includes the Chief Executive Officer and senior level management, including risk experts and management from each line of business. The Enterprise Risk Management Committee is responsible for reviewing and approving the Enterprise Risk Management Framework and policies, overseeing the management of all risk categories to ensure that risks remain within our risk appetite, and fostering a culture that supports risk management objectives. In order to fulfill these responsibilities, the Enterprise Risk Management Committee reviews information on risk levels and trends, capital adequacy, and top and emerging risks during each quarterly meeting. The Enterprise Risk Management Committee oversees keyhas several subordinate management committees responsible for specific risk categories and key risk-related policies and processes in order to support an aggregate view of risk and provide executive-level risk management oversight of all risk categories. The Enterprise Risk Management Committee has the following subordinate management committeescouncils which oversee specific areas of risk, including oversight of front line unit risk-taking activities, to determine if risk management practices need to be strengthened or ifare aligned with the Enterprise Risk Management Framework, including monitoring risk needs to be reduced,appetite, review of key risk indicators, concentration risk limits, and other risk metrics and reporting:
Asset Liability Management Committee – oversees the management of the balance sheet, including the investment portfolio, as well as market, liquidity, and interest rate risks for the Bancorp and its subsidiaries
Liquidity Risk Management Committee – oversees the measurement and quantification of liquidity risk and assesses the adequacy of the Bancorp’s liquidity
Mortgage Servicing Rights Committee – establishes and maintains policies and procedures related to the management of the mortgage servicing rights portfolio and oversees compliance with those policies and procedures
Secondary Marketing Risk Management Committee – oversees policies and strategies related to the marketing and risk management of Fifth Third Mortgage division’s loan programs including hedging, pricing, commitment strategy, inventory control, sale of loans, and counterparty exposure
Treasury Investment Management Committee – evaluates the investment strategy and its impact on the Bancorp’s balance sheet, as well as risks to the investment portfolio and their impact on liquidity, and regulatory capital positions
Capital Committee – oversees Fifth Third’s overall capital assessment process and monitors and manages its current and future capital positions to ensure the capital adequacy of the Bancorp and its subsidiaries
Corporate Credit Committee – establishes strategic credit-related priorities, develops initiatives, and makes policy decisions to optimize risk and returnreporting.
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CORPORATE GOVERNANCE |
Commercial Credit Policy Committee – reviews and approves key commercial credit policies, processes, and products as well as strategic credit and portfolio management decisions relating to commercial credit risk
Consumer Credit Policy Committee – oversees Fifth Third’s Consumer guidelines and processes to ensure risk-adjusted return levels are obtained for credit-related products and services
Country Risk Committee – oversees the Bancorp’s country risk management process, including the identification, measurement, monitoring, and reporting of risk associated with Fifth Third’s foreign exposure and activity
Market Risk Management Committee – oversees the identification, measurement, assessment, management, mitigation, monitoring and reporting of credit and price risk related to Capital Markets-related activities. As these activities are client-focused, price risk is more limited and the primary risk is credit-related.
Corporate Responsibility and Reputation Committee – provides oversight and review of the Bancorp’s policies, programs, practices, strategies, and approach to corporate responsibility that reflect the Bancorp’s core values and impact the Bancorp’s reputation among all of its stakeholders
Loan Loss Reserve Committee – reviews and approves the allowance for credit losses based on economic information and forecasts, portfolio quality measurements, and the methodology and assumptions used to calculate the reserve
Management Compliance Committee – oversees and supports the Bancorp in the management of regulatory compliance risk, protecting consumer interests, and offering products and services in a safe and sound manner. In overseeing regulatory compliance risk, the Committee guards againstnon-compliance with laws and regulations, including those related to money laundering and the Bank Secrecy Act.
Community Reinvestment Act/Responsible Banking Committee – guides enterprise-wide CRA and responsible conduct strategies and policies and facilitates high-level direction to consumer and commercial lines of business consistent with such strategies and policies
Regulatory Change Management Committee – provides oversight of Fifth Third’s current regulatory change management activities, monitors future regulatory proposals, and reviews readiness assessments of Fifth Third’s products and processes for potential regulatory changes
Operational Risk Committee – oversees and supports an integrated operational risk framework and the identification, assessment, management/mitigation, monitoring, and reporting of operational risks, including, but not limited to, risks associated with cybersecurity, information technology, third party vendors, data management, business continuity, disaster recovery, and fraud
Information Security Governance Committee – creates awareness of critical issues that impact information security and functions as a formal mechanism for the review and ratification of Information Technology (IT) and Information Security (IS) policies. This Committee will jointly report to the Risk and Compliance and Technology Committees in 2020.
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Model Risk Committee – provides a forum to review and discuss model risks that impact the Bancorp, identify solutions to address risks, and review and ratify Model Risk policies
Communication with the Board. Shareholders may communicate directly towith the Board of Directors in writing by sending a letter to the Board at: Fifth Third Bancorp Board of Directors, c/o Fifth Third Legal Department, Office of the Corporate Secretary, 38 Fountain Square Plaza, MD 10909F, Cincinnati, Ohio 45263. All communications directed to the Board of Directors will be received and processed by the Fifth Third Legal Department and will be transmitted to the Nominating and Corporate Governance Committee.
The Audit Committee has also established Fifth Third’s EthicsLine, a toll-free hotline and web portal through which confidential complaints may
be made anonymously regarding: illegal or fraudulent activity; questionable accounting, internal controls, or auditing matters; conflicts of interest, dishonest or unethical conduct, including incentive gaming; disclosures in the Company’s SEC reports, bank regulatory filings, and other public disclosures that are not full, fair, accurate, timely, and understandable; violations of our Code of Business Conduct and Ethics; and/or any other violations of laws, rules, or regulations. The contact information for the EthicsLine is available in the Code of Business Conduct and Ethics, which is available at our website. Complaints submitted through this process are presented to the Audit Committee on a regular, periodic basis.
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CORPORATE GOVERNANCE
We are committed to engaging with and listening to our shareholders, and we have continued our engagement throughout the COVID-19 pandemic. In addition to our regular and continuing meetings with shareholders and investors, whether individually or at conferences, in the fall of 2021, we reached out to our 30 largest shareholders and engaged with many of them on issues including ESG, corporate governance, and executive compensation matters.
Who we engage:
• Institutional shareholders • Retail shareholders • Fixed-income investors • Proxy advisory firms • Industry thought leaders |
• Annual report • Proxy statement • SEC filings • Press releases • • Governance Report
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How we engage:
• Quarterly • Investor conferences • Annual shareholder meetings • Investor road shows • On-site visits • Virtual meetings and calls |
• Our senior executives, including our CEO, • Our CEO presents at our
• Senior management offered off-season individual engagements to shareholders representing 50% of our outstanding institutionally-held shares.
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• ESG • Human Capital Management • Executive Management and Compensation • Green Bonds • Carbon Emissions and Neutrality • Corporate Governance • Strategic Priorities • Technology • New and enhanced products
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Shareholder Communication with Investor Relations Department.Department. Shareholders who wish to speak to a Fifth Third representative regarding their investment in Fifth Third may communicate directly with our Investor Relations Department by calling866-670-0468. In addition, shareholders may communicate in writing directly with the Investor Relations Department by sending a letter to 38 Fountain Square Plaza, MD 1090QC,1090FV, Cincinnati, Ohio 45263 or by emailing ir@53.com. Shareholders can also view information and request documents from the Investor Relations page of Fifth Third’s website at www.ir.53.com.ir.53.com.
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Eachnon-employee director is awarded an annual cash retainer and an award of restricted stock units (“RSUs”) for their service on the Board. The Human Capital and Compensation Committee reviewed director compensation for 2021 in consultation with its independent compensation consultant in light of best practices, peer institution benchmarking (using the same Compensation Peer Group as used for the executive pay analysis), and other relevant factors. There were no changes to director compensation in 2021 from the prior year. Employee directors receive no additional compensation for their Board service. In addition to the 20192021 compensation structure described below,non-employee directors were reimbursed for reasonableout-of-pocket expenses incurred for travel and attendance related to meetings of the Board of Directors or its committees.
Element of Compensation
|
Position
|
($)(1)(2)
| ||||||
Annual
|
Board Member
|
|
90,000
|
| ||||
|
| |||||||
|
Lead Director Additional Retainer
|
|
|
65,000
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| |||
Annual Retainer (equity) |
|
|
|
| ||||
| 25,000 | |||||||
Annual Committee Retainers | Audit Committee |
Chair
|
|
45,000
|
| |||
Member
|
|
10,000
|
| |||||
Risk & Compliance Committee
|
Chair
|
|
45,000
|
| ||||
Member
|
|
10,000
|
| |||||
Human Capital & Compensation Committee
|
Chair
|
|
25,000
|
| ||||
Nominating & Corporate
|
Chair
|
|
20,000
|
| ||||
Finance Committee
| Chair
|
| 55,000 | |||||
Technology Committee
| Chair | 20,000 |
| |||||
(1) Payments of cash retainers are made in arrears on a quarterly basis each January, April, July, and October.
(2) All equity awards granted to the Board of Directors are granted in RSUs that vest on the date the director’s service on the Board ends unless deferral instructions are received prior to the beginning of the year of grant. RSU awards are granted on the date of the annual shareholders meeting.
| (1) | Payments of cash retainers are made in arrears on a quarterly basis each January, April, July, and October. |
| (2) | All equity awards granted to the Board of Directors are granted in RSUs that vest on the date the director’s service on the Board ends. Directors may defer these awards by submitting their deferral instructions prior to the beginning of the year of grant. RSU awards are granted on the date of the annual shareholders meeting or upon joining the Board. |
The Company’s 20192021 Incentive Compensation Plan provides that the Human Capital and Compensation Committee has full authority to provide equity-based or other incentive awards tonon-employee directors, and the equity-based awards shown in the table below were granted under that plan.
Pursuant to the Fifth Third Bancorp Unfunded Deferred Compensation Plan forNon-Employee Directors, such directors may annually elect to defer fromone-half to all of their cash compensation. The deferred funds receive earnings based on the mutual fund(s) elected by each director. The directors do not receive any above-market or preferential earnings. Under the plan, directors may not defer their future cash compensation into Company stock.
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BOARD OF DIRECTORS COMPENSATION |
The following table summarizes the compensation earned by or awarded to eachnon-employee director who served on the Board of Directors during 2019.2021. The amounts listed in the “Stock Awards” column represent RSU awards that vest at the completion of a director’s service on the Board. The award relates to the fiscal year in which it was granted. Directors did not receive any option awards,non-equity incentive compensation, or above market or preferential earnings from nonqualified deferred compensation in 2019.2021. The 20192021 Incentive Compensation Plan establishes a shareholder-approved annual limitation of $700,000 on the amount of cash compensation and the value of shares (determined on the date of the grant) paid to directorsany non-employee director in a calendar year.
2019 Director Compensation
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2021 Director Compensation
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2021 Director Compensation
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Name
| Fees Earned or Paid in Cash ($) | Stock Awards ($)(1)(2) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($) | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($) | |||||||||||||||||||||||||||||||||||||||||
Nicholas K. Akins
|
| 105,000
|
|
| 125,000
|
| —
| —
| —
| —
|
| 230,000
|
| 110,000 | 130,000 | — | — | — | — | 240,000 | |||||||||||||||||||||||||||||||||||
B. Evan Bayh, III
|
| 95,000
|
|
| 125,000
|
| — | — | — | — | 220,000 | 90,000 | 130,000 | — | — | — | — | 220,000 | |||||||||||||||||||||||||||||||||||||
Jorge L. Benitez
|
| 105,000
|
|
| 125,000
|
| —
| —
| —
| —
|
| 230,000
|
| 110,000 | 130,000 | — | — | — | — | 240,000 | |||||||||||||||||||||||||||||||||||
Katherine B. Blackburn
|
| 95,000
|
|
| 125,000
|
| —
| —
| —
| —
|
| 220,000
|
| 100,000 | 130,000 | — | — | — | — | 230,000 | |||||||||||||||||||||||||||||||||||
Emerson L. Brumback
|
| 130,000
|
|
| 125,000
|
| —
| —
| —
| —
|
| 255,000
|
| 135,000 | 130,000 | — | — | — | — | 265,000 | |||||||||||||||||||||||||||||||||||
Jerry W. Burris
|
| 105,000
|
|
| 125,000
|
| —
| —
| —
| —
|
| 230,000
|
| ||||||||||||||||||||||||||||||||||||||||||
C. Bryan Daniels(3)
|
| 42,500
|
|
| 133,575
|
| —
| —
| —
| —
|
| 176,075
|
| ||||||||||||||||||||||||||||||||||||||||||
Thomas H. Harvey(3)
|
| 42,500
|
|
| 133,575
|
| —
| —
| —
| —
|
| 176,075
|
| ||||||||||||||||||||||||||||||||||||||||||
| Linda W. Clement-Holmes(2) | 94,670 | 166,329 | — | — | — | — | 260,999 | ||||||||||||||||||||||||||||||||||||||||||||||||
| C. Bryan Daniels | 100,000 | 130,000 | — | — | — | — | 230,000 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Mitchell Feiger(2) | 90,000 | 166,329 | — | — | — | — | 256,329 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Thomas H. Harvey | 100,000 | 130,000 | — | — | — | — | 230,500 | ||||||||||||||||||||||||||||||||||||||||||||||||
Gary R. Heminger
|
| 140,000
|
|
| 125,000
|
| —
| —
| —
| —
|
| 265,000
|
| 155,000 | 130,000 | — | — | — | — | 285,000 | |||||||||||||||||||||||||||||||||||
Jewell D. Hoover
|
| 140,000
|
|
| 125,000
|
| —
| —
| —
| —
|
| 265,000
|
| 110,000 | 130,000 | — | — | — | — | 240,000 | |||||||||||||||||||||||||||||||||||
Eileen A. Mallesch
|
| 95,000
|
|
| 125,000
|
| —
| —
| —
| —
|
| 220,000
|
| 145,000 | 130,000 | — | — | — | — | 275,000 | |||||||||||||||||||||||||||||||||||
Michael B. McCallister
|
| 110,000
|
|
| 125,000
|
| —
| —
| —
| —
|
| 235,000
|
| 125,000 | 130,000 | — | — | — | — | 255,000 | |||||||||||||||||||||||||||||||||||
Marsha C. Williams
|
| 150,000
|
|
| 150,000
|
| —
| —
| —
| —
|
| 300,000
|
| 155,000 | 155,000 | — | — | — | — | 310,000 | |||||||||||||||||||||||||||||||||||
(1) The values shown for stock awards in the Director Compensation Table reflect the grant date fair value of $27.73, which was the closing price of Fifth Third stock on the grant date, April 16, 2019, calculated in accordance with FASB ASC Topic 718.
(2) The full fair value of stock awards granted in 2019 totaled $1,667,150. Outstanding RSUs for current directors totaled 304,606 shares as of December 31, 2019, as shown on the following page.
(3) The values shown for Messrs. Daniels and Harvey represent prorated payments due to joining the Board upon completion of the MB Financial merger.
| (1) | The values shown for stock awards in the Director Compensation Table reflect the grant date fair value of $38.22, which was the closing price of Fifth Third stock on the grant date April 13, 2021. All values are calculated in accordance with FASB ASC Topic 718. |
| (2) | Upon joining the Board Mr. Feiger and Ms. Clement-Holmes received a prorated grant in 2020 for service through December 31, 2020. The 2021 award for these directors was increased to account for service from January 1, 2021 through April 12, 2021. |
|
BOARD OF DIRECTORS COMPENSATION |
In 2019,2021, the Company’s stock ownership guidelines required each director to own Fifth Third Stock equal in value to six times their Board Memberhis/her annual cash retainer, not including fees paid for committee service. Directors have five years from their election date to meet this requirement. For all directors appointed after June 1, 2020 dividends on shares subject to equity awards will automatically be reinvested. As of December, 2019,2021, all directors had sufficient holdings to meet or exceed the stock ownership requirement, or had not yet served on our Board for five years and arewere on pace to meet the guidelines. The outstanding equity awards for each director as of December 31, 20192021 are provided below.
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| ||||
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| ||||
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| ||||
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| Outstanding Equity Awards at December 31, 2021 | ||||||||
| Director | Options Awards # | Stock Awards (#) | ||||||
| Nicholas K. Akins |
|
|
| 45,491 | ||||
| B. Evan Bayh, III |
|
|
| 40,410 | ||||
| Jorge L. Benitez |
|
|
| 30,876 | ||||
| Katherine B. Blackburn |
|
|
| 39,921 | ||||
| Emerson L. Brumback |
|
|
| 40,140 | ||||
| Linda W. Clement-Holmes |
|
|
| 7,669 | ||||
| C. Bryan Daniels |
|
|
| 16,626 | ||||
| Mitchell Feiger | 61,193 | (1) | 7,754 | |||||
| Thomas H. Harvey |
|
|
| 16,610 | ||||
| Gary R. Heminger |
|
|
| 40,140 | ||||
| Jewell D. Hoover |
|
|
| 40,140 | ||||
| Eileen A. Mallesch |
|
|
| 29,029 | ||||
| Michael B. McCallister |
|
|
| 45,491 | ||||
| Marsha C. Williams |
|
|
| 54,085 | ||||
(1) All options awards were granted while Mr. Fieger was an employee and do not reflect compensation as a member of the Board of Directors. |
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The Human Capital and Compensation Committee reviewed director compensation for 20202022 in consultation with its independent compensation consultant in light of best practices, peer institution benchmarking, and other relevant factors. Based upon this review,The Board approved a $10,000 increase to overall director compensation, split equally between cash and equity, effective January 1, 2022. Additionally, $5,000 increases to the cash retainer for the Chairs of the Nominating and Corporate Governance Committee determined that director pay is well-aligned with the market and peer institutions.Technology Committee were also approved, effective January 1, 2022.
