8-KMaterial Agreements

PNC FINANCIAL SERVICES GROUP, INC. 8-K Report, Material Agreement (Mar 24, 2006)

Filed March 24, 2006For Securities:PNC

Summary

PNC Financial Services Group, Inc. filed this 8-K on March 24, 2006, to report on the finalization of corporate performance goals for long-term incentive awards granted in 2006. These grants, made under the 1997 Long-Term Incentive Award Plan, are designed to qualify as performance-based compensation under Section 162(m) of the Internal Revenue Code. The report details that for the primary incentive share/performance unit grants made to executive and senior officers in January and February 2006, the Personnel and Compensation Committee finalized performance goals based on PNC's Earnings Per Share (EPS) growth and Return on Average Common Shareholders' Equity (ROCE), measured relative to peer performance over a three-year period (2006-2008). Payouts will be contingent on achieving specific thresholds for both EPS and ROCE, with a potential award range of 40% to 200% of target shares, subject to committee discretion.

Key Highlights

  • 1PNC finalized corporate performance goals for 2006 long-term incentive grants on March 21, 2006.
  • 2Incentive grants were made to executive and senior officers in January and February 2006.
  • 3Performance goals are based on PNC's Earnings Per Share (EPS) growth and Return on Average Common Shareholders' Equity (ROCE) relative to peer performance over a three-year period (2006-2008).
  • 4Potential awards for these grants range from 40% to 200% of target shares, contingent on achieving defined performance levels.
  • 5A separate performance unit grant for a Vice Chairman recognizes additional oversight of the Asset and Liability (A&L) management function, with goals tied to A&L unit financial returns compared to benchmarks.
  • 6Payouts for all grants are subject to the Committee's negative discretion and the employee's continued employment at the time of determination (with exceptions).
  • 7The filing ensures these awards are structured to qualify as performance-based compensation under Section 162(m) of the Internal Revenue Code.

Frequently Asked Questions

The primary purpose of this 8-K filing is to report that PNC Financial Services Group, Inc. has finalized the corporate performance goals for long-term incentive awards granted to its executives and senior officers in early 2006. These goals are crucial for determining the payout of these awards.

The payouts for the primary incentive share/performance unit grants will be based on PNC's performance relative to its peers in two key areas: Earnings Per Share (EPS) growth and Return on Average Common Shareholders' Equity (ROCE). Performance will be measured over a three-year period (2006-2008).

The potential award size for the executive and senior officer grants can range from 40% of the target shares at a threshold performance level up to a maximum of 200% of the target shares. The actual payout is subject to achieving specific performance levels and the discretion of the Personnel and Compensation Committee.

The grant for the Vice Chairman, recognized for his oversight of the A&L management function, is a performance unit grant with payout goals tied to the financial returns of the A&L unit compared to an internal benchmark. This grant is expected to be paid in cash, unlike the primary grants which may be paid in shares and then cash.