Section 5.02. departure of directors or certain managers; Election of directors; Appointment of certain leaders; Compensatory provisions of certain executives.
(e) OnJune 13, 2022 (the "Effective Date"), theHuman Resources Committee ("Committee") of the Board of Directors ofThe PNC Financial Services Group, Inc. ("PNC") approved grants of performance-based restricted stock units ("PRSUs") with a five-year performance period to three executives (each grant, a "Leadership Continuity Award") based on the following dollar values (at target). The number of PRSUs granted to each of the following executives was determined by dividing the dollar value of the applicable Leadership Continuity Award by the closing price of a share of PNC Common Stock on the Effective Date ($155.53 per share): Executive Officer Title Dollar Value of Grant Number of PRSUs (At Target) (At Target) Michael P. Lyons Executive Vice President and$10.8 million 69,440 Head of Corporate & Institutional Banking E William Parsley, III Executive Vice President and$10.2 million 65,583 Chief Operating Officer Robert Q. Reilly Executive Vice President and$5.5 million 35,363 Chief Financial Officer In granting the Leadership Continuity Awards, the Committee intends to address three key objectives: (1) ensuring leadership continuity to support the CEO in executing the organization's strategic priorities over the next several years; (2) increasing PNC's ability to retain senior leadership in a highly competitive environment; and (3) strengthening the alignment between compensation and long-term shareholder value creation. The Leadership Continuity Award is a stock-based award subject to the vesting conditions described below. The Leadership Continuity Award is separate from the annual or long-term incentive compensation awards that may be granted by the Committee to each executive following the completion of the 2022 performance year. The terms and conditions of the Leadership Continuity Award were developed with input from the Committee's independent compensation consultant. The Committee established a performance-based metric for the Leadership Continuity Award tied to PNC's total shareholder return ("TSR") as compared to a peer group. The overall payout percentage of the Leadership Continuity Award, and the amount realized by each executive, will be based on PNC's performance against such relative TSR goal and may be adjusted downward at the discretion of the Committee based on the executive's individual performance. The maximum payout percentage may not exceed 125% of the target award and will require relative TSR outperformance by PNC, as described in the chart below. In the event PNC's absolute TSR is negative at the end of the performance period, the maximum payout percentage may not exceed 100%.
Vesting will be determined over a five-year performance period beginning on the Effective Date, with the following adjustments for relative TSR performance:
Percentile Performance of PNC TSR Relative to Peer Percent Increase or Reduction in Payout
Group
?25th percentile 25% reduction
50th percentile Target (no reduction)
?75th percentile 25% increase
PNC’s closing share price on the Effective Date will be used to calculate achievement of the relative TSR target. The initial peer group for the relative TSR metric is the same as the peer group described in PNC’s 2022 definitive proxy statement on Schedule 14A, which has been filed with the
The Leadership Continuity Award is also subject to the same risk-related
performance metric and review to which the executives are subject under their
2021 Performance Share Unit ("PSU") awards, as described in the 2022 Proxy. A
form of award agreement for the 2021 PSU awards is attached as Exhibit 10.26 to
PNC's Annual Report on Form 10-K for the fiscal year ended December 31, 2021 ,
which was filed with the SEC on February 5, 2022 (the "2021 Form 10-K").
Vesting is subject to continuous service with PNC until the end of the five-year
performance period (i.e., June 13, 2027 ), with limited exceptions as set forth
in the applicable award agreement and PNC's 2016 Incentive Award Plan (the
"IAP"), including upon death and disability. In addition, in the event (1) PNC
terminates the executive's employment without Cause during the performance
period (as defined in the IAP), or (2) the executive terminates his employment
with PNC by reason of a qualifying retirement at any time following the third
anniversary of the Effective Date, the Committee has the discretion to continue
vesting all or a portion of the
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Leadership Continuity Award. In both cases, the payment timing and final payout
percentages remain the same as though the executive had remained employed during
the entire performance period.
Amounts earned under the Leadership Continuity Award will be settled in shares
of PNC Common Stock to be delivered following the end of the performance period,
along with dividend equivalent rights that have accrued throughout the
performance period. These shares will be subject to the forfeiture and clawback
provisions applicable to equity-based awards as set forth in PNC's Incentive
Compensation Adjustment and Clawback Policy.
This summary of the Leadership Continuity Award is qualified in its entirety by
reference to the applicable award agreement, which PNC will file as an exhibit
to its Quarterly Report on Form 10-Q for the fiscal quarter ending June 30,
2022 , and to the IAP, which is included as Exhibit 10.7 to the 2021 Form 10-K.
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