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The Company’s Compensation Discussion and Analysis provides information concerning the compensation for its executive officers.Named Executive Officers. This information is set forth in the following sections:
| ||
| ||
Compensation Methodology and Structure | ||
| • Compensation Philosophy | |
• | Features of our Executive Compensation Program | |
• | Compensation Risk Management | |
• | The Committee’s Role | |
• | Role of Executive Officers in Compensation Decisions | |
• | Role of the Independent Compensation Consultant | |
• | Benchmarking Methodology | |
• | Tally Sheet | |
• Say-on-Pay | ||
• | Compensation Structure | |
• | Pay Mix and Pay for Performance | |
| • Base Salary | |
• | ||
• | Variable Compensation Plan Performance Goals | |
• | Performance Against Variable Compensation Plan Goals | |
• | Determination of Variable Compensation Plan Awards | |
• | ||
• | Payout of | |
• | Other Long-term, Equity-based Plan Provisions | |
• | Determination of Long-term, Equity-based Incentive Awards | |
• | Qualitative Performance Assessments | |
• | The Committee’s Considerations | |
| • 2022 Variable Compensation Plan Changes | |
• | ||
| Executive Benefits and Perquisites | ||
| • Summary of Eligibility for Benefits and Perquisites | |
• | Use of the Corporate Aircraft | |
• | Retirement Benefits | |
• | Health and Welfare Benefits | |
• | Severance and Change in Control Benefits • Executive Severance Benefits Plan | |
| Executive Ownership and Capital Accumulation | ||
| ||
| ||
| ||
|
| |
| • Stock Ownership Guidelines • Beneficial Ownership • Prohibition on Hedging and Pledging • Clawbacks and Recoupments | |
| Tax and Accounting Impacts of Compensation Programs | ||
| • Deductibility of Executive Compensation | |
• | Accounting and Financial Reporting | |
|
COMPENSATION DISCUSSION AND ANALYSIS |
In the various sections of this Compensation Discussion and Analysis, we will describe our compensation philosophy, methodology, and structure and how pay decisions were made in 2019.2021. We will focus on the compensation of individuals who served in the following roles during fiscal year 2019,2021, who are referred to as our Named Executive Officers (“NEOs”):
Greg D. Carmichael | Chairman | |
| Executive Vice President and Chief Financial Officer | |
Timothy N. Spence | President | |
Lars C. Anderson | Vice Chairman, Strategic Growth Initiatives | |
Kevin P. Lavender |
| |
| Executive Vice President and Head of | |
|
| |
Summary of Executive Compensation Program
At Fifth Third we endeavorendeavors to attract and retain the best peopletalent and motivate them to fulfill Fifth Third’s vision to be the Company’s vision of becoming the “OneOne Bank that people most value and trust.” We intendplan to accomplish this by aligning our company strategy and goals with our shareholders’ long-term interests, by establishing compensation programs that reward our employeespeople for delivering the right products to the right customers, in ways that consider our shareholders’ long-term interests, and servicesalign with Fifth Third’s values, while also staying within our customers highly value, and by avoiding excessive risk.risk tolerance. Our compensation philosophy guides us in this endeavor.
Our compensation is delivered through three primary elements:
| Base Salary | + |
Annual Cash Incentive (Variable Compensation Plan)
| + | Long-Term Incentives (Equity-based Compensation) |
The Company typically pays base salary and annual incentive compensation awards through our Variable Compensation Plan, in cash. All long-term, equity-based incentive compensation awards are paidsettled in shares of the Company’s common stock.Common Stock. These three elements combined define our “Total Direct Compensation,” which is referred to in the discussion that follows.
When making pay decisions, the Human Capital and Compensation Committee (the “Committee”) considers the aggregate and mix of an executive officer’s Total Direct Compensation and reviews Company performance results, individual performance, and risk assessment information to ensure that pay decisions align with performance and ultimately shareholders’ interests.
Highlights of 20192021 Company Performance
In 2021, the Company performed extremely well in a unique environment, highlighting our performance through the cycle. For detailed highlights of 20192021 Company performance, please see page 3.4.
|
COMPENSATION DISCUSSION AND ANALYSIS |
Compensation Methodology and Structure
Compensation Philosophy. Our compensation methodology centers on our compensation philosophy, which is comprised of the following key tenets:
In order
Our commitment to drive our business strategythis philosophy. The company is committed to making compensation decisions that are fiscally responsible, while remaining competitive to attract and human capital needs, the following are essential:retain talent.
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|
|
Our expected total compensation opportunities generally reflect the median pay levels of our compensation peer group,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. Long-term incentives are a key focus of our executive compensation program. This focus facilitates collaboration among business units, ownership in the Company, and a focus on shareholder goals.
The Human Capital team also conducts an annual review ofFifth Third is committed to a pay equity for both genderphilosophy that ensures all employees are paid fairly and race for similarly situated roles as part of its annual compensation planning and makes efforts to appropriately address any issues identified through that process. Please refer to our Corporate Social Responsibility Report for further information regarding diversity and inclusion initiatives.equitably in compliance with the law.
|
COMPENSATION DISCUSSION AND ANALYSIS |
Features of our Executive Compensation Program. Our executive compensation program incorporates the following features:
Pay for performance. |
Risk-balancing features. |
|
Double-triggerchange-in-control provisions. |
No excise taxgross-ups to executive officers. |
Stock ownership guidelines and stock retention policies. |
Prohibition on speculative trading and hedging strategies by executive officers. |
Prohibition on use of securities as collateral for a loan. |
Utilization of an independent compensation consultant hired and overseen by the Committee. |
Grant of long-term incentives onpre-determined dates. |
Committee reviews of both financial andnon-financial performance. |
Clawback features in all executive officer |
Compensation Risk Management. We believe it is critical to bring a multi-faceted strategy toward mitigating risk in our compensation programs and incentive plans. Our executive compensation program includes several features that address potential concerns aboutcompensation risk:
Downward discretion based on risk, performance, and regulatory factors. |
Caps on the maximum payment under our Variable Compensation Plan and our Performance Share Plan. |
|
Forfeiture provisions related to material risk events. |
Stock ownership and retention guidelines. |
Ability to clawback compensation received as a result of misconduct. |
|
|
To execute the risk mitigation strategies, we conduct yearly review processes, which are documented and incorporate input from business segments including Finance, Legal, Human Capital, Risk Management, and the Company’s business leaders. These processes include:
| Processes | Purpose | |
| Market Reviews | Human Capital uses 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 serving on the Compensation Risk Oversight Committee (a management committee that reports to the Human Capital and Compensation Committee) determine whether incentive plans support the Company’s risk culture of not promoting unnecessary risk and are consistent with the incentive compensation risk framework. | |
| Financial Reviews | Senior finance executives confirm that the incentive plans are fiscally sound and contribute to shareholder value. | |
| Board Reviews | Independent directors, serving on the Human Capital and Compensation Committee and Risk and Compliance Committee, assess the strategic, risk, and fiscal soundness of the compensation plans and ensure that they are aligned with the Company’s compensation philosophy. | |
| Fifth Third 2022 Proxy Statement | 51 |
COMPENSATION DISCUSSION AND ANALYSIS
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.
In December 2018,2021, the Committee met jointly with the Risk and Compliance Committee to review our 20192022 executive and other incentive programs. Based in part on the provisions and actions above, the Committee concluded that neither the design and/ornor metrics of such programs do not encourage taking unnecessary or inappropriate risk.risk and that our compensation policies and practices are not reasonably likely to have a material adverse effect on the Company.
The Committee’s Role. The Committee is comprised 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. TheAmong other things, the Committee focuses on the attraction and retention of key executives. When making decisions, the Committee 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 F.W. Cook, an 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 Total Direct Compensation, benefits, and certain perquisites. Generally, the types of compensation and benefits paid to Named Executive Officers are similar to those provided to other executive officers of the Company.
|
|
The Committee typically follows the annual cycle described below:
RoleRole of Executive Officers in Compensation Decisions. The chief executive officer annually reviews the performance of each of the other Named Executive Officers, which includes a risk performance assessment completed by the Company’s chief risk officer. Based on this review, the chief executive officer makes compensation recommendations to the Committee, including recommendations for salary adjustments, Variable Compensation Plan awards, and long-term, equity-based incentive awards. In addition, the chief executive officer and certain other members of management annually assess
| 52 |
COMPENSATION DISCUSSION AND ANALYSIS
performance for other executive officers and make compensation recommendations to the Committee. Also, the appropriate committees provide review and approval of the compensation for key risk-related roles such as the chief risk officer, chief credit officer, and chief audit executive. Although the Committee considers these recommendations along with data provided by its consultant, F.W. Cook, it retains full discretion to set all compensation for the Company’s executive officers. The Committee works directly with its consultant to determine compensation for the chief executive officer. The chief executive officer has no input into his/herhis own compensation determinations.
Additionally, the chief risk officer reviews and evaluates with the Committee all executive officer and employee incentive compensation plans, described in more detail in the Compensation Risk Management section above. The purpose of the review is to confirm that the Company’s incentive compensation plans do not incent or pose unnecessary or excessive risks to the Company.
|
|
Role of the Independent Compensation Consultant. The Committee uses the services of its external executive compensation consultant to provide guidance and advice to the Committee on all matters covered by its charter. This consultant was directly selected and approved by the Committee to provide a broad set of services pertaining to the compensation of the Company’s executives and Board of Directors. In 2019,2021, the Committee’s compensation consultant performed the key actions listed below:
Advising the Committee on competitive practices, market trends, and peer group composition. |
Providing recommendations to the Committee on the compensation of the chief executive officer. |
Providing |
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 compensation. |
The Company does not engage the Committee’s compensation consultant for additional services outside of the services to the Board, as described above. The Committee conducted an assessment of potential conflicts of interest and independence issues for F.W. Cook and nodid not identify any conflicts of interest or independence issues relating to F.W. Cook’s services were identified by the Committee.services.
Benchmarking Methodology. In making compensation decisions, the Committee compares Company performance and each element of each executive officer’s Total Direct Compensation with the Compensation Peer Group. The Committee refers to this Compensation Peer Group for both compensation and performance-related benchmarks. Financial performance data is prepared either by the Committee’s independent compensation consultant or by the Company, using data from public filings. Compensation data is generally prepared by the Committee’s compensation consultants,consultant, using third-party survey data as provided by management and publicly available data from proxy statements. The Committee’s compensation consultant reviews all financial and compensation data that is prepared by the Company and provided to the Committee.
| 53 |
COMPENSATION DISCUSSION AND ANALYSIS |
The Compensation Peer Group consists of companies with which the Committee believes the Company competes for talent and for shareholder investment, and which are generally similar in asset size and business mix. The following 1110 companies were identified by the Committee as the 20192021 Compensation Peer Group:
Citizen’s Financial Group | M&T Bank Corporation | |
Comerica Incorporated | The PNC Financial Services Group, Inc. | |
| Regions Financial | |
Huntington Bancshares Incorporated | Truist Financial Corporation | |
KeyCorp |
| |
|
| |
|
| |
| Zions Bancorporation | |
| ||
(1) BB&T Corporation and SunTrust Banks Inc. merger completed December 2019 to form Truist Financial Corporation.
The Company’s assets were at approximately the 70th percentile of its 2019 Compensation Peer Group as of December 31, 2019.
The Committee annually reviews the Compensation Peer Group and considers changes to the Compensation Peer Group deemed necessary to ensure that the business structure and size of the organizations continue to be appropriate. Based on the Committee’s evaluation of the Compensation Peer Group, no changes were made for 2020, U.S. Bancorp will no longer be included in the Compensation Peer Group and First Horizon National and Truist Financial Corporation will be added.2022.
Tally Sheet. The Company annually prepares a tally sheet of all compensation and potential payouts for the Committee’s use when consideringto review our compensation matters.programs. The Committee reviews all components of compensation for the Company’s chief executive officer, chief financial officer, and the other NEOs, including:
Base salary. |
Annual cash incentive targets. |
Long-term, equity-based incentive 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 Committee reviewed the above compensation components and the associated dollar amounts for 20182020 compensation in June 2019.
|
|
2021.
Say-on-Pay. The Committee annually reviews the results of thenon-binding advisorysay-on-pay proposal and considers them when approving plan design changes as well as pay decisions.
87% Approval | At the Company’s 2021 Annual Meeting, shareholders approved a non-binding advisory say-on-pay proposal with 87 percent of the votes cast voting in favor of that proposal |
Thesay-on-pay vote resulted in 92%87% approval from shareholders in 2019,2021, which is comparablemodestly lower than prior years’ votes. The Company leveraged its ongoing Stakeholder Engagement activities to solicit direct shareholder feedback and suggestions on its compensation program or practices.
Two relevant topics that were raised by shareholders during these discussions were (i) disclosure of the adjustments to performance results from prior years. for purposes of the 2020 Variable Compensation Plan, and (ii) the inclusion of ESG in our executive compensation program. Management discussed these two items with the Committee and the Company has implemented changes to address both of them. Those changes are disclosed in this Proxy Statement.
The Committee believes that the most recent vote, and consistently high level of approval of compensation in the annual shareholder vote, demonstrates a strong alignment with shareholders’
| 54 |
COMPENSATION DISCUSSION AND ANALYSIS
interests. Additionally, these results indicate strongbroad support among shareholders for ourpay-for-performance approach. Future votes cast, as well as our ongoing Stakeholder Engagement discussions, will be closely monitored to ensure continued support for our pay programscompensation program and pay decisions among our shareholders.
Compensation Structure. The compensation structure (including each element of pay described below and the respective amounts for each element) for executive officers is reviewed annually by management and the Committee. 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, target variable compensation, and target long-term, equity-based incentive compensation, as well as the resulting Total Direct Compensation). |
The ability to provide median Total Direct Compensation for 50th percentile performance relative to the Compensation Peer Group. |
The ability to provide upper quartile Total Direct Compensation for upper quartile (i.e., 75th percentile or better relative to the Compensation Peer Group) performance and lower quartile Total Direct Compensation for lower quartile (i.e., 25th percentile or lower relative to the Compensation Peer Group) performance. |
Pay Mix and Pay for Performance. Our Named Executive Officers have approximately 50% or more of their target total compensation delivered in the form of long-term, equity-based compensation.
20192021 Total Compensation Pay Mix(1)
(1) The percentages reflect the Named Executive Officer’s base salary as of December 31, 2019, target annual cash incentive award for 2019 and target long-term, equity-based incentive award for 2019.
| Chief Executive Officer | Average of Other NEOs | |||||
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| (1) | The percentages reflect the Named Executive Officer’s base salary as of December 31, 2021, target annual cash incentive award for 2021, and target long-term, equity-based incentive award for 2021. |
The Committee considers several factors and objectives relevant to each program when determining compensation. The Committee also contemplates the impact of each award on the Total Direct Compensation package. Total Direct Compensation opportunities are intended to target the median of the relevant market data, and actual compensation (both amount and mix) for executives varies, based on their performance, prior experience, and other pertinent factors. In addition, for purposes of attracting and retaining key executives, the Committee may determine that an additional award, an above-mediansign-on package, an incentive guarantee for a new hire, or a Total Direct Compensation package that is above market median, is appropriate.
As shown in the pay mix charts on the preceding page,above, the annual cash incentive 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.
| Fifth Third 2022 Proxy Statement | 55 |
COMPENSATION DISCUSSION AND ANALYSIS
Company performance under these incentive plans is evaluated from a variety of perspectives, including:
20192021 Executive Compensation Plan Design and Award Decisions
As stated above, compensation is delivered through three primary elements: base salary, an annual cash incentive through our Variable Compensation Plan, and long-term, equity-based incentives. We review and assess our compensation practices and programprograms 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’sexecutive compensation program, along with any changes that were made to the program for 2019,2021, are described in the following paragraphs.
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Base Salary. The Committee reviews individual base salaries of the Company’s executive officers annually or at the time of promotion or hire, as applicable. The objectives of the Company’s base salary program are to provide salaries at a level that allows the Company to attract and retain qualified executives and to recognize and reward individual performance. The following items are considered when determining base salary levels:
A competitive market analysis 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.
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Salary increases, if any, are based on the Company’s overall performance and the executive’s attainment of individual objectives during the preceding year. TheAfter the annual review and evaluation at the beginning of 2019 showed that2021, base salary increases ranging from 0%adjustments were recommended and approved for executives who were promoted or gained additional responsibilities in 2021. Unrelated to 2.5%performance, no other adjustments were neededmade to other executives’ base salaries in order2021 given the ongoing uncertainty related to maintain pay levels competitive with the market.COVID-19 pandemic.
20192021 Variable Compensation Plan Design. The Variable Compensation Plan’s objective is to reward executives for strong corporate, business unit, and individual performance. The design of our 20192021 Variable Compensation Plan (VCP) was structured as follows:
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COMPENSATION DISCUSSION AND ANALYSIS
It is the view of the Committee that this mix of Bancorp funding metrics provides executives with balanced incentiveincentives to increase the level of absolute earnings growth, to ensure that shareholder capital is used efficiently to generate competitive returns, and to assess the cost efficiency of the Company’s operations. The funding modifiers are useful as complementary metrics to add focus onbest-in-class business processes. The Committee retains discretion to adjust pool funding upward or downward based on other factors, such as individual performance and risk assessment.
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Variable Compensation Plan Performance Goals. The financial plan approved by the Board of Directors includes specific target goals for the Company in each of the Bancorp funding metrics as detailed below. When determining the available funding pool for all VCP participants, including NEOs, of the Variable Compensation Plan, the Committee first determines if the performance hurdle has been met, then considers actual performance against target goals, in addition to three funding modifiers.
Bancorp Funding Metrics
Bancorp Funding Metrics
| Threshold
| Target
| Maximum
| |||||||||
Earnings Per Share |
|
$2.45 |
|
|
$2.74 |
|
|
$3.02 |
| |||
Return on Assets |
|
1.18% |
|
|
1.32% |
|
|
1.46% |
| |||
Efficiency Ratio |
|
61.70% |
|
|
58.30% |
|
|
55.00% |
| |||
Actual awards are approved by the Committee from the pool. 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, additionally for executives, an individual risk assessment. Amounts realizable from prior compensation awards do not influence decisions relative to future awards. To determine the Variable Compensation Plan funding pool, performance against each target Bancorp funding metric is reviewed to determine the performance level that was achieved, with results between threshold and target, and target and maximum, being interpolated. The overall funding amount represents the sum of the weighted average score for each of the Bancorp funding metrics. The maximum payout for any executive is limited to 200% of the individual target.
