Summary
PNC Financial Services Group, Inc. (PNC) filed an 8-K on January 26, 2006, detailing significant updates regarding its executive compensation and corporate governance. The primary focus is the authorization of new incentive share and performance unit award opportunities for 2006 under the company's 1997 Long-Term Incentive Award Plan. These awards are tied to the achievement of corporate performance goals, specifically earnings per share growth and return on average common shareholders' equity relative to peers, over a three-year performance period ending December 31, 2008. Additionally, PNC announced amendments to its Corporate Governance Guidelines, effective January 5, 2006. In uncontested director elections, any nominee receiving more 'withheld' votes than 'for' votes will be required to tender their resignation. The Nominating and Governance Committee will then review and recommend to the Board whether to accept or reject the resignation within 90 days.
Key Highlights
- 1PNC has authorized new long-term incentive awards for 2006, comprising incentive shares and performance units, for selected executive officers and senior managers.
- 2These awards are subject to performance-based vesting over a three-year period (January 1, 2006 - December 31, 2008).
- 3Performance metrics for the awards include PNC's earnings per share (EPS) growth and return on average common shareholders' equity (ROE), measured relative to a peer group.
- 4The maximum potential award is 200% of the target shares/units, with incentive shares vesting at target performance and performance units offering a premium for exceeding target performance, payable in cash.
- 5PNC is shifting from triennial grants of incentive shares to smaller, annual grants of incentive share/performance unit opportunities to enhance flexibility.
- 6The company is discontinuing the annual grant of restricted stock as a long-term compensation component for this executive group, though it may still be granted on an individual basis.
- 7Amendments to Corporate Governance Guidelines require directors in uncontested elections to tender their resignation if they receive more 'withheld' votes than 'for' votes.