What are the primary components of executive compensation for 2006 at PNC?

For 2006, executive compensation includes annual incentive awards tied to company performance (pre-tax net income, EPS, ROE) and individual performance. Additionally, specific long-term incentives and restricted stock awards were granted, particularly to William S. Demchak, linked to the performance of the asset and liability management function.

How will the 2006 annual incentive awards be structured and paid?

The compensation pool for the top five executives will be 0.5% of PNC's 2006 consolidated pre-tax net income. Payouts will be determined based on established performance goals and may be adjusted downwards. For awards approved in Q1 2007, 75% will be paid in cash and 25% in restricted stock or units with a three-year vesting period.

What were the results of the 2003 and 2004 incentive share awards?

The Personnel and Compensation Committee determined that the maximum number of shares permitted under the 2003 and 2004 incentive share programs were awarded due to performance achievements. This resulted in payouts to key executives, with awards split between unrestricted and restricted shares, subject to a restriction period through December 31, 2006.

What is the significance of the performance unit award to William S. Demchak?

The performance unit award to Mr. Demchak is an additional incentive tied to the success of PNC's asset and liability management unit over a three-year period (2006-2008). It reflects his expanded role and the importance of this function to the company. The award has a target of 30,000 share units with a maximum payout of 200% of target, paid in cash based on PNC's stock price.

PNC 8-K: Material Agreements

Summary

This 8-K filing from PNC Financial Services Group, Inc., dated February 21, 2006, details the actions taken by its Personnel and Compensation Committee on February 14, 2006, regarding executive compensation for the 2006 award period and the payout of previously granted incentive awards. The report outlines the establishment of performance goals and award structures for the 2006 fiscal year, including an annual incentive award plan for key executives tied to consolidated pre-tax net income and individual performance metrics. It also details a new performance unit incentive opportunity for William S. Demchak, linked to the performance of PNC's asset and liability management unit. Furthermore, the filing reports the payout of 2003 and 2004 incentive share awards to top executives based on achieved corporate performance targets.

Key Highlights

1PNC established performance goals and business criteria for executive annual incentive awards for the 2006 award period, based on factors like EPS, return on equity, and business financial performance.
2The 2006 annual incentive compensation pool for the top five executives is set at 0.5% of PNC's 2006 consolidated pre-tax net income, with individual awards subject to downward adjustment based on performance.
3A new 2006 performance unit incentive award opportunity was granted to William S. Demchak, tied to the performance of PNC's asset and liability management unit over a three-year period.
4Mr. Demchak also received a grant of 52,000 restricted shares of PNC common stock as recognition for his leadership in the asset and liability management function.
5The filing confirms the payout of maximum allowable shares for the 2003 and 2004 incentive share award programs, based on achieving 139% of the dividend-adjusted target for the 2004 program.
6Specific share payouts for the 2003/2004 programs were disclosed for James E. Rohr (165,235 shares), Joseph C. Guyaux (90,128 shares), William S. Demchak (75,107 shares), Timothy G. Shack (67,596 shares), and Thomas K. Whitford (67,596 shares).
7Awards approved in Q1 2007 for 2006 will be paid in a combination of cash (75%) and restricted stock or units (25%), with the restricted portion subject to a three-year vesting period.

PNC FINANCIAL SERVICES GROUP, INC. 8-K Report, Material Agreement (Feb 21, 2006)

Summary

Key Highlights

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