The Committee may use final results of the funding modifiers to increase or decrease the pool funding amount. The Committee may exercise discretion to increase the funding pool amount up to a maximum of 10 basisfunding points; however, downward discretion is not capped.
| Fifth Third 2022 Proxy Statement | 57 |
COMPENSATION DISCUSSION AND ANALYSIS
Performance Against Variable Compensation Plan (VCP) Goals. CompanyOverall, the Company’s performance againstin 2021 was extremely strong, as highlighted on page 4. The strength is also apparent when comparing the 2019 goals set forCompany’s financial results to its VCP targets, which the Variable CompensationCommittee approved in February of 2021. It should be noted that at the time the Committee approved the targets, the trajectory and speed of the economic recovery from the COVID-19 pandemic-related shutdowns were still highly uncertain. Additionally, the ultimate efficacy of vaccines being developed and used by the public was unknown. Also, the $1.9 trillion American Rescue Plan Act of 2021 was strong.passed after the approval of these targets, providing further stimulus to the economy. Consistent with last year, and our historical practice, of evaluating performance against the Bancorp funding metrics, reported performance results were adjustedCompany chose to excludemaintain the initially approved targets and provide reasonable adjustments in consideration of the financial effects of certain events not contemplated in the targets, which are referred to herein as the (“2019“2021 VCP Adjusted Actual”)Actual.”
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amounts, in the plan year. In determining 2019 Variable Compensation Plan (“VCP”)2021 VCP Adjusted Actual performance forunder the plan, the Committee reviewed certain items assessed annually for potential exclusion from the VCP calculation (where items could have the effect of increasing or decreasing funding). For the 2021 performance year, the annual adjustments, including the adjustment described below relating to the allowance for credit losses, had a negative ($0.24) impact to earnings per share, negative (8) basis point impact to Return on Assets, and a favorable (63) basis point impact to the efficiency ratio.
The items the Committee evaluated and adjusted are consistent with prior practice and include: Gains or Losses related to the Company’s Visa total return swap, 2019 sales of Worldpay, Inc. securities,Total Return Swap; securities gains and losses MB merger costs, rate environmentexcluding the impact andof Non-Qualified Deferred Compensation valuation changes; the gain from the sale of HSA deposits; a donation to the Fifth Third Foundation donation were excluded.in support of the Accelerating Racial Equity, Equality and Inclusion Initiative; and a special staffing bonus to front-line employees that provided customers with essential banking services throughout the COVID-19 pandemic. The most significant adjustment was made to neutralize the positive impact of a lower Allowance for Credit Losses than was anticipated at the time of setting the targets. The adjustment is consistent with the Committee approval of 2020 VC in excluding the negative impact of higher Allowance for Credit Losses that was incurred but not included in the target due to the COVID-19 pandemic (i.e., increased provision expense). The result of that adjustment increased the 2020 adjusted VC performance. The Committee believes consistent application of these adjustments is important to maintain the integrity of the VC Plan.
The table below sets forth the impact of each of the aforementioned items used to calculate 2021 VCP Adjusted Actual performance.
| Adjustment: | Performance Impact: | |||||||||||
| EPS | ROA | Efficiency Ratio (FTE) | ||||||||||
Visa Total Return Swap | $ | 0.09 | 0.03 | % | (0.65 | %) | ||||||
Securities (Gain) / Loss | $ | 0.02 | 0.01 | % | (0.13 | %) | ||||||
Gain on HSA Deposits Sale | ($ | 0.07 | ) | (0.02 | %) | 0.46 | % | |||||
Donation to Fifth Third Foundation | $ | 0.02 | 0.01 | % | (0.19 | %) | ||||||
Special Bonus to Front-Line Employees | $ | 0.01 | 0.00 | % | (0.12 | %) | ||||||
Allowance for Credit Losses | $ | (0.31 | ) | (0.11 | %) | — | ||||||
In addition to the performance adjustments above, the VCP Adjusted Actual results include any increase or decrease to variable compensation implied by the funding calculation, further impacting the VCP Adjusted Actual as reported below. Unadjusted reported financial results, as well as adjusted results for each of the Bancorp funding metrics, are shown in the table below:
Bancorp Funding Metrics | 2019 Reported Metrics | 2019 VCP Adjusted Actual (Including effects of funding pool) | 2021 Reported Metrics | 2021 VCP Adjusted Actual (Including impact of funding) | ||||||||
EPS
| $3.33
| $2.82
| $ | 3.73 | $ | 3.40 | ||||||
ROA
| 1.53%
| 1.31%
| 1.34% | 1.23% | ||||||||
Efficiency Ratio (FTE)
| 55.80%
| 57.90%
| 60.1% | 60.6% | ||||||||
In addition to these key financial performance metrics, the
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COMPENSATION DISCUSSION AND ANALYSIS
The Company also met or exceeded target on the funding modifiers considered by the Committee in assessing annual performance:
Performance Hurdle |
Actual | ||
Capital Levels |
| ||
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|
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Non-Performing Assets (“NPA”) | Ranked 3rd best of 11 | ||
Loan to Deposit Ratio |
(Internal Target | ||
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Determination of Variable Compensation Plan Awards. Based on the 20192021 performance results described above, athe calculated pool funding level of 117%176% of target was achieved as shown below:
Bancorp Funding Metrics | Threshold | Target | Maximum | 2019 VCP Adjusted Actual | Funding % | Funding Weight | Funding Level | Threshold | Target | Maximum | 2021 VCP Adjusted Actual | Funding % | Funding Weight | Funding Level | |||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share
|
| $2.45
|
|
| $2.74
|
|
| $3.02
|
|
| $2.82
|
|
| 131%
|
|
| 50%
|
|
| 65%
|
| $2.18 | $2.44 | $2.70 | $3.40 | 200 | % | 50 | % | 100 | % | ||||||||||||||||||||||||||||||||
Return on Assets
|
| 1.18%
|
|
| 1.32%
|
|
| 1.46%
|
|
| 1.31%
|
|
| 96%
|
|
| 25%
|
|
| 24%
|
| 0.86 | % | 0.96 | % | 1.06 | % | 1.23 | % | 200 | % | 25 | % | 50 | % | ||||||||||||||||||||||||||||
Efficiency Ratio
|
| 61.70%
|
|
| 58.30%
|
|
| 55.00%
|
|
| 57.90%
|
|
| 113%
|
|
| 25%
|
|
| 28%
|
| 64.0 | % | 60.7 | % | 57.4 | % | 60.6 | % | 104 | % | 25 | % | 26 | % | ||||||||||||||||||||||||||||
Total Funding
|
| 117%
|
|
|
|
|
|
|
| 176 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Considering thisDue to the overall favorable performance related to the funding modifiers, including top quartile Non-Performing Asset (“NPA”) performance on a relative basis to our peer group and continued progress on customer experience, an increase of 4% was recommended to the funding pool for a total funding level of 180%. Taking into consideration a recommendation from management, the Committee then performedrecommended a quantitative and qualitative assessmentfinal cash performance payout target of 2019 criticized assets, reversal in interest rate direction, commercial loan growth performance, and other factors. In conjunction with Management’s recommendation, this assessment led130%. The Committee determined that funding the Committee to exercise discretion to reduce the funding to 100%cash VCP award at 130% of target was appropriate as a significant factor in the Company’s outperformance versus its targets was impacted by the continued benefits from monetary and fiscal government support to the calculated 117%.
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economy and our customers, combined with a faster than anticipated economic recovery versus the expectations at the time the targets were approved, which were set under the backdrop of extreme uncertainty and volatility attributable to the pandemic. The most material effect of the improving environment was the impact to credit losses, for us and the industry, which were significantly lower than the expectations when the target was set in early 2021.
When making the final determination of individual awards using the approved funding pool, the Committee had the benefit of information relating to market median compensation levels as well as performance and risk assessment rating information. Considering each individual’s qualitative performance assessment (described for each NEO in the qualitative performance assessments section below) and risk performance assessment, the Committee thought it appropriate to make final individual award decisions of 100%ranging from 130 percent to 150 percent of the NEO’s target.target in cash funding.
The determination of 2022 annual long-term equity incentive awards consider the factors outlined in the Determination of Long-term, Equity-based Incentive Awards that follows. As stated, this includes consideration of the strong 2021 performance as described in the performance highlights on page 4 and reflected in the calculation above. 2022 LTI awards are expected to exceed certain Named Executive Officers’ targets given those factors. Management believes this provides continued incentive on prospective performance, further stock ownership opportunity, and maintains alignment with our pay for performance philosophy.
| Fifth Third 2022 Proxy Statement | 59 |
COMPENSATION DISCUSSION AND ANALYSIS
20192021 Long-Term, Equity-based Incentive Compensation Plan Design. The long-term, equity-based incentive plan 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 determine award amounts for Named Executive Officers are:
| Plan Objectives | ||
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 | ||
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| Areas of Assessment | ||
The Company’s revenue and expense results
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| |
Division revenue and expenses vs. budget
| ||
Internal and external customer service levels
| ||
Performance relative to the Company’s strategic initiatives
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Results related to specific individual responsibilities
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Results related to specific individual risk assessments
| ||
| Equity Type Mix |
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For the 2021 awards, Stock Appreciation Right Awards, or “SARs,” 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, or “RSUs,” are calculated by taking 35% of the total LTl award amount divided by the Company’s closing stock price on the date of the grant. Performance Share awards are calculated by taking 50% of the total LTI award amount divided by the Company’s closing stock price on the date of the grant.
In the December 2021 compensation plan reviews, the Committee approved granting future Restricted Stock Unit and Performance Share Awards based on the average closing stock price for each trading day during the month of January. The Committee determined that this approach will likely reduce the volatility compared to using a single day price target. For 2022, Performance Share Awards and Restricted Stock Awards will be calculated by taking 50% and 35%, respectively, of the total LTI award
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COMPENSATION DISCUSSION AND ANALYSIS
amount divided by the Company’s average closing stock price for each trading day in the month of January. SARs will remain priced on the Black-Scholes value as of the grant date.
The Committee believes that performance shares are an important piece of the equity-based incentive compensation opportunity because they create a clear connection between results achieved and compensation earned. In addition, the Committee believes that full-value awards in the form of performance shares and restricted stock units complement each other and are important for driving strong retention value and enhanced ownership-creation opportunities, which is why they are a meaningful portion of the long-term, equity-based incentive opportunity.opportunities. The Committee also believes that a portion of the opportunity should come from a growth-oriented incentive, specifically Stock Appreciation Rights, or “SARs”,stock-settled SARs which align executives’ interests with those of the Company’s shareholders. The Committee determined in 2018 thathas maintained the Long Term Incentive mix of long-term incentives for grants to be made in 2019 was appropriate, based on50% performance share awards, 35% restricted stock units, and 15% stock appreciation rights and feel it aligns well with the Company’s long-term incentive plan objectives, strategic objectives, compensation philosophy, regulatory guidance, risk culture, and competitive practice.
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Target award levels are established at the beginning of the year for each Named Executive Officer considering market median compensation for each position. Award levels are not automatically made at target. Actual award levels are based upon Company performance, and the Committee includes qualitative assessments of individual performance of each Named Executive Officer in the areas shown in the graphic display on the preceding page. Amounts realizable from prior compensation awards do not influence decisions relative to future awards.
The grant date of the LTI awards is the date of the Committee’s approval of the awards, which typically isoccurs at a first quarter meeting of the Committee. The grant dates for awards made in 20192021 are detailed in the “2019“2021 Grants of Plan-Based Awards” table later in this proxy statement. The Company does not adjust the timing of its annual grant based on SEC filings or press releases. Rather, the annual grant date is established and communicated well in advance.
Performance share grants made in 20192021 were structured as follows:
Performance share grants are granted at “target,” calculated by taking 45%50% of the long-term incentiveLTI award amount divided by the Company’s closing stockshare price onused for purposes of the date of grant. Executives have the opportunity to earn between zero and 150% of their target award based upon the Company’s three-year cumulative result on Return on Average Common Equity (“ROACE”) versus our Compensation Peer Group. The payout table
| Fifth Third 2022 Proxy Statement | 61 |
COMPENSATION DISCUSSION AND ANALYSIS
represented above was approved in 2019 in lieu of a pure stack ranking to limit the impact of potential changes among the Compensation Peer group potentially arising from M&A activity, delisting, or bankruptcy. Performance share grants are eligible for dividend equivalents which accrue in cash and are paid when the award is earned and distributed.
RSUs have a three-year graded vesting schedule. These grants do not have voting rights during the vesting period, but are eligible for dividend equivalent payments, which accrue in cash and are paid upon vest and distribution of the underlying award.
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SARs are granted at the closing price of the Company’s common stockCommon Stock on the date of grant and have a10-year term. Grants made in 20192021 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.
The Committee believes that the design of the long-term, equity-based incentive plan provides incentive for the creation of shareholder value since the full benefit of the grant to each Named Executive Officer can be realized only with an appreciation in the price of the Company’s common stockCommon Stock or by meeting goals based on relative ROACE, depending on the type of award.
Payout of 20172019 Performance Share Awards. The 20172019 performance share grant measured the Company’s performance on ROACE versus our compensation peer group over the three-year period beginning January 1, 20172019 through December 31, 2019.2021. In its February 20202022 meeting, the Committee reviewed final ROACE results showing the Company ranked 7ththird among peers and the absolute metric thresholds for ROTCE and efficiency ratio were met. Accordingly, the Committee approved a 100%150% payout. The grant paid out in Company stock and the shares were distributed on February 17, 2022, after the approval date of February 12, 2020.16, 2022.
Other Long-term, Equity-based Plan Provisions. The Variable Compensation Plan and long-term, equity-based incentive compensation awards made in 20192021 were authorizedissued under the Company’s 20172019 Incentive Compensation Plan (the “Plan”), which was approved and adopted by the Company’s shareholders in 2017.
2019. The Committee has delegated toawards granted in 2022 will be issued under the chief executive officer, as well as to2021 Incentive Compensation Plan, which was approved and adopted by the chief human resources officer, the authority to grant equity awards for purposes of recruiting, retention, and M&A activity, up to specified limits.Company’s shareholders in 2021.
Determination of Long-term, Equity-based Incentive Awards. The chief executive officer recommends the award levels for each Named Executive Officer except for himself, and the Committee makes the final award determination for all Named Executive Officers, including the chief executive officer. The award considerations are not based on a formula. Rather, the Committee may choose to make the actual award higher or lower than the target award based on the qualitative assessment of performance against stated objectives as well as the individual’s risk assessment results. The Committee believes that, by including a performance element as part of theup-front grant process, the Company is able to further reinforce thepay-for-performance objective of the Company’s compensation structure.
When making the final determination to grant long-term, equity-based incentive compensation awards in February 2019,2021, the Committee considered information relating to market median compensation levels, Company financial performance during 2018,2020, the qualitative performance assessment, described below, and individual risk performance assessments. After reviewing this information for 2018,2020, the Committee granted a 20192021 long-term equity incentive compensation award of 100% of target for Messrs. Carmichael, Anderson, and Forrest and equity awards of 110% for Messrs. Tuzun and Spence.all Named Executive Officers.
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COMPENSATION DISCUSSION AND ANALYSIS |
Qualitative Performance Assessments. The individual qualitative performance assessment is a review of each Named Executive Officer’s performance against a set of stated objectives. This assessment is performed by the Board of Directors with respect to the chairman president and chief executive officer’s performance and by the chairman president and chief executive officer with respect to the performance of the other NEOs. Each NEO was evaluated on the following objectives:
|
2021 financial plan |
Strategic initiatives |
Risk management |
Operational excellence |
Customer experience |
Talent optimization and employee engagement |
Promotion of the Bank’s Core Values and Leader Capabilities
|
Examples of specific objectives considered for 2019 performance for each Named Executive Officer are as follows:
For Mr. Carmichael: As chairman, president, and chief executive officer, Mr. Carmichael had responsibility for delivering both short and long-term financial results and leading key strategic initiatives, including the acquisition of MB Financial, Inc. He was also responsible for customer experience results, ensuring effective succession planning and promoting an inclusive and diverse workforce. Additionally, he drove accountability for a culture of strong risk management and regulatory results, and he provided strong Board leadership, including Board composition and a culture of open dialogue and effective challenge.
The Variable Compensation Plan award was based on Mr. Carmichael’s 2019 performance against these objectives and his overall contribution to Fifth Third’s performance. The long-term, equity-based award granted in February 2019 was based on performance against 2018 objectives.
For Mr. Tuzun: As chief financial officer, Mr. Tuzun had responsibility for managing the Company’s financial performance against the 2019 plan, providing strategic advice for long-term business planning, and providing strategic and analytic support for M&A activity, including the acquisition of MB Financial, Inc. Additionally, he managed operational, market and liquidity risks, and effectively managed the Company’s capital plan.
The Variable Compensation Plan award was based on 2019 performance against these objectives. The long-term, equity-based award granted in February 2019 was based on performance against 2018 objectives.
For Mr. Anderson: As chief operating officer, Mr. Anderson was responsible for achieving the financial plan for the commercial line of business and for executing key growth strategies, including the successful integration of MB Financial, Inc. He led efforts to enhance customer satisfaction, ensured strong talent acquisition and talent management plans, and effectively managed operational, compliance, credit and market risks.
The Variable Compensation Plan award was based on 2019 performance against these objectives. The long-term, equity-based award granted in February 2019 was based on performance against 2018 objectives.
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For Mr. Spence: As head of consumer bank, payments, and strategy, Mr. Spence was responsible for leading the Bank’s strategic planning process, as well as executing on strategic priorities related to the Bank’s digital transformation, retail channel optimization, treasury management, and the acquisition of MB Financial, Inc. He was accountable for providing an enhanced customer experience across multiple lines of business, and was responsible for managing operational, compliance, credit and strategic risks.
The Variable Compensation Plan award was based on Mr. Spence’s 2019 performance against these objectives. The long-term, equity-based award granted in February 2019 was based on performance against 2018 objectives.
For Mr. Forrest: As chief risk officer, Mr. Forrest had responsibility for managing all aspects of the Fifth Third’s regulatory results and risk programs including, but not limited to, credit, compliance, operational, market, and liquidity risks. He was also responsible for providing strategic support for Fifth Third’s initiatives, including the acquisition of MB Financial, Inc. and other strategic investments.
In addition, Mr. Forrest was responsible for performing an independent risk management assessment for each of the NEOs, other than himself, to determine if the NEOs are achieving risk-balanced results while consistently demonstrating behaviors that support an appropriate risk culture.
The Variable Compensation Plan award was based on Mr. Forrest’s 2019 performance against the qualitative objectives and risk management assessment. The long-term, equity-based award granted in February 2019 was based on performance against 2018 objectives and risk management assessments.
The Committee’s Considerations. The Committee considers both the aggregate amount and mix of an executive officer’s Total Direct Compensation when making the decisions discussed above. The Committee assesses Total Direct Compensation relative to competitive market data annually. Recommendations for executive compensation are reviewed and approved as final during one of the Committee’s first quarter meetings.
Based on its most recent review of the competitive data, the Committee has determined that the compensation structure for executive officers is effective and appropriate. The structure reflects the Company’s compensation philosophy in that its incentive payout ranges are aligned with the competitive market data; it has appropriate leverage to ensure a strong linkage between compensation, risk outcomes, and performance; and it drives rewards based on the most relevant performance measures for the Company and shareholders.
The Committee also has reviewed the internal relationships between the compensation for the chief executive officer and for other executive officers and has deemed them to be appropriate. The Committee believes that the relative difference between the compensation of the chief executive officer and the compensation of the Company’s other executive officers is consistent with such differences found in the Company’s Compensation Peer Group.
Objectives considered for 2021 performance for each Named Executive Officer and Executive Compensation Decision Highlights are discussed in the next section.
For Mr. Carmichael: As Chair and Chief Executive Officer, Mr. Carmichael had responsibility for delivering both short and long-term financial results and leading key strategic initiatives. He was also responsible for customer experience results, for leveraging human capital programs to ensure effective succession planning and to promote an inclusive and diverse workforce. He drove accountability for a culture of strong risk management and regulatory results, and provided strong Board leadership, including Board composition, a culture of open dialogue and effective challenge.
The Variable Compensation Plan award was based on 2021 performance and his overall contribution to Fifth Third’s performance. The long-term, equity-based award granted in February 2021 was based on performance against 2020 objectives.
For Mr. Leonard: As Chief Financial Officer Mr. Leonard had responsibility for managing the Company’s financial performance against the 2021 plan, providing strategic advice for long-term business planning, and providing strategic and analytic support for M&A activity. Additionally, he drove accountability for a culture of strong risk management and effectively managed the Company’s capital plan.
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COMPENSATION DISCUSSION AND ANALYSIS |
The Variable Compensation Plan award was based on 2021 performance and his overall contribution to Fifth Third’s performance. The long-term, equity-based award granted in February 2021 was based on performance against 2020 objectives.
For Mr. Spence: As President, Mr. Spence was responsible for leading Fifth Third’s strategic planning process and executing on strategic priorities. He was accountable for driving organic and inorganic growth and providing an enhanced customer experience across multiple lines of business and the regional footprint. Additionally, he drove accountability for a culture of strong risk management.
The Variable Compensation Plan award was based on 2021 performance and his overall contribution to Fifth Third’s performance. The long-term, equity-based award granted in February 2021 was based on performance against 2020 objectives.
For Mr. Anderson: As Vice Chairman, Strategic Growth Initiatives, Mr. Anderson was responsible for identifying and executing on private equity opportunities, acquisitions and strategic partnerships that complement the Commercial line of business’s strategic initiatives, and for continued client and talent growth in targeted expansion markets. He was also responsible for managing strategic and reputational risks.
The Variable Compensation Plan award was based on 2021 performance and his overall contribution to Fifth Third’s performance. The long-term, equity-based award granted in February 2021 was based on performance against 2020 objectives.
For Mr. Lavender: As the head of the Commercial bank at Fifth Third, Mr. Lavender was responsible for developing a clear vision for the Commercial bank that includes business strategy, driving cultural and talent priorities and delivering strong financial, operational and risk outcomes.
The Variable Compensation Plan award was based on 2021 performance and his overall contribution to Fifth Third’s performance. The long-term, equity-based award granted in February 2021 was based on performance against 2020 objectives.
20202022 Executive Compensation Plan Design Changes
20202022 Variable Compensation Plan Changes. The Company and the Committee review the Variable Compensation Plan annually to determine if changes should be made to the plan for the next year. During the review in 2019,2021, the Committee approved the addition of an ESG modifier and the removal of the Loan to Deposit Ratio modifier. The ESG modifier will be reviewed based on the Bank’s qualitative performance against the Company’s ESG priorities, as reviewed by the Board. The removal of the Loan to Deposit ratio as a change to reducemodifier is indicative of the maximum percentage allowed for upward discretionary adjustments.current liquidity environment and will be reviewed as appropriate with the annual review of the plan.
20202022 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 theits 2021 review, done in 2019, the Committee approved an updated long-term incentive mix for Named Executive Officers that will increase the weight of performance share grantsdetermined no material changes to 50% and decrease the weight of restricted stock units to 35% as shown below.plan design were necessary.
Executive 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 health programs, a deferred compensation plan, financial planning reimbursement, nominal holiday gifts, from time to time, parking, and occasional personal use of the corporate aircraft by the chief executive officer.aircraft. Additionally, spouses or guests of named executive officers may be provided travel and/or entertainment benefits related to business events at which their attendance is expected and appropriate, such as Company recognition events or trips, recruiting meals, or social events held for marketing or other business purposes.
These benefits are often provided with little or no incremental cost to the Company. The Company does not provide taxgross-ups for these speciallimited perquisites.
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COMPENSATION DISCUSSION AND ANALYSIS
Use of the Corporate Aircraft. The Committee has approved limited personal use of the corporate aircraft by Mr. Carmichael up to a maximum value of $100,000 per year. TheIn 2021, the Board approved a change to the Company’s policy requires Mr. Carmichael to reimburse the Company for the incremental cost of operating the corporate aircraft in the event the value of personalpolicy that allows certain executive officers to use (as measured based on the incremental cost of operating the aircraft) exceeds $100,000 in any year. No other executive officer is permitted to travel on the corporate aircraft for personal use.use in certain special situations (e.g., death in family). Such use by any NEO is accounted for in the summary compensation table.
|
|
Mr. Carmichael is subject to a lease (“time-sharing”) agreement with the Company that governs the terms and conditions of his personal use of the corporate aircraft. Under the terms of the time-sharing agreement, Mr. Carmichael will pay for the costs of any personal flights that exceed the allowance described above. The cost of Mr. Carmichael’s personal use of the corporate aircraft did not exceed the $100,000 allowance for 2019.
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 upon 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. The same 401(k) plan is maintained for all eligible employees.employees, including the Named Executive Officers. The 401(k) plan provides a match to employee contributions of 150% on the first 2% and 100% on the next 4 percent of eligible compensation an employee contributes to the plan and is invested in the employee’s selection of the plan’s existing investment alternatives. This Company match is immediately 100% vested. All Named Executive Officers are eligible for this plan up to the IRS wage or contribution limits. Under the plan, NEOs may not defer their future cash compensation into Company stock.
The Company offers employees at certain salary band levels, including its Named Executive Officers, a nonqualified deferred compensation plan. This plan allows for the deferral of base salary and awards received under the Variable Compensation Plan. The plan also provides for the Company to make a contribution for loss of the qualified plan 401(k) match due to the deferral of pay into this plan or due to wage or contribution limitations under the qualified 401(k) plan. The deferred funds receive earnings based on the mutual funds elected by each executive. The executives do not earn any preferential or above-market returns on these earnings. Under the plan, NEOs may not defer their cash compensation into Company stock.
The Company maintains a defined benefit pension plan which was frozen to new participants as of November 15, 1998. Employees who met the age and service requirement at that time are “grandfathered” and continue to accrue benefits under that plan. No Named Executive Officers are participants in this plan.
Health and Welfare Benefits. The Company offers broad-based medical, dental, vision, life, and disability plans to all of its employees. The Company also provides to each Named Executive Officer a comprehensive physical exam program and access to an executive fitness facility.
Severance and Change in Control Benefits. The Fifth Third Bancorp Executive Change in Control Severance Plan (the “Severance“CIC Severance Plan”) provides severance benefits to certain officers upon a qualifying termination after a change in control, subject to execution of a release andnon-compete agreement. The plan covers approximately 4045 officers, including all Named Executive Officers.
|
COMPENSATION DISCUSSION AND ANALYSIS |
Under the CIC Severance Plan, certain executives will receive severance if, in connection with a change in control, the executive’s employment is terminated without Cause“cause” (as defined in the CIC Severance Plan) or the executive resigns for Good Reason“good reason” (as defined in the CIC Severance Plan). For this purpose, a change in control would occur in any of the following instances:
Any person is or becomes the beneficial owner of 30% or more of the voting power of the Company’s outstanding securities; |
During any consecutive12-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 60% of the voting power of the merged or consolidated entity; or |
The Company’s shareholders approve a plan of complete liquidation of the Company.
|
The Severance Plan defers to the applicable incentive compensation plans for treatment of long-term, equity-based incentive compensation in the event of a change in control.control is determined by the applicable incentive compensation plans. More specific details are discussed in the “Potential Payments Upon Termination or Change in Control” section below.
Executive Severance Benefits Plan. On February 17, 2021, the Human Capital and Compensation Committee adopted the Executive Severance Benefits Plan, in which participating executives are eligible to receive certain severance benefits as described in the Severance Benefits Plan if such executive’s employment terminates prior to a change in control of Fifth Third or more than 24 months following a change in control, but only if the Bank determines, in its sole discretion, that the executive’s employment was terminated involuntarily by the Bank without “cause” or by the executive for “good reason” (each as defined in the Severance Benefits Plan). For purposes of the Severance Benefits Plan, a change in control has the same meaning given to that term in the CIC Severance Plan, as amended.
Executive Ownership and Capital Accumulation
Stock 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 stock ownership guidelines for senior employees in the Company’s salary band structure, including the named executive officers. The amount of stock required to be retained varies based upon the assigned salary band and associated multiple of base salary.
These employees are expected to use stock net of taxes obtained through awards under the long-term, equity-based incentive compensation program to establish a significant level of direct ownership. Stock ownership includes:
Stock owned individually and by immediate family sharing the same household. | Restricted stock units not yet vested. | Stock held in the employee stock | ||
In 2021, the executive ownership guidelines were updated to provide additional flexibility to less tenured executives, while also further deepening the overall ownership targets. Until ownership guidelines are met, executive officers are required to retain 75% (reduced from 100%) of net, after tax shares received from stock appreciation right exercises and restricted stock unit and performance share award vesting until the netafter-tax stock following exercise or receiptminimum ownership guidelines are met. As an additional requirement, once these guidelines are met, executives must retain 25% of stock under the long-term, equity-based incentive compensation program. net, after tax shares until two times their guidelines are met.
| 66 |
COMPENSATION DISCUSSION AND ANALYSIS
Executives have five years to achieve theirthe minimum executive stock ownership requirements. There is no specific time frame required to meet the two times guideline. Specific ownership guidelines for the Named Executive Officers are:
Stock 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. As of the most recent annual review performed in June 2019,2021, all Named Executive Officers had sufficient holdings to meet or exceed the stock ownership requirements.requirements or had not yet been in the role for five years and are on pace to meet the guidelines.
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 December 31, 2019:2021:
Title of Class
| Name of Officer
|
Number of Stock Beneficially Owned (1)
| % of Class
| Name of Officer | Number of Stock Beneficially Owned(1) | % of Class | ||||||||||||||||||
Common Stock
|
Greg D. Carmichael
|
|
1,336,633
|
|
|
0.1883%
|
| Greg D. Carmichael | 1,551,856 | 0.2269 | % | |||||||||||||
Common Stock
|
Tayfun Tuzun
|
|
329,256
|
|
|
0.0464%
|
| James C. Leonard | 142,329 | 0.0208 | % | |||||||||||||
Common Stock
|
Lars C. Anderson
|
|
191,374
|
|
|
0.0270%
|
| Timothy N. Spence | 282,940 | 0.0414 | % | |||||||||||||
Common Stock
|
Timothy N. Spence
|
|
219,041
|
|
|
0.0309%
|
| Lars C. Anderson | 341,396 | 0.0500 | % | |||||||||||||
Common Stock
|
Frank R. Forrest
|
|
130,083
|
|
|
0.0183%
|
| Kevin P. Lavender | 109,064 | 0.0160 | % | |||||||||||||
(1) The amounts shown represent the total stock owned outright by such individuals together with stock 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 December 31, 2019 but unexercised. These individuals have the number of SARs indicated after their names that are exercisable as of December 31, 2019 or will become exercisable within 60 days of December 31, 2019: Mr. Carmichael, 844,751; Mr. Tuzun, 192,843; Mr. Anderson, 115,511; Mr. Spence, 89,367; and Mr. Forrest, 91,409. The amounts listed for SARs represent the number of rights that may be exercised; the actual number of stock delivered will vary based on the stock’s appreciation over the grant price at the time of exercise.
(2) For beneficial ownership of individual directors and all directors and executive officers as a group see “Election of Directors” on pages 9-21.
| (1) | The amounts shown represent the total stock owned outright by such individuals together with stock 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 December 31, 2021 but unexercised. These individuals have the number of SARs indicated after their names that are exercisable as of December 31, 2021 or will become exercisable within 60 days of December 31, 2021: Mr. Carmichael, 935,838; Mr. Leonard, 40,892; Mr. Anderson, 215,966; Mr. Spence, 139,710; and Mr. Lavender, 36,729. The amounts listed for SARs represent the number of rights that may be exercised; the actual number of stock 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 15-28. |
Prohibition on Hedging.Hedging and Pledging. The Company prohibits all employees and directors from engaging in speculative trading and hedging shares of Company securities. This includes prohibitions against day trading or short-selling of Company securities and transactions in any derivative of Company securities, including buying and writing options. Employees and directors are restricted from buying Company securities on margin or using Company securities as collateral for a loan. Additionally, the Company’s Insider Trading Policy prohibits trading for directors and certain employees during designated blackout periods and requires approval by the Legal Department prior to any trade.
Clawbacks and Recoupments.The Company’s Code of Business Conduct and Ethics and its Compensation Clawback and Disclosure Policy provide that the Company reserves the right to 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.
| Fifth Third 2022 Proxy Statement | 67 |
COMPENSATION DISCUSSION AND ANALYSIS
Tax and Accounting Impacts of Compensation Programs
Deductibility of Executive Compensation. Section 162(m) of the Internal Revenue Code limits the tax deductibility of compensation for certain executive officers that is more than $1 million. The Committee is not limited to paying compensation that is fully deductible and retains the flexibility to consider tax and accounting impacts as some factors among many in structuring compensation programs. For the year ending December 31, 2021, the tax impact related to non-deductible compensation expense was approximately $4.5 million.
Accounting and Financial Reporting. The Company accounts for long-term, equity-based incentive compensation payments including SARs, RSUs, RSAs, stock options, and performance shares in accordance with accounting principles generally accepted in the United States (U.S. GAAP).
| 68 |
|
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 of 1933, as amended or the Securities Exchange Act of 1934, as amended, 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, 2019.2021.
Michael B. McCallister, Chair
Nicholas K. AkinsEmerson L. Brumback
Gary R. Heminger
Eileen A. Mallesch
Marsha C. Williams
| 69 |
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, 2019:2021:
The median annual total compensation of all employees of our company (other than the CEO) was $68,103;$66,720; and
The annual total compensation of our CEO, as reported in the Summary Compensation Table included on page 65,71, was $8,999,237.$10,531,649.
Based on this information, for 20192021, the ratio of the annual total compensation for our CEO to the median of the annual total compensation of our employees was 132158 to 1.
In order to determine this ratio, we first identified one of our employees as the median employee. Since only 11%12% of our employees receive equity compensation, we considered total cash compensation as a consistently applied compensation measure. As allowed by the rules, we excluded our CEO and our 89 employees located outside the United States (6(7 in Canada and 2 in the United Kingdom) who are less than 1% of our total 20,41819,452 employee base. We then examined the total cash compensation (salary, wages, and bonus) for the remaining employees who were employed on December 31, 2019,2021, as reflected in our payroll records and reported to the Internal Revenue Service on FormW-2 for 2019.2021. In making this examination we annualized the salary of approximately 2,9813,145 full-time employees hired in 20192021 who did not work the entire year. We did not annualize the pay of any other type of employee (i.e.(e.g., part-time,co-ops,co-ops) etc.) or make any other adjustments to the payroll data.
Once we identified the median employee, we then compared all elements of that employee’s 20192021 compensation in accordance with the requirements of Item 402(c)(2)(x) of RegulationS-K; the same methodology we used for our Named Executive Officers in the 20192021 Summary Compensation Table on page 6571 of this proxy statement, to comparable total compensation of our CEO in order to determine the ratio as shown below:
Chairman, President and CEO ($)
|
Median employee ($)
| |||||||||
Base salary
|
|
1,100,070
|
|
|
59,940
|
| ||||
Stock awards
|
|
4,462,507
|
|
|
0
|
| ||||
Option awards
|
|
787,498
|
|
|
0
|
| ||||
Non-equity incentive plan compensation
|
| 2,200,000
|
|
| 2,283
|
| ||||
Change in pension value/NQDC earnings
|
|
0
|
|
|
927
|
| ||||
All other compensation
|
|
449,162
|
|
|
4,953
|
| ||||
TOTAL
|
|
8,999,237
|
|
|
68,103
|
| ||||
CEO pay ratio
|
|
132 : 1
|
| |||||||
|
|
Chairman and CEO ($) | Median employee ($) | |||||||
Base salary | 1,100,070 | 64,383 | ||||||
Stock awards | 4,887,500 | 0 | ||||||
Option awards | 862,502 | 0 | ||||||
Non-equity incentive plan compensation | 3,300,000 | 0 | ||||||
Change in pension value/NQDC earnings | 0 | 0 | ||||||
All other compensation | 381,577 | 2,337 | ||||||
TOTAL | 10,531,649 | 66,720 | ||||||
CEO pay ratio | 158 : 1 | |||||||
December 31, 20192021 was the date selected to identify the median employee because it is the date consistent with the rest of the discussion included in this proxy statement and because our employee base does not materially change at any point during the year.
|
Summary Compensation Table.The table below summarizes the compensation awarded, paid to, or earned by the Company’s Named Executive Officers during 2017-2019.2019 through 2021. The amounts in the Stock Awards and Option Awards columns indicate the fair value on the grant date associated with all grants awarded in the corresponding year and do not correspond with the amounts that the Named Executive Officers may eventually realize with respect to these awards. The benefit, if any, actually received from these awards will depend upon the future value of our common stock.Common Stock.
2019 Summary Compensation Table
| ||||||||||||||||||||||||||||||||||||||||
Name & Principal Position
| Year
| Salary ($)
| Bonus ($)
| Stock ($)(1)
| Option ($)(2)
| Non-Equity ($)(3)
| All Other ($)(4)
| Total ($)
| ||||||||||||||||||||||||||||||||
Greg D. Carmichael, Chairman, President, and Chief Executive Officer | 2019 | 1,100,070 | 0 | 4,462,507 | 787,498 | 2,200,000 | 449,162 | 8,999,237 | ||||||||||||||||||||||||||||||||
| 2018 | 1,088,531 | 0 | 4,887,480 | 862,496 | 4,100,000 | 235,145 | 11,173,652 | |||||||||||||||||||||||||||||||||
| 2017 | 1,000,064 | 0 | 4,526,248 | 798,750 | 2,000,000 | 363,230 | 8,688,292 | |||||||||||||||||||||||||||||||||
Tayfun Tuzun, Executive Vice President and Chief Financial Officer | 2019 | 602,913 | 0 | 1,215,493 | 214,500 | 635,000 | 129,276 | 2,797,182 | ||||||||||||||||||||||||||||||||
| 2018 | 586,015 | 0 | 1,020,011 | 180,000 | 1,150,000 | 86,260 | 3,022,286 | |||||||||||||||||||||||||||||||||
| 2017 | 553,426 | 0 | 1,190,006 | 209,997 | 630,000 | 129,575 | 2,713,004 | |||||||||||||||||||||||||||||||||
Lars C. Anderson, Executive Vice President and Chief Operating Officer | 2019 | 688,500 | 0 | 1,444,991 | 255,001 | 760,000 | 158,214 | 3,306,706 | ||||||||||||||||||||||||||||||||
| 2018 | 688,501 | 0 | 1,444,985 | 255,004 | 1,400,000 | 109,171 | 3,897,661 | |||||||||||||||||||||||||||||||||
| 2017 | 686,943 | 0 | 1,444,996 | 255,004 | 637,500 | 251,669 | 3,276,112 | |||||||||||||||||||||||||||||||||
Timothy N. Spence, Executive Vice President and Head of Consumer Bank, Payments, and Strategy
|
|
2019 |
|
|
492,694 |
|
|
0 |
|
|
1,121,999 |
|
|
197,998 |
|
|
670,000 |
|
|
122,914 |
| 2,605,605 | ||||||||||||||||||
|
2018 |
| 479,902 | 0 | 1,020,011 | 180,000 | 1,200,000 | 158,622 | 3,038,535 | |||||||||||||||||||||||||||||||
|
| 2017
|
|
| 461,950
|
|
| 0
|
|
| 1,359,999
|
|
| 239,999
|
|
| 715,000
|
|
| 318,772
|
|
| 3,095,720
|
| |||||||||||||||||
Frank R. Forrest, Executive Vice President and Chief Risk Officer | 2019 | 557,010 | 0 | 1,020,011 | 179,998 | 615,000 | 123,609 | 2,495,628 | ||||||||||||||||||||||||||||||||
| 2018 | 546,092 | 0 | 1,020,011 | 180,000 | 1,055,000 | 93,476 | 2,894,579 | |||||||||||||||||||||||||||||||||
| 2017 | 534,796 | 0 | 1,190,006 | 209,997 | 600,000 | 148,245 | 2,683,044 | |||||||||||||||||||||||||||||||||
(1) The values shown for performance share awards for 2019 in both tables reflect the grant date fair value of $26.72 which was the closing price on the February 6, 2019 grant date and the price used to calculate the number of performance shares awarded. The values shown for performance share awards for 2018 in both the Summary Compensation Table and the table below reflect the grant date fair value of $33.10 for Mr. Carmichael, which was the closing price on the January 31, 2018 grant date and also the price used to calculate the number of performance shares awarded. The values shown for performance share awards for all other NEO’s in 2018 in both tables reflect the grant date fair value of $33.17 which was the closing price on the January 29, 2018 grant date and also the price used to calculate the number of shares awarded. 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 $26.52 which was the closing price on the February 3, 2017 grant date and the price used to calculate the number of performance shares awarded. Fair values for 2017, 2018, and 2019 performance share awards assume target performance achievement as of the date of grant. Fair values assuming maximum performance as of the date of grant are as follows:
Executive
| Fair Value at Maximum Performance
| |||||||||||
2017 ($)
| 2018 ($)
| 2019 ($)
| ||||||||||
Greg D. Carmichael
|
|
3,594,362
|
|
|
3,881,240
|
|
|
3,543,753
|
| |||
Tayfun Tuzun
|
|
945,014
|
|
|
810,011
|
|
|
965,247
|
| |||
Lars C. Anderson
|
|
1,147,494
|
|
|
1,147,516
|
|
| 1,147,491
|
| |||
Timothy N. Spence
|
|
1,080,000
|
|
|
810,011
|
|
|
891,018
|
| |||
Frank R. Forrest
|
|
945,014 |
|
|
810,011 |
|
|
810,017
|
| |||
(2) 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 26 “Stock Based Compensation” located on pages174-177 of the Company’s Annual Report on Form10-K for the year ended December 31, 2019.
(3) Amounts reflect the Variable Compensation Plan award paid in cash to each NEO.
(4) 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 2019.
| 2021 Summary Compensation Table | ||||||||||||||||||||||||||||||
| Name & Principal Position | Year | Salary ($) | Bonus ($) | Stock ($)(1) | Option ($)(2) | Non-Equity ($)(3) | All Other ($)(5) | Total ($) | ||||||||||||||||||||||
Greg D. Carmichael, Chairman and Chief Executive Officer | 2021 | 1,100,070 | 0 | 4,887,500 | 862,502 | 3,300,000 | 381,577 | 10,531,649 | ||||||||||||||||||||||
|
2020 |
| 1,100,070 | 0 | 4,674,998 | 825,002 | 2,860,000 | 337,519 | (4) | 9,797,589 | ||||||||||||||||||||
|
2019 |
| 1,100,070 | 0 | 4,462,507 | 787,498 | 2,200,000 | 449,162 | 8,999,237 | |||||||||||||||||||||
James C. Leonard, Executive Vice President and Chief Financial Officer | 2021 | 570,577 | 0 | 1,019,983 | 179,999 | 862,500 | 87,982 | 2,721,040 | ||||||||||||||||||||||
|
2020 |
| 452,565 | 0 | 452,083 | 56,251 | 598,000 | 57,945 | 1,616,844 | |||||||||||||||||||||
Timothy N. Spence, President, Fifth Third Bancorp | 2021 | 514,987 |
| 1,275,012 | 225,000 | 1,312,500 | 139,143 | 3,572,570 | ||||||||||||||||||||||
|
2020 |
| 514,987 | 0 | 1,020,002 | 180,000 | 910,472 | 91,819 | 2,717,280 | |||||||||||||||||||||
|
2019 |
| 492,694 | 0 | 1,121,999 | 197,998 | 670,000 | 122,914 | 2,605,605 | |||||||||||||||||||||
Lars C. Anderson, Vice Chairman, Strategic Growth Initiatives | 2021 | 688,501 | 0 | 1,444,975 | 255,004 | 984,556 | 113,115 | 3,486,151 | ||||||||||||||||||||||
|
2020 |
| 688,501 | 0 | 1,444,979 | 255,000 | 833,086 | 120,751 | 3,342,317 | |||||||||||||||||||||
|
2019 |
| 688,500 | 0 | 1,444,991 | 255,001 | 760,000 | 158,214 | 3,306,706 | |||||||||||||||||||||
Kevin P. Lavender, Executive Vice President and Head of Commercial Bank | 2021 | 498,462 | 0 | 934,984 | 165,001 | 750,000 | 117,382 | 2,465,829 | ||||||||||||||||||||||
|
COMPENSATION OF NAMED EXECUTIVE OFFICERS
Grants of Plan-Based Awards. The following table reflects the full grant date fair value of long-term, equity-based incentive compensation awards made to our Named Executive Officers during Performance shares are reported in the “Estimated Future Payouts Under Equity Incentive Plan Award” columns below; RSUs are reported in the “All Other Stock Awards: Number of Shares of Stock or Units” column below; and SARs are reported in the “All Other Option Awards: Number of Securities Underlying Options” column below.
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,
COMPENSATION OF NAMED EXECUTIVE OFFICERS
COMPENSATION OF NAMED EXECUTIVE OFFICERS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Option Exercises and Stock Vested.The following table outlines SARs exercised and restricted stock and RSUs that vested during 2019.2021.
2019 Option Exercises & Stock Vested
| 2021 Option Exercises & Stock Vested | |||||||||||||||||||||||||||||||
Option Awards(1)
|
Stock Awards(2)
| Option Awards(1) | Stock Awards(2) | |||||||||||||||||||||||||||||
Executive
|
Number of
|
Value on Exercise ($)
|
Number of Shares
|
Value Realized
| Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | ||||||||||||||||||||||||
Greg D. Carmichael
|
|
185,476
|
|
|
2,750,609
|
|
|
268,099
|
|
|
7,246,295
|
| 236,407 | 3,576,838 | 149,180 | 4,476,194 | ||||||||||||||||
Tayfun Tuzun
|
|
63,194
|
|
|
1,710,990
|
| ||||||||||||||||||||||||||
| James C. Leonard |
|
| 14,096 | 447,666 | ||||||||||||||||||||||||||||
| Timothy N. Spence |
|
| 32,414 | 975,493 | ||||||||||||||||||||||||||||
Lars C. Anderson
|
|
260,789
|
|
|
6,965,422
|
|
|
| 45,071 | 1,354,707 | ||||||||||||||||||||||
Timothy N. Spence
|
|
114,002
|
|
|
3,062,440
|
| ||||||||||||||||||||||||||
Frank R. Forrest
|
|
63,194
|
|
|
1,710,990
|
| ||||||||||||||||||||||||||
| Kevin P. Lavender | 7,182 | 154,126 | 14,129 | 467,781 | ||||||||||||||||||||||||||||
(1) The dollar figures in the table represent the value at exercise for option awards.
| (1) | The dollar figures in the table represent the value at exercise for SARs. |
| (2) | The dollar figures in the table represent the value on the vest date for RSUs. |
(2) The dollar figures in the table represent the value on the vest date for stock awards.
Nonqualified Deferred Compensation. As discussed above, the Company maintains a Nonqualified Deferred Compensation Plan (“NQDCP”) that allows participant and Company contributions.
The plan allows participants to defer up to 70% of their base salary and up to 100% of their Variable Compensation award. In addition, the Company makes contributions for loss of qualified 401(k) plan matching contributions for two reasons: (1) due to base salary or Variable Compensation Plan award deferrals into the NQDCP plan and/or (2) due to wage and/or contribution limitations under the qualified 401(k) plan. The Company’s contribution to this planthe NQDCP is determined by taking the participant’s eligible wages above the qualified 401(k) plan compensation limits ($280,000
($290,000 for 2019)2021) and applying the Company’s 401(k) match (7%). If other qualified plan 401(k) limitations applied, the participants would also have contributions made to the plan for those limitations.
Distributions are made in a lump sum or in up to 10 annual installments. The Named Executive Officers may elect when the payments commence. The earliest distribution is August of the calendar year following the year of retirement. TheIf a change is made to an initial distribution election which pushes out the start date of the payments, the entire distribution mayof the account must be made no later than the 10th15th calendar year following the year of retirement. This plan is intended to comply with the requirements of Section 409(A) of the Internal Revenue Code.
|
|
The following table illustrates the nonqualified deferred compensation plan benefits. It includes each Named Executive Officer’s and the Company’s contributions (each of which are reflected in the amounts disclosed in the 20192021 Summary Compensation Table) under the NQDCP as well as the earnings during 2019.2021. It does not reflect matching 401(k) or discretionary contributions made under the qualified plan.
2019 Nonqualified Deferred Compensation | ||||||||||||||||||||||||||||||||||||||||||||
Executive
| Plan | Executive ($) | Company ($) | Aggregate ($) | Aggregate Withdrawals / Distributions ($) | Aggregate ($) | 2021 Nonqualified Deferred Compensation | |||||||||||||||||||||||||||||||||||||
| Executive | Plan | Executive Contributions in 2021 ($) | Company Contributions in 2021 ($) | Aggregate Earnings in 2021 ($) | Aggregate Withdrawals / Distributions ($) | Aggregate Balance at 12/31/2021 ($) | ||||||||||||||||||||||||||||||||||||||
Greg D. Carmichael
|
| NQDCP
| (1)
|
| -
|
|
| 344,405
|
|
| 1,298,673
|
| -
|
| 7,423,897
|
| NQDCP(1) | — | 256,905 | 2,451,209 | — | 11,783,668 | ||||||||||||||||||||||
Tayfun Tuzun
|
| NQDCP
| (1)
|
| 87,646
|
|
| 103,104
|
|
| 280,309
|
| -
|
| 2,329,314
|
| ||||||||||||||||||||||||||||
| James C. Leonard | NQDCP(1) | — | 61,500 | 32,268 | — | 1,458,341 | ||||||||||||||||||||||||||||||||||||||
| Timothy N. Spence | NQDCP(1) | 136,571 | 86,897 | 80,924 | — | 726,605 | ||||||||||||||||||||||||||||||||||||||
Lars C. Anderson
|
| NQDCP
| (1)
|
| -
|
|
| 126,595
|
|
| 101,827
|
| -
|
| 670,061
|
| NQDCP(1) | 83,309 | 86,211 | 161,990 | — | 1,278,137 | ||||||||||||||||||||||
Timothy N. Spence
|
| NQDCP
| (1)
|
| -
|
|
| 98,889
|
|
| 41,271
|
| -
|
| 302,737
|
| ||||||||||||||||||||||||||||
Frank R. Forrest
|
| NQDCP
| (1)
|
| -
|
|
| 93,241
|
|
| 92,534
|
| -
|
| 766,170
|
| ||||||||||||||||||||||||||||
| Kevin P. Lavender | NQDCP(1) | 94,692 | 58,942 | 296,446 | — | 2,186,860 | ||||||||||||||||||||||||||||||||||||||
(1)
| Fifth Third 2022 Proxy Statement | 77 |
COMPENSATION OF NAMED EXECUTIVE OFFICERS
| (1) | The investments under this plan would produce earnings equal to those of any other investor who invested similar amounts of money in like investments for the same time period during the year. |
Potential Payments Upon Termination or Change in Control. The treatment of long-term, equity-based awards issued as of December 31, 2019,2021, under all termination scenarios, is dictated by the 2008, 2011, 2014, 2017, and 2019 Incentive Compensation Plans, which were approved by shareholders on: April 15, 2008; April 19, 2011; April 15, 2014; April 18, 2017; and April 16, 2019, respectively.
The Company’s change in control policies were 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.
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 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 discussed below. Except in a change in control scenario, the Named Executive Officer’s termination would not result in enhanced retirement benefits.
Voluntary or Without Cause.Voluntary. The Company does not currently have contracts with its Named Executive Officers that would require cash severance payments upon voluntary termination. Under the terms of the 2008, 2011, 2014, 2017, and 2019 Incentive Compensation Plans, if the Named Executive Officer meets certain retirement eligibility criteria, any exercisable SARs would remain outstanding and under certain other criteria outstanding equity awards may continue to vest. These values, as applicable, are included in the following pages.
With Cause. The Company does not currently have contracts with its Named Executive Officers that would require cash severance payments upon involuntary termination by the Company for cause. Under the terms of the Company’s 2008, 2011, 2014, 2017, and 2019 Incentive Compensation
Plans, all equity-based awards would be immediately forfeited.
|
|
forfeited
Death and Disability. Under the terms of the 2008, 2011, 2014, 2017, and 2019 Incentive Compensation Plans, all unvested stock and option awards vest immediately
Immediately upon termination of a participant’s employment due to death or disability, and option awardsSARs remain outstanding for the remaining term of the grant. Performance shares granted prior to 2021 are earned on a prorated basis determined 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. Performance shares granted in 2021 and future years will vest immediately based on the target number of shares and will not be prorated for months of service for the performance period. The table on the following page 80 reflects an assumed payout each Named Executive Officer would be eligible to receive if the Company achieved 100% of its performance goals for each outstanding performance share award and paid out effective December 31, 2019.2021.
Involuntary Without Cause or For Good Reason. On February 17, 2021, the Human Capital and Compensation Committee adopted the Executive Severance Benefits Plan, in which participating executives are eligible to receive certain severance benefits as described in the Severance Benefits Plan if such executive’s employment terminates prior to a change in control of the Bank or more than 24 months following a change in control, but only if the Bank determines, in its sole discretion, that the executive’s employment was terminated involuntarily by the Bank without “cause” or by the executive for “good reason” (each as defined in the Severance Benefits Plan). For purposes of the Severance Benefits Plan, a change in control has the meaning given to that term in the Fifth Third Bancorp Executive Change in Control Severance Plan, as amended.
The cash severance payment received upon a triggering event under the Severance Benefits Plan would be equal to 2 times the Named Executive Officer’s base salary for Messrs. Carmichael, and Spence and 1.5 times base salary Messrs. Leonard, Anderson, and Lavender. The payment is payable in quarterly installments over the 12-month period following termination of employment.
| 78 |
COMPENSATION OF NAMED EXECUTIVE OFFICERS
In addition to the base annual salary, a Named Executive Officer will receive a lump sum payment of a portion of the executive’s annual bonus for the year in which termination of employment occurs prorated based on the number of days elapsed; and a lump sum payment equal to twelve (12) times the monthly COBRA premium costs for the Bank-sponsored medical, dental and vision coverage in which the executive participated.
The table below reflects an assumed full-year Variable Compensation Plan award at the amount each Named Executive Officer would be eligible to receive if the Company achieves 100% of its Variable Compensation Plan performance targets.
Change in Control. As described in the “Severance and Change in Control Benefits” section, the Company’s CIC 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 under the plan, the eligible Named Executive Officer would be required to sign an agreement at the time of the triggering event not to compete with, nor solicit employees or customers from, the Company for a period of three years following the executive’s termination for Messrs. Carmichael, Tuzun,Leonard, and AndersonSpence and for a period of two years for Messrs. SpenceAnderson, and Forrest.Lavender.
The cash severance payment would be equal to 2.99 times the Named Executive Officer’s base salary plus his or her Variable Compensation amount for Messrs. Carmichael, Tuzun,Leonard, and AndersonSpence and 2 times base salary plus his Variable Compensation amount for Messrs. SpenceAnderson and Forrest.Lavender. In addition, the Named Executive Officer would earn a prorated Variable Compensation Plan award for the fiscal year of the termination. The table below reflects an assumed full-year Variable Compensation Plan award at the amount each Named Executive Officer would be eligible to receive if the Company achieves 100% of its Variable Compensation Plan performance targets.
Since April 2008, we have not granted any awards that provide for “single-trigger” vesting upon a change in control to our executives. Instead, as defined in our incentive compensation
plans, any outstanding long-term, equity-based award (stock options, SARs, RSUs, and restricted stock awards) would vest immediately only if there is a 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 greater of (1) the extent to which applicable performance goals have been met through and including the effective 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. The value of performance share awards would be calculated based on current market value of the Company’s stock on the date of the change in control times the earned number of shares. The table on the following page reflects an assumed payout each Named Executive Officer would be eligible to receive if the Company achieved 100% of its performance goals for each outstanding performance share award and paid out effective December 31, 2019.2021. 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 under the CIC Severance Plan, Messrs. Carmichael, Tuzun,Leonard, and AndersonSpence would receive three, and Messrs. SpenceAnderson and ForrestLavender would receive two, additional years of age and service credit under the qualified and nonqualified defined contribution plans; medical, dental, and life insurance benefits; and the additional value, if any, of the pension benefit at age 60. These benefits are reflected in the Other Benefits category below. The NEO’s termination would not result in enhanced retirement benefits. Eligibility for these benefits, as well as any other benefits in a change in control scenario, is determined in a manner consistent with all eligible employees, not just the Company’s Named Executive Officers.
|
|
Material differences in circumstances relate to retirement eligibility, as described above. As of December 31, 2019,2021, Messrs. Carmichael, Tuzun,Anderson, and ForrestLavender meet all retirement eligibility criteria under outstanding long-term, equity-based compensation award agreements. All three have met the criteria in to retain all vested and unvested awards except in a termination for cause scenario.
| Fifth Third 2022 Proxy Statement | 79 |
COMPENSATION OF NAMED EXECUTIVE OFFICERS
The tables below contain the total payments oneeach Named Executive Officer would receive under each termination scenario if the Named Executive Officer separated on December 31, 2019.2021. For all termination scenarios, the figures for long-term, equity-based incentive compensation awards are as of December 31, 2019,2021, at the closing stock price of $30.74$43.55 on that date.
| Termination Scenarios | |||||||||||||||||||||||||||||||
| Executive | Termination Scenarios | ||||||||||||||||||||||||||||||
Voluntary or Without Cause ($)(1) | With Cause | Death or ($)(2) | Voluntary ($)(1) | With Cause | Death or Disability ($)(2) | Involuntary or for Good Reason ($)(3) | |||||||||||||||||||||||||
Greg D. Carmichael | 23,099,141 | — | 20,485,880 | 35,565,359 | — | 34,218,503 | 39,990,854 | ||||||||||||||||||||||||
Tayfun Tuzun | 5,393,721 | — | 4,733,364 | ||||||||||||||||||||||||||||
James C. Leonard | — | — | 3,239,961 | 2,662,835 | |||||||||||||||||||||||||||
Timothy N. Spence | — | — | 6,857,119 | 3,642,134 | |||||||||||||||||||||||||||
Lars C. Anderson | — | — | 4,321,600 | 9,190,698 | — | 8,774,404 | 10,998,138 | ||||||||||||||||||||||||
Timothy N. Spence | — | — | 3,436,377 | ||||||||||||||||||||||||||||
Frank R. Forrest | 3,769,209 | — | 3,188,223 | ||||||||||||||||||||||||||||
Kevin P. Lavender | 3,624,496 | — | 3,624,496 | 4,882,198 | |||||||||||||||||||||||||||
| (1) | Amounts in this column include the amount of long-term, equity-based compensation each NEO is entitled to retain for meeting all |
| (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. |
| (3) | Amounts in this column include the amount of base salary, variable compensation, a lump sum COBRA payment each NEO is entitled to receive in a termination without “cause” or for “good reason” scenario, as well as the value of long term equity each NEO is entitled to retain due to meeting retirement eligibility criteria, or as otherwise provided for in the award agreements. |
| Involuntary Termination Upon a Change in Control | ||||||||||||||||||
| Executive | Cash ($) | Unvested ($) | Potential Excise ($) | Other ($) | Total ($) | |||||||||||||
Greg D. Carmichael | 12,067,000 | 13,708,658 | 0 | 747,164 | 26,522,822 | |||||||||||||
Tayfun Tuzun | 4,340,827 | 3,431,487 | 0 | 315,025 | 8,087,339 | |||||||||||||
Lars C. Anderson | 5,080,448 | 4,356,521 | 0 | 338,868 | 9,775,837 | |||||||||||||
Timothy N. Spence | 2,989,202 | 3,482,716 | 0 | 199,604 | 6,671,522 | |||||||||||||
Frank R. Forrest | 2,958,841 | 3,187,800 | 0 | 188,204 | 6,334,845 | |||||||||||||
Compensation Committee Interlocks and Insider Participation
In 2019, the Human Capital and Compensation Committee members were Messrs. Akins, Heminger, and McCallister and Ms. Mallesch. No executive officer of Fifth Third serves on any board of directors or compensation committee of an entity that compensates any member of the Human Capital and Compensation Committee.
| Involuntary Termination Upon a Change in Control | ||||||||||||||||||||
| Executive | Cash Severance ($) | Unvested Equity ($) | Potential Excise Tax Gross-Up ($) | Other Benefits ($) | Total ($) | |||||||||||||||
Greg D. Carmichael | 12,067,210 | 20,088,488 | — | 763,081 | 32,918,780 | |||||||||||||||
James C. Leonard | 4,013,500 | 2,859,555 | — | 312,430 | 7,185,484 | |||||||||||||||
Timothy N. Spence | 5,360,000 | 4,886,891 | — | 363,274 | 10,610,165 | |||||||||||||||
Lars C. Anderson | 3,649,054 | 6,191,264 | — | 236,186 | 10,076,505 | |||||||||||||||
Kevin P. Lavender | 2,500,000 | 3,321,048 | — | 155,404 | 5,976,452 | |||||||||||||||
| 80 |
|
The Charter of the Company’s Human Capital and Compensation Committee requires that the Human Capital and Compensation Committeepre-approve approve all related person or affiliate transactions between Fifth 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,benefited. Loans to directors, executive officers, and their immediate family members have been made in the ordinary course of business, on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans with persons not related to Fifth Third, and do not involve more than the normal risk of collectability or present other than forunfavorable features. The Board reviews all extensions of credit otherwise covered bymade to directors and executive officers and related interests which are subject to the Federal Reserve Board Regulation O. For 2021, all of these extensions of credit complied with the policies and procedures governed by Federal Reserve Regulation O.
Certain of these related person transactions are required to be disclosed by Fifth Third Bancorp in this proxy statement:
One of our 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. Fifth Third Bancorp’s corporate headquarters is located in Cincinnati and the region is a significant market for the Company. During 2019,2021, we paid the Cincinnati Bengals approximately $1.8$2.1 million for sponsorship arrangements, tickets, and advertising expenses. Prior to Ms. Blackburn’s appointment to the Board in September 2014,In 2020, Fifth Third and the Cincinnati Bengals signed a five-year sponsorship contract extension for these arrangements that calls for total payments by Fifth Third Bancorp during that period of over $7.9 million.up to $2.05 million per year, subject to a 3.5% escalator per year. 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. The sponsorship contract was negotiated at arms-length and on market terms and Ms. Blackburn did not participate in the negotiations or execution of the contract. Fifth Third’s sponsorship of the Cincinnati Bengals began prior to Ms. Blackburn’s election as a director.
Kevin Hipskind
Noel Hamilton is employed by Fifth Third Bank as an Executivea Senior Vice President. He is thebrother-in-law of PhilipKristine R. McHugh,Garrett, who is an Executive Vice President of Fifth Third Bancorp. In 2019,2021, Mr. HipskindHamilton received compensation of approximately $856,258$419,478, including base salary and incentive and equity compensation, as well as benefits generally available to similarly situated employees.
Nicholas Carmichael is employed by Fifth Third Bank as an Investment Banking Analyst. He is the son of Greg D. Carmichael, who is the Chief Executive Officer of Fifth Third Bancorp. In 2021, Nicholas Carmichael received compensation of approximately $132,500, including base salary and incentive and equity compensation, as well as benefits generally available to similarly situated employees.
The compensation packagepackages of Kevin Hipskind wasNoel Hamilton and Nicholas Carmichael were established by Fifth 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.Common Stock. In 2019,2021, we paid BlackRock Financial Management, Inc. approximately $2,406,265$3,901,787 for tools used to manage an investment portfolio, including a trading platform, risk analytics, and daily reporting. In 2019, we paid the Vanguard Group approximately $30,403 for administrative services related the 401KThis business relationship and Deferred Compensation Plans of employees of MB Financial, Inc. All of these business relationships and transactions weretransaction was 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 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 Fifth Third Bancorp.
| 81 |
|
Certain Additional Transactions.Report of the Audit Committee
Effective June 30, 2014, MB Financial, Inc. entered into a letter agreement (the “Escrow Letter Agreement”) with certain principal stockholders of Taylor Capital (the “Principal Stockholders”) pursuant to which the Principal Stockholders agreed to be responsible for repayment of 60% of the restitution payments made by Taylor Capital’s subsidiary bank, Cole Taylor Bank, or MB Financial Bank, as successor to Cole Taylor Bank, under the Order to Cease and Desist and Order of Assessment of Civil Money Penalty Issued Upon Consent Pursuant to the Federal Deposit Insurance Act and the Illinois Banking Act, As Amended (the “Consent Order”) entered into by Cole Taylor Bank with the Board of Governors of the Federal Reserve System and the State of Illinois Department of Financial and Professional Regulation, Division of Banking, for a specified period of time calculated on anafter-tax basis if the Company realizes a tax benefit therefrom. In 2019, MB Financial, Inc. merged into Fifth Third Bancorp.
The restitution payments are subject to a maximum of the lesser of: (i) $30,000,000; or (ii) the total amount of such restitution that relates to fees collected by the third party named in the Consent Order, with which Cole Taylor Bank previously had a deposit program relationship, from affected account holders between May 4, 2012 and June 30, 2014. Included among the Principal Stockholders are: Prairie Capital IV, L.P. and Prairie Capital IV QP, L.P. (collectively, the “Prairie Entities”), with which C. Bryan Daniels is affiliated as a managing member of the sole general partner of each of the Prairie Entities. Mr. Daniels has a 2.31% ownership interest in Prairie Capital IV, L.P. and Prairie Capital IV QP, L.P.
Prairie Capital IV, L.P. and Prairie Capital IV QP, L.P. are obligated to contribute approximately 7.77% and 7.77%, respectively, toward the total repayment responsibility of the Principal Stockholders under the Escrow Letter Agreement. The Escrow Letter Agreement originally provided that, during the four-year period after the closing of theMB-Taylor Capital Merger, the payment obligation of the Principal Stockholders would be secured by their deposit into escrow of cash or, with respect to the Prairie Entities, a letter of credit. The Escrow Letter Agreement was amended on December 16, 2016 to terminate the escrow arrangement effective December 15, 2016 (the “Escrow Termination Date”). The Principal Stockholders, other than the Prairie Entities, will remain obligated for four years following the Escrow Termination Date on an unsecured basis. The Prairie Entities will remain obligated on an unsecured basis for three years following the Escrow Termination Date.
|
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, as amended, or the Securities Exchange Act of 1934, as amended, 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, which may be found in the Corporate Governance Sectionsection of the Company’s website at www.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 2019,2021, the Committee met 1312 times, and the Committee discussed the interim financial and other information contained in each quarterly earnings announcement and periodic filings to the SEC 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 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 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 Committee reviewed both with the independent external audit firm and internal auditors, their audit plans, audit scope, and identification of audit risks.
The 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. 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 Committee also discussed the results of internal audits.
|
|
The Committee reviewed and discussed the audited consolidated financial statements of the Company as of and for the year ended December 31, 20192021 and management’s assessment as to the effectiveness of Company’s internal control over financial reporting as of December 31, 20192021 with management and the independent external audit firm. Management has the responsibility for the preparation of the Company’s consolidated financial statements and their assessment of the 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 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 Annual Report on Form10-K for the year ended December 31, 2019,2021, for filing with the SEC. The Committee also appointed the independent external audit firm for 2020.2022.
Emerson L. Brumback,Eileen A. Mallesch, Chair
Jorge L. BenitezKatherine B. Blackburn
Jerry W. Burris
C. Bryan DanielsThomas H. Harvey
Jewell D. Hoover
Eileen A. MalleschMichael B. McCallister
| 82 |
|
The following table sets forth the aggregate fees billed to Fifth Third Bancorp for the fiscal years ended December 31, 20192021 and December 31, 20182020 by the Company’s independent external audit firm Deloitte & Touche LLP.
| December 31, | ||||||||
| 2021 | 2020 | |||||||
| Audit fees | $ | 5,034,650 | $ | 5,178,650 | ||||
| Audit-related fees(1) | 1,283,800 | 1,321,800 | ||||||
| Tax fees(2) | 230,351 | 245,312 | ||||||
| All other fees(3) | 67,553 | 72,382 | ||||||
|
| $ | 6,616,354 | $ | 6,818,144 | ||||
| (1) | 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, comfort letters and trust compliance. |
| (2) | Includes fees for services related to tax compliance and tax consulting and planning. Of these amounts, for 2021, $105,314 represents fees for tax compliance services and $125,037 represents fees for tax consulting and planning services; and for 2020, $196,333 represents fees for tax compliance services and $48,979 represents fees for tax consulting and planning services. |
| (3) |
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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 constitutes 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 20192021 or 20182020 pursuant to this exception.
| 83 |
Company Proposal 1: Independent External Audit Firm
(Item 2 on Proxy Card)
The Audit Committee of the Board of Directors proposes and recommends that the shareholders approveratify the selection by the Committee of the firm of Deloitte & Touche LLP to serve as its independent external audit firm for the Company for the year 2020.2022. The firm has served as the independent external audit firm for Fifth Third Bank since 1970 and for 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 approvingratifying Deloitte & Touche LLP as the Company’s independent external audit firm is rejected by the shareholders, then the Audit Committee will reconsidertake the opportunity to re-evaluate 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 received by the Company and not revoked prior to or at the Annual Meeting will be voted in favor of the resolution unless otherwise instructed by the shareholder. Pursuant to the Company’s Code of Regulations, the affirmative vote of the holders of a majority of the sharesvoting power of the Company’s common stockCommon Stock and Series A, Class B Preferred Stock, voting together as a single class, present in personelectronically or by proxy 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 this 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 A VOTE “FOR” THE ADOPTION OF THE RESOLUTION.
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Company Proposal 2: Advisory Vote on Compensation of Named Executive Compensation
Officers (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” proposal, gives you, as a shareholder, the opportunity to endorse or not endorse the compensation of our executive pay programNamed Executive Officers through the following resolution:
RESOLVED, that the shareholders advise that they approve the compensation of Fifth 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 20202022 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,” 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 20192021 Total Rewards package (and potential payouts in the severance andchange-in-control scenarios) for its Named Executive Officers are reasonable, appropriate and appropriate.align our executive officers’ interests with the long-term interests of our shareholders. 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.
We are currently conductingconduct “Say-on-Pay” advisory votes on an annual basis. The next“Say-on-Pay” vote is currently scheduled for the 2021 Annual Meeting. However, please see Company Proposal 3 regarding an advisory vote on the frequency of these“Say-on-Pay” votes.
Vote Required
Proxies received by Fifth 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. Pursuant to ourthe Company’s Code of Regulations, the affirmative vote of the holders of a majority of the sharesvoting power of our common stockthe Company’s Common Stock and Series A, Class B Preferred Stock, voting together as a single class, present in personelectronically or by proxy 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 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 A VOTE “FOR” THE ADVISORY APPROVAL OF THE COMPENSATION OF THE NAMED EXECUTIVE OFFICERS AS DISCLOSED PURSUANT TO THE DISCLOSURE RULES OF THE SECURITIES AND EXCHANGE COMMISSION.
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Company Proposal 3: Advisory Vote on FrequencyApproval Of An Amendment To The Fifth Third Code of Votes on
Executive Compensation
Regulations To Add a Federal Forum Selection Provision (Item 4 on Proxy Card)
As required by Section 14AThe Board of the Exchange Act, we are seeking advisory shareholder approval of the frequency of advisory shareholder votes on compensation of the Named Executive Officers through the following resolution:
RESOLVED,Directors recommends that the shareholders advise thatadopt an advisory resolution with respect to executive compensation should be presentedamendment to the shareholders every one, two, or three yearsCompany’s Code of Regulations, as reflected by their votes for each of these alternativesamended (the “Regulations”), to add new Article XI, which will provide that, unless we consent 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 aswriting to the frequency with whichselection of an advisory vote on executive compensation shouldalternative forum, the federal district courts of the United States will be held. If you have no preference, you should abstain.the exclusive forum for the resolution of any claims arising under the Securities Act of 1993, as amended (the “Securities Act”) This provision is sometimes referred to as a federal forum selection provision.
The BoardSecurities Act provides that federal and state courts have concurrent jurisdiction over all suits brought to enforce any duty or liability created by the Securities Act. Adoption of a federal forum selection provision requiring that all claims arising under the Securities Act be brought exclusively in the federal district courts would allow the Company to avoid state court forum shopping and parallel litigation in multiple federal and state jurisdictions asserting claims arising out of the same underlying circumstances. In addition, the Company also believes that current best corporate practices and governance trends favor an annual advisory vote andlimiting claims under the Securities Act to federal court would improve certain procedural efficiencies, particularly since federal courts often have significant experience with federal securities law issues. The proposed amendment to the Regulations does not require that such claims be brought in any particular federal district court.
Given these considerations, the Board of Directors has determined that it is in the best interests of the Company and its shareholders that the Regulations be amended to hold an annual advisory vote. This would give shareholdersadd the opportunity to react promptly to emerging trends in compensation, and giveproposed federal forum selection provision.
Effect of the Amendment
Although the Board of Directors is asking the shareholders to adopt the proposed amendment to the Regulations to add a federal forum selection provision for the reasons described above, if adopted, the provision could have the effect, among other things, of discouraging claims under the Securities Act or limiting the ability of litigants to bring a claim in a state judicial forum they believe is more favorable to them, and the Human Capital and Compensation Committee the opportunitycould result in additional costs for a litigant seeking to evaluate compensation decisions in light of yearly feedback from shareholders.bring such claims.
Because your vote is advisory, it will not be binding upon the Board. However, the Board will take into account the outcomeText of the vote when consideringProposed Amendment
The proposed amendment to our Regulations would add a new Article XI to read as follows:
“ARTICLE XI
FORUM FOR ADJUDICATION OF CERTAIN DISPUTES
Unless the frequencyCorporation consents in writing to the selection of advisory shareholder approvalan alternative forum, the federal courts of the compensationUnited States shall be the exclusive forum for the resolution of named executive officers.any claim arising under the Securities Act of 1933, as amended.”
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 Required
Adoption of the proposed amendment to the Code of Regulations to add a federal forum selection clause requires the affirmative vote of the holders of at least a majority of the voting power of our outstanding Common Stock and Series A Class B Preferred Stock, voting together as a single class. Proxies received by Fifth Third Bancorpthe Company and not revoked prior to or at the Annual Meeting will be voted in favor of “every 1 year”the proposed amendment unless otherwise instructed by the shareholder. Pursuant to our Code of Regulations, the affirmative vote of the holders of a majority of the shares of our common stock present in person or by proxy 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 ADVISORYA VOTE FOR THE APPROVAL“FOR” ADOPTION OF THE COMPENSATIONCOMPANY PROPOSAL TO AMEND THE CODE OF THE NAMED EXECUTIVE OFFICERS EVERY “1 YEAR.”REGULATIONS TO ADD A FEDERAL FORUM SELECTION PROVISION AS ARTICLE XI.
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Compensation Committee Interlocks and Insider Participation
In 2021, the Human Capital and Compensation Committee members were Messrs. Brumback, Heminger, and McCallister and Mses. Mallesch and Williams. No executive officer of Fifth Third serves on any board of directors or compensation committee of an entity that compensates any member of the Human Capital and Compensation Committee.
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Under Section 13(d) of the Exchange Act, a beneficial owner of a security is any person who directly or indirectly has or shares voting power or investment power over such security. Such beneficial owner under this definition need not enjoy the economic benefit of such security as of December 31, 2019. Thesecurity. Pursuant to publicly available information and filings, the following table contains information regarding the only persons who, to our knowledge, beneficially own more than five percent of our common stock as of February 15, 2020:2022:
| Title of Class | Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percent
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Common stock | The Vanguard Group 100 Vanguard Blvd. Malvern, PA 19355 | 83,040,329(1) | 12.14% | |||||
| Common stock | BlackRock, Inc. 55 East 52nd Street New York, NY 10055 | 53,486,431(2) | 7.8% | |||||
| Common stock | T. Rowe Price Associates, Inc. 100 East Pratt Street Baltimore, MD 21202 | 47,228,752(3) | 6.9% | |||||
| Common Stock | State Street Corporation One Lincoln Street Boston, MA 02111 |
| 5.1% | |||||
| (1) |
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| The Vanguard Group
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| have sole dispositive power over 80,212,187 shares of common stock, and have shared dispositive power over 2,828,142 shares of common stock. |
| (2) | BlackRock, Inc. owns the above holdings in its capacity as a parent company or control person in accordance with SEC Rule 13d-1(b)(1)(ii)(G). According to the Schedule 13G filed with the SEC on January 31, 2022, in aggregate, BlackRock, Inc. and the affiliated entities included in Schedule 13G have sole voting power over 47,374,612 shares of common stock and have sole dispositive power over 53,486,431 shares of common stock. |
| (3) | T. Rowe Price Associates, Inc. owns the above holdings in its capacity as an investment advisor in accordance with SEC Rule13d-1(b)(1)(ii)(E). According to the Schedule 13G filed with the SEC on February 14 |
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Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires our executive officers and directors, and persons who own more than ten percent of a registered class of our stock, to file reports of ownership and changes in ownership with the SEC. Executive officers and directors, and persons who own greater than ten percent of a registered class of our stock, are required by SEC regulation to furnish us with copies of all Section 16(a) forms they file.
The Company believes that, for the period from January 1, 2021 through December 31, 2021, its executive officers and directors complied with all filing requirements applicable to them with one exception. On January 5, 2022, the Company filed a Form 5 on behalf of Mr. Feiger regarding four trusts that owned shares of Company Common Stock on June 15, 2020, the date on which Mr. Feiger became a director of the Company. The Company based this determination solely on its review of such forms filed electronically or written representations from certain reporting persons that no Annual Statement of Changes In Beneficial Ownership of Securities on Form 5 was required for those persons.
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Shareholder Proposals to be included in Fifth Third Bancorp’s Proxy Statement. In order for a shareholder proposal for the 20212023 Annual Meeting of Shareholders to be eligible for inclusion in our proxy statement, it must comply with the requirements of Rule14a-8 of the Exchange Act and must be received by Fifth Third Bancorp on or before November 4, 20201, 2022 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
MD10909F
Cincinnati, Ohio 45263
Attn: Corporate Secretary
Facsimile:513-534-6757
Nominees to the Board of Directors for Inclusion in Fifth Third Bancorp’s Proxy Statement: In 2020, the Board of Directors adopted amendments to our Code of Regulations to implement proxy access for the election of directors. An eligible shareholder or group of up to 20 shareholders, owning continuously for at least three years shares of our common stock representing an aggregate of at least 3% of our outstanding common stock, may nominate and include in our proxy statement director nominees constituting up to 20% of the total number of our directors (subject to certain adjustments) provided that the shareholders and their nominees satisfy the requirements specified in Article II, Section 12 of our Code of Regulations. Notice of nominations under the proxy access director nomineesprovisions of our Code of Regulations for our 2023 Annual Meeting of Shareholders must be received by our Corporate Secretary at the address listed above by no earlier than October 5, 20202, 2022 and no later than the close of business on November 4, 2020,1, 2022, assuming that we do not change the date of our 20212023 Annual Meeting of Shareholders by more than 30 days before or after
from the date of our 20202022 Annual Meeting of Shareholders Meeting.Shareholders.
Shareholder Proposals not included in Fifth Third Bancorp’s Proxy Statement. Any shareholder who intends to nominate a person for election to the Board, or to propose any matterother business to be acted uponconsidered by the shareholders, at the 20212023 Annual Meeting of Shareholders without such nomination or proposal being included in our proxy statement as a shareholder proposal must be a record holder of shares entitled to vote at the meeting and must send a notice that complies with all of the applicable requirements set forth in Article II, Section 11 of our Code of Regulations to the Corporate Secretary using the address and facsimile number listed above no earlier than January 14, 202112, 2023 and no later than February 13, 2021. If notice is provided by February 13, 2021, and11, 2023. Among other requirements, the proposal is voted upon, SEC rules permit the persons named as proxies for the 2021 Annual Meeting to exercise discretionary authority to vote upon such additional proposal if we advise shareholders in the proxy statement for the 2021 Annual Meeting how they intend to vote on it.
The notice to the Corporate Secretary must meet the requirements set forth in our Code of Regulations, which are summarized below.
The notice must include:
the name and address of the record shareholder as they appear in 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 ofinclude information regarding the shareholder and any beneficial owner;
the class and number of shares of Fifth Third Bancorp held of record by the shareholder or beneficially owned as of the date ofgiving the notice, and a representation thatspecified background information regarding the shareholder will notify Fifth Third Bancorp in writing within five (5) business days after the record date for such meeting of the class and number of shares of Fifth 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 requiredperson to be disclosed in a proxy statementnominated or other filings requiredthe proposal 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 Fifth Third Bancorp in the notice;
a representation that the shareholder intends to appear at the meeting to bring suchand make the nomination or other proposal. If notice is provided by February 11, 2023, and the proposal is voted upon at the meeting, SEC rules permit the persons named as proxies for the 2023 Annual Meeting to exercise discretionary authority to vote on such additional matters if we advise shareholders in the proxy statement for the 2023 Annual Meeting how they intend to vote.
Our Code of Regulations, which sets forth the detailed requirements for making nominations to the Board using proxy access and for making nominations to the Board and proposing other business beforeto be considered by the meeting;shareholders at shareholder meetings without inclusion in our proxy statement as a shareholder proposal, may be found in the Corporate Governance section of our website at www.53.com.
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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 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 information that could be material to a reasonable shareholder’s understanding of the independence, or lack thereof, of the nominee.
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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 our 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.
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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 and 12 of the Code of Regulations. Except as otherwise provided by law, our Articles, or our 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 at 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 Fifth Third Bancorp. No other shareholder has informed us 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.
Series A, Class B Preferred Stock. All of the outstanding Series A, Class B Preferred Stock is held of record and will be voted at the Annual Meeting by American Stock Transfer & Trust Company, LLC, as depositary, in accordance with instructions received by the depositary from the record holders of the depositary receipts issued with respect to the Series A, Class B Preferred Stock (which we sometimes refer to as depositary shares). Each outstanding depositary share represents 1/40 of a share of Series A, Class B Preferred Stock and, therefore, has the right to instruct the depositary with respect to the voting of 1/40th of the 24 votes to which each share of Series A, Class B Preferred Stock is entitled, which is 0.6 vote for each depositary share. Holders of depositary shares may not vote directly at the Annual Meeting, but should follow the directions given to them as to how to instruct the depositary to vote the Series A, Class B Preferred Stock represented by such holder’s depositary shares, using our proxy card, which also serves as voting instructions to the depositary. A failure by the holder of depositary shares to give timely voting instructions to the depositary will result in the
Series A, Class B Preferred Stock represented by such holder’s depositary shares not being voted at the Annual Meeting.
Householding.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 at1-800-488-80351-800-870-0653 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, New York 10005, or by email at FITB@dfking.com. We will respond promptly to such requests.
For those shareholders who have the same address and last name and who request to receive a printed copy of the proxy materials by mail, we will send only one copy of such materials to each address unless one or more of those shareholders notifies us, in the same manner described above, that they wish to receive a printed copy for each shareholder at that address.
Beneficial shareholders can request information about householding from their bank, broker or other nominee.
Copies.A copy of our Annual Report onForm 10-K for the most recent fiscal year, as filed with the SEC, 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,1090FV, Cincinnati, Ohio 45263 or by emailing ir@53.com. You can also view information and request documents from the Investor Relations page of Fifth Third’s website at www.ir.53.com.ir.53.com. TheForm 10-K includes certain listed exhibits, which will be provided upon payment of a fee covering our reasonable expenses.
By Order of the Board of Directors
Susan B. ZaunbrecherJoseph C. Alter
Corporate Secretary
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Questions and Answers About the Annual Meeting and Voting 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 20202022 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”).
Our Annual Report for the year 2019,2021, including financial statements, has been delivered or made available to all shareholders. Such report and financial statements are not a part of this proxy statement. This proxy statement, form of proxy, notice of Annual Meeting, Notice of Internet Availability, and the Annual Report are first being sent or made available to shareholders on or about March 4, 2020.1, 2022.
When is the Annual Meeting and where will it be held?
The Annual Meeting will be held on Tuesday, April 14, 2020, at the Renaissance Hotel, located at 36 East Fourth Street, Cincinnati, Ohio12, 2022, at 11:30 a.m. eastern daylight saving time.The meeting will occur virtually. There is no physical location for the meeting and you cannot attend in person.
Shareholders and guests may attend the meeting by visiting www.virtualshareholdermeeting.com/FITB2022 beginning at 11:15 a.m. eastern daylight saving time. Guests may attend and listen to the meeting by registering as a guest. Shareholders of record of common stock and depositary interests in Series A, Class B Preferred Stock on February 18, 2022 may vote and ask questions at the meeting. To do so, shareholders must use the 16-digit control number that is printed in the box marked by the arrow on the Notice of Internet Availability of Proxy Materials or the Proxy Card to log in and access the meeting.
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. The holders of the Common Stock have one vote per share, and the holders of the Series A, Class B Preferred Stock have 24 votes per share.
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 is also called a proxy or a proxy card. When you designate a proxy, you may also direct the proxy how to vote your shares. Three Fifth Third directors, Emerson 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 Directors. The Nominating and Corporate Governance Committee of the Board of Directors has recommended a slate of nominees for election to the Board of Directors. Information about these nominees may be found in the proxy statement section titled “Election of Directors.”
Company Proposal 1: ApprovalRatification of Appointment of Auditors. This is a proposal to ratify the reappointmentre-appointment of Deloitte & Touche LLP as our independent external audit firm for 2020.2022. This approval is not required by law to appoint an independent external audit firm, but the 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 reconsidertake the
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QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
opportunity to reevaluate its choice of 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 interests of our shareholders.
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Company Proposal 2: Advisory Approval of Executive Compensation. Company Proposal 2 is an annual advisory vote to approve the compensation of our named executive officers (“NEOs”). The Board will strongly consider the outcome of this advisory vote in determining the compensation of such executives. In 2019, 92% of our shareholders who cast a vote on our executive compensation program voted to approve it.
Company Proposal 3: Advisory VoteApproval of an Amendment to Determine Frequencythe Fifth Third Bancorp Code of Executive Compensation Votes.Regulations to Add a Federal Forum Selection Provision. Company Proposal 3 is a proposal to approve an advisoryAmendment to the Fifth Third Bancorp Code of Regulations to add a federal forum selection clause. Information about this proposal is included in the proxy statement section entitled: “Company Proposal 3: Approval of an Amendment to the Fifth Third Bancorp Code of Regulations Add a Federal Forum Selection Provision.”
What vote to determine how often shareholders will be given the opportunityis required to approve the compensation of our NEOs: either every one, every two, or every three years. The Board will strongly considerproposals considered at the outcome of these votes in determining how often the shareholders are provided asay-on-pay vote. At the 2019 Annual Meeting, our shareholders supported the Board’s recommendation that shareholders be provided the option to cast an advisory vote every one year on the compensation of our NEOs. Accordingly, the Board decided to hold a“say-on-pay” vote annually.Meeting?
Election of Directors. As longOur directors are elected by the holders of our outstanding Common Stock and Series A, Class B Preferred Stock, voting together as cumulative voting is not in effect, ina single class. The holders of the Common Stock have one vote per share, and the holders of the Series A, Class B Preferred Stock have 24 votes per share. In an uncontested election of directors, each nominee for director receiving a greater number of votes “for” his or her election than votes “against” his or her election will be elected as a director. In the event of a contested election, or if cumulative voting is in effect, the nominees receiving the greatest number of votes “for” his or her election shallwill be elected. Abstentions and shares not voted by brokers and other entities holding shares on behalf of beneficial owners will not be counted and will have no effect on the outcome of the election.election in accordance with Ohio law and our Articles of Incorporation and Code of Regulations.
Company Proposals1-3. Company proposals1-3 at the Annual Meeting require the affirmative vote of the holders of a majority of the common sharesvoting power of our outstanding Common Stock and Series A, Class B Preferred Stock, voting together as a single class, present in personelectronically or by proxy at the Annual Meeting and entitled to vote on theeach such proposal. Abstentions will have the same effect as a vote cast against a proposal. Sharessuch proposal andshares not voted on these proposals by brokers orand other entities holding shares on behalf of beneficial owners will not be counted as present to vote on these proposals and 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 stockCommon Stock and Series A, Class B Preferred Stock on February 21, 202018, 2022 are entitled to vote on every matter that is to be voted on at the Annual Meeting. Please see the following question for more information on voting shares of Series A, Class B Preferred Stock.
In order to conduct the Annual Meeting, a majority of sharesthe voting power of Fifth Third common stockCommon Stock and Series A, Class B Preferred Stock, together constituting a single class, entitled to vote at the Annual Meeting on every matter that is to be voted on must be present in personelectronically or by proxy. This is called a quorum. Shareholders who deliver valid proxies or vote in personelectronically 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” (which are explained below) are counted as present and entitled to vote for purposes of determining a quorum.
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QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING |
How many votes do I have?
Each share of Fifth Third common stock outstanding on February 21, 202018, 2022 is entitled to one vote on all proposals at the meeting. Only shareholdersmeeting, either electronically or by proxy.
Each share of outstanding Series A, Class B Preferred Stock on February 18, 2022 has 24 votes per share on all proposals at the meeting, either electronically or by proxy. All of the outstanding Series A, Class B Preferred Stock is held of record on our books at the close of business on February 21, 2020and will be entitled to votevoted at the Annual Meeting eitherby American Stock Transfer & Trust Company, LLC, as depositary, in person oraccordance with instructions received by proxy. the depositary from the record holders of the depositary receipts issued with respect to the Series A, Class B Preferred Stock (which we sometimes refer to as depositary shares). Each outstanding depositary share represents 1/40 of a share of Series A, Class B Preferred Stock and, therefore, has the right to instruct the depositary with respect to the voting of 1/40th of the 24 votes to which each share of Series A, Class B Preferred Stock is entitled, which is 0.6 vote for each depositary share. Holders of depositary interests in the Series A, Class B Preferred Stock may not vote directly at the Annual Meeting, but should follow the directions given to them as to how to instruct the depositary to vote the Series A, Class B Preferred Stock represented by such holder’s depositary interests, using our proxy card which also serves as voting instructions to the depositary. A failure by the holder of depositary shares to give timely voting instructions to the depositary will result in the Series A, Class B Preferred Stock represented by such holder’s depositary shares not being voted at the Annual Meeting.
As of the close of business on February 21, 2020,18, 2022, there were approximately 711,132,684[683,671,079] shares of Fifth Third common stock outstanding and entitled to vote and 8,000,000 depositary shares of Series A, Class B Preferred Stock outstanding and entitled to vote.
The shares represented by all properly executed proxies that are sent to us will be voted as designated and each not designated will be voted and counted as described below. Each person giving a proxy may revoke it by giving notice to us in writing or in open meeting at any time before it is voted.
If notice in writing is given by any shareholder to our President, a Vice President, or the Secretary not less than forty-eight (48) hours before the time fixed for holding a meeting of shareholders for the purpose of electing directors that a shareholder desires that the voting at such election shall be cumulative, and if an announcement of the giving of such notice is made upon the convening of the meeting by the Chair or Secretary or by or on behalf of the shareholder giving such notice, each shareholder shall have the right to cumulate such voting power as he or she possesses in voting for directors. This will not affect the voting procedures for the other proposals considered at the Annual Meeting.
Fifth Third bears the expense of soliciting proxies. Proxies will be solicited principally by mail, but may also be solicited by our directors, officers, and other regular employees, who will receive no additional compensation therefore in addition to their regular compensation. Brokers and others who hold stock on behalf of others will be asked to send proxy materials to the beneficial owners of the stock, and we will reimburse them for their expenses. We have retained D.F. King & Co., a proxy solicitation firm to assist us in soliciting proxies. We anticipate that the costs of D.F. King’s proxy solicitation services will be approximately $13,000,$14,500, plus reasonableout-of-pocket expenses.
How do I vote?
Record Shareholders. A shareholder who owns sharesCommon Stock in Fifth Third directly, and not through a broker, bank, or other nominee (“record holder” or “record shareholder”), may vote in personelectronically 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 at |
| 2. | Telephone: You may call toll-free |
| 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, untilbut you must vote no later than 11:00 a.m.,59 p.m. eastern daylight saving time on the morning of the Annual Meeting, April 14, 2020.11, 2022 for shares held directly and by 11:59 p.m. eastern daylight saving time on April 7, 2022 for shares held in a Plan.
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QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING |
Holders of depositary shares representing the Series A, Class B Preferred Stock are not record holders of the Series A, Class B Preferred Stock and must instruct the depositary as to how the Series A, Class B Preferred Stock represented by the depositary interests are to be voted. Your proxy serves as your voting instructions to the depositary. You may use the Internet or telephone to submit your proxy (voting instructions), but you must submit your proxy by 11:59 p.m. eastern daylight saving time on April 7, 2022.
Street Name Shareholders. 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. Please see “Can my broker vote for me?” below.
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 directors nominated by the Fifth Third Bancorp Nominating and Corporate Governance Committee;
“FOR”the approvalratification of the selection of Deloitte & Touche LLP as the Company’s independent external audit firm (Company Proposal 1);
“FOR”the advisory vote on executivethe Company’s compensation of its Named Executive Officers (Company Proposal 2); and,
“FOR”holding an advisory vote for the approval of an amendment to the compensationFifth Third Bancorp Code of the Company’s executives every “1 Year”Regulations to Add a Federal Forum Selection Provision (Company Proposal 3).
Can my broker vote for me?
If you are a beneficial holder of shares and do not provide the organization that holds your shares with specific voting instructions then, under applicable rules, the organization that holds your shares generally has discretionary authority to vote on “routine” matters without receiving instructions from you but cannot vote on“non-routine” matters unless you provide instructions. If the organization that holds your shares does not receive instructions from you on how to vote your shares on anon-routine matter, that organization will inform the inspector of election that it does not have the authority to vote on that matter with respect to your shares. This is generally referred to as a “brokernon-vote.”
All proposals at the Annual Meeting except Company Proposal 1 (Approval(Ratification of the Selection 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 approvalratification of the selection of Deloitte & Touche LLP as the Company’s independent external audit firm for 20202022 (Company Proposal 1) is considered a routine matter under applicable rules. A broker or other nominee generally exercises its discretionary authority to vote on routine matters without instructions. Although brokers and other nominees are not required to exercise discretionary authority, we expect that no brokernon-votes will exist in connection with Company Proposal 1.
What happens if the meeting is postponed or adjourned?
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Your proxy will still be good and may be voted at the postponed or adjourned meeting. You will still be able to change or revoke your proxy until it is voted.
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
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 us 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.electronically. Even if you plan to attend the virtual Annual Meeting, you are encouraged to vote your shares by proxy.
How are proxy materials delivered?
We control costs by following SEC rules that allow for the delivery of proxy materials to our shareholders primarily through the Internet. In addition to reducing the amount of paper used in producing these materials, this method lowers the costs associated with mailing the proxy materials to shareholders. Record holders will have a Notice of Internet Availability of Proxy Materials delivered directly to their mailing address. Beneficial holders will have a Notice of Internet Availability of Proxy Materials forwarded to them by the intermediary that holds the shares. Shareholders who have requested paper copies of all proxy materials and certain institutional and other shareholders will also receive paper copies of the other proxy materials including this proxy statement, the 20192021 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.
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, we are relying upon SEC “householding” rules that permit delivery of only one set of applicable proxy materials to multiple shareholders who share an address and have the same last name, unless we receive contrary instructions from any shareholder at that address. Shareholders of record who have the same address and last name and have not previously requested electronic delivery of proxy materials will receive a single envelope containing the notices or the proxy statement and proxy card for all shareholders having that address. The notice or proxy card for each shareholder will include that shareholder’s unique control number needed to vote his or her shares. This procedure reduces our printing costs and postage fees. If, in the future, you do not wish to participate in householding and prefer to receive your Notice or Proxy Statement in a separate envelope, or if your household currently receives more than one Notice or Proxy Statement and in the future, you would prefer to participate in householding, please call1-800-488-80351-800-870-0653 (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—22nd Floor, New York, NY 10005, or by email at FITB@dfking.com. Requests will be responded to promptly.
For those shareholders who have the same address and last name and who request to receive a printed copy of the proxy materials by mail, we will send only one copy of such materials to each address unless one or more of those shareholders notifies us, in the same manner described above, that the shareholder(s) wish to receive a printed copy for each shareholder at that address.
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Beneficial shareholders can request information about householding from their banks, brokers, or other holders of record.
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QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
How do I request a paper or e-mail copy of the proxy materials?
Record Shareholders. Record holders may request a paper ore-mail copy of the proxy materials by following the instructions below. You will be asked to provide your11-digit16-digit control number located on your proxy card or Notice of Internet Availability.
| 1. | Call the toll-free telephone number |
| 2. | Access the website |
| 3. | Send ane-mail to |
Please make your request for a copy on or before March 31, 202029, 2022 to facilitate timely delivery.
Street Name Shareholders. Beneficial holders, also known as street name shareholders, should request copies of the proxy materials by following the instructions provided by their bank, broker, or other nominee.
Can I attend the virtual Annual Meeting?
You canThe Annual Meeting is being held virtually. There will be no physical meeting and you cannot attend in person. Please refer to page 2 for instructions on how to attend the virtual Annual Meeting. Annual Meeting. Individuals who are not shareholders of the Company will be permitted to listen to the Annual Meeting. In order to vote (though not holders of depositary shares representing Series A, Class B Preferred Stock), examine the shareholder list, or submit questions at the Annual Meeting, if you are a:must be one of the following:
| 1. | Record holder of Fifth Third common |
| 2. | Holder of depositary shares representing Series A, Class B Preferred Stock; |
| 3. | Beneficial holder of Fifth Third |
Authorized representative of persons or entities who are beneficial holders of Fifth Third common |
In additionCan I participate in the Annual Meeting?
Shareholders will have substantially the same opportunities to participate in our virtual Annual Meeting as they would have in an in-person meeting. Only shareholders of the Company will be able to attend, vote, examine the shareholder list, and submit questions before and during a valid photo ID or other satisfactory proofportion of identification, you should bring the following items to be admittedmeeting via the online platform. Shareholders may submit questions by signing into the virtual meeting platform at www.virtualshareholdermeeting.com/FITB2022, typing a question into the “Ask a Question” field, and clicking submit. You may submit questions beginning on April 5, 2022 by logging onto proxyvote.com with your 16-digit control number. Questions which comply with the Rules of Conduct and that are germane to the Annual Meeting:
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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 within physical proximity to the Annual Meeting. The Chairpurpose of the Annual Meeting shall have the power to silence or have removed any person in order to ensure the orderly conduct ofwill be answered during the Annual Meeting. Fifth Third representatives will be at the entranceMeeting, subject to time constraints. Questions regarding personal matters or matters not relevant to the Annual Meeting and these representatives will havenot be answered. If we receive substantially similar questions, we will group them together.
Shareholders (but not holders of depositary shares representing Series A, Class B Preferred Stock) may vote during the authority,Annual Meeting. Shareholders may also vote before the date of the Annual Meeting, by proxy or by telephone using the one of the methods provided on the Company’s behalf, to determine whether the admission policy and procedures are being followed and whether you will be granted admissionproxy card. We recommend at that shareholders vote by mail, internet, or telephone prior to the Annual Meeting.Meeting, even if they plan to attend the Annual Meeting virtually.
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QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING |
What if I experience technical difficulties logging into the virtual Annual Meeting?
Shareholders encountering difficulty accessing the Annual Meeting virtual platform during the sign-in process or at any time during the meeting may utilize technical support provided by the Company through Broadridge Financial Solutions, Inc. Technical support information is provided on the sign-in page for all shareholders. If you have difficulties accessing the virtual Annual Meeting during check-in or during the meeting, please call the technical support number listed on the Annual Meeting sign-in page.
How do I propose actions for the 2023 Annual Meeting of Shareholders?
Shareholder Proposals to be included in our 20212023 Proxy Statement. In order for a shareholder proposal for the 20212023 Annual Meeting of Shareholders to be eligible for inclusion in our 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 us on or before the date provided on page 8389 at the address or facsimile number provided on page 83.89.
Shareholder Proposals not included in our 20212023 Proxy Statement. Any shareholder who intends to propose any matter to be acted upon at the 20212023 Annual Meeting of Shareholders without such proposal being included in the Company’s proxy statement as a shareholder proposal must send a notice to the Corporate Secretary during the period referenced on page 8389 using the address and facsimile number listed on page 83.89.
Who can I call for help in voting my shares?
If you have any questions or need assistance voting your shares, please call D.F. King & Co., Inc., which is assisting us, toll-free at1-800-488-8035.1-800-870-0653.
Who can I contact with questions about my investment in Fifth Third?
Shareholders who wish to speak to a Fifth Third representative regarding their investment in Fifth Third may communicate directly with our Investor Relations Department by calling866-670-0468. In addition, shareholders may communicate in writing directly with the Investor Relations Department by sending a letter to 38 Fountain Square Plaza, MD 1090QC,1090FV, Cincinnati, OH 45263 or by emailing ir@53.com. You can also view information and request documents from the Investor Relations page of our website at www.ir.53.com.ir.53.com.
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Annex A: Proposed Amendment to The Fifth Third Bancorp Code of Regulations to Add a Federal Forum Selection Provision
RESOLVED, that the Articles of Incorporation, as amended, be, and they hereby are amended by inserting the following new Article XI:
REGULATIONS FOR CONDUCT AT THE APRIL 14, 2020 ANNUAL MEETINGARTICLE XI
FORUM FOR ADJUDICATION OF SHAREHOLDERS OF FIFTH THIRD BANCORPCERTAIN DISPUTES
We welcome youUnless the Corporation consents in writing to the 2020 Annual Meetingselection of Shareholdersan alternative forum, the federal courts of Fifth Third Bancorp. In order to provide a fair and informative Meeting, we ask you to honor the following regulationsUnited States shall be the exclusive forum for the Meeting.
1. GENERAL ORDER OF BUSINESS. The businessresolution of any claim arising under the Meeting will be taken upSecurities Act of 1933, 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 has sole authority to preside over the Meeting and make any and all determinations with respect to the conduct of the Meeting. Any action taken by the Chairman at the Meeting will be final, conclusive and binding on all persons. The Secretary of the Bancorp shall act as secretary of the Meeting.
2. VOTING AT THE MEETINGamended. 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. 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.
3. ITEMS OF BUSINESS; SHAREHOLDER PROPOSALS – THREE MINUTE LIMIT. Matters not set forth in the Agenda may be proposed by shareholders of record in accordance with the federal securities laws, the Ohio Revised Code and our Code of Regulations. Shareholder proposals will be entertained in the following order: first, any proposals of which the Bancorp was informed prior to the commencement of this Meeting; and then, any other proposals properly made in accordance with these Regulations. Each proposing shareholder will be allotted three minutes in which to present the proposal and any desired remarks in support thereof. Properly 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 21, 2020 or a person named in a proxy given by such a shareholder. There will be one period for questions and statements by shareholders as set forth on the Agenda attached to these Regulations. Remarks and questions will be limited to one minute per shareholder and to one comment or question at a time. Additional turns to speak may be allowed as time permits.
If you wish to speak, please raise your hand and wait until you are recognized. 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.
The Chairman will stop discussions which are repetitive, derogatory, over the time limit, irrelevant to the business of the Bancorp or the items on the Agenda for the Meeting, related to pending or threatened litigation, regulatory proceedings or similar actions or otherwise inappropriate.
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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.
THANK YOU FOR YOUR COOPERATION AND ENJOY THE MEETING.
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Annual Meeting of Shareholders
APRIL 14, 2020
Call to Order
Introductions
Approval of 2019 Minutes
Nomination and Election of Directors
Approval of the Selection of Auditors
Approval of Executive Compensation
Determination of Frequency of Votes on Executive Compensation
Question and Answer Session
Announcement of Voting Results on All Matters Presented
Adjournment
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38 FOUNTAIN SQUARE PLAZA
CINCINNATI, OHIO 45263
(800)972-3030
FIFTH THIRD BANCORP
38 FOUNTAIN SQUARE PLAZA
CINCINNATI, OHIO 45263
VOTE BY INTERNET
Before The Meeting - Go towww.proxyvote.comor scan the QR Barcode above
Use the Internet to transmit your voting instructions and for electronic delivery of information. Vote by 11:59 p.m. Eastern Time on April 11, 2022 for Common Stock held directly and by 11:59 p.m. Eastern Time on April 7, 2022 for Common Stock held in a Plan and for depositary shares representing Series A, Class B Stock held directly. Have this card in hand when you access the website and follow the instructions to obtain your records and to create an electronic voting instruction form.
During The Meeting, if you hold Common Stock - Go to
www.virtualshareholdermeeting.com/FITB2022
You may attend the meeting via the Internet and, if you hold Common Stock, vote during the meeting. The 2022 Annual Meeting of Shareholders will be online in a virtual meeting format only via live webcast. You will not be able to attend the Annual Meeting physically in person. Have the information that is printed in the box marked by the arrow available and follow the instructions.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions. Vote by 11:59 p.m. Eastern Time on April 11, 2022 for Common Stock held directly and by 11:59 p.m. Eastern Time on April 7, 2022 for Common Stock held in a Plan and depositary shares representing Series A, Class B Stock held directly. Have this card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date this card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
D67436-P65097-Z81618 | KEEP THIS PORTION FOR YOUR RECORDS |
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DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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Nominees: | For | Against | Abstain | ||||||
1a. Nicholas K. Akins | ☐ | ☐ | ☐ | ||||||
1b. B. Evan Bayh, III | ☐ | ☐ | ☐ | ||||||
1c. Jorge L. Benitez | ☐ | ☐ | ☐ | ||||||
1d. Katherine B. Blackburn | ☐ | ☐ | ☐ | ||||||
1e. Emerson L. Brumback | ☐ | ☐ | ☐ | ||||||
1f. Greg D. Carmichael | ☐ | ☐ | ☐ | ||||||
1g. Linda W. Clement-Holmes | ☐ | ☐ | ☐ | ||||||
1h. C. Bryan Daniels | ☐ | ☐ | ☐ | ||||||
1i. Mitchell S. Feiger | ☐ | ☐ | ☐ | ||||||
1j. Thomas H. Harvey | ☐ | ☐ | ☐ | ||||||
1k. Gary R. Heminger | ☐ | ☐ | ☐ | ||||||
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1m. Eileen A. Mallesch |
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1o. Marsha C. Williams |
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2. Ratification of the appointment of Deloitte & Touche LLP to serve as the independent external audit firm for the Company for the year 2022. | ☐ | ☐ | ☐ | |||||
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4. Approval of an amendment to the Fifth Third Bancorp Code of Regulations to establish the exclusive jurisdiction of federal courts for actions brought under the Securities Act of 1933, as amended. | ☐ |
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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.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Emerson 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, 2020 at the Renaissance Hotel, at 36 East Fourth 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 the election of Directors, FOR Items 2 and 3, and FOR 1 Year on Item 4.
Please sign exactly as name appears on this | ||||||
Annual Meeting of Shareholders of
FIFTH THIRD BANCORP
Renaissance Hotel, 36 East Fourth Street, Cincinnati, Ohio,
at 11:30 a.m., eastern daylight saving time, April 14, 2020.
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, 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 Shareholders will be held at the following address:
The Renaissance Hotel, at 36 East Fourth Street, Cincinnati, Ohio,
at 11:30 a.m., eastern daylight saving time, April 14, 2020. 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.
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.
The Board of Directors recommends a vote “FOR” the election of Directors, “FOR” Items 2 and 3, and FOR “1 YEAR” on Item 4.
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Signature [PLEASE SIGN WITHIN BOX] | Date | |||||||||||||||||||
Signature (Joint Owners) | Date | |||||||||||||||||||
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice of Meeting, Proxy Statement, and Proxy Card are available at www.proxyvote.com.
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PROXY CARD AND VOTING INSTRUCTIONS FOR VIRTUAL MEETING | ||||||||
This is a proxy card for shares of Common Stock you hold directly and voting instructions to the depositary for depositary shares representing Series A, Class B Preferred Stock you hold directly. | ||||||||
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The undersigned hereby appoints Emerson 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 FOR HOLDERS OF DEPOSITARY SHARES REPRESENTING INTERESTS IN FIFTH THIRD BANCORP 6.00% NON-CUMULATIVE PERPETUAL CLASS B PREFERRED STOCK, SERIES A (THE “SERIES A, CLASS B PREFERRED STOCK”): All of the outstanding shares of Fifth Third Bancorp Series A, Class B preferred stock are held of record and will be voted at the Annual Meeting by American Stock Transfer & Trust Company, LLC, as depositary, in accordance with instructions received from the record holders of the depositary shares issued with respect to the Series A, Class B preferred stock. The Series A, Class B preferred stock is entitled to 24 votes per share, and each outstanding depositary share represents 1/40 of a share of Series A, Class B preferred stock. The depositary will vote the Series A, Class B preferred stock represented by all depositary shares held by the person(s) whose signature(s) appear on the reverse side of this proxy card in accordance with instructions indicated on the reverse side of this card by such holder. The depositary will not vote Series A, Class B preferred stock represented by depositary shares for which the holder has not returned voting instructions. Holders of depositary shares may not vote directly at the Annual Meeting. In their discretion, the PROXIES and the depositary holding the Series A, Class B Preferred Stock are authorized to vote upon such other business as may properly come before the meeting. These shares represented by this proxy and these voting instructions when executed will be voted in the manner directed herein by the undersigned. If no direction is made, the shares represented by this proxy and these voting instructions will be voted FOR the election of Directors, FOR Items 2, 3, and 4. (Continued, and please sign on reverse side.) | |||
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(Continued, and please sign on reverse side.)
