What are the key changes to executive compensation for 2007?

The primary change is the establishment of new performance goals and criteria for annual incentive awards under the 1996 Executive Incentive Award Plan. The calculation of the compensation pool and the payout structure, involving a mix of cash and restricted stock with a vesting period, have also been detailed.

How will executive bonuses be determined for 2007?

Bonuses will be determined based on a compensation pool set at a maximum of 0.2% of PNC's adjusted pre-tax net income. This pool will be subject to downward adjustments based on factors like earnings per share (EPS) targets, return on assets (ROA) and equity (ROE) compared to peers, business unit performance, and individual executive performance. Specific adjustments will exclude costs related to BlackRock and the proposed Mercantile acquisition.

What is the significance of the amendment to the shareholder rights plan?

PNC's Board accelerated the expiration date of its shareholder rights plan from May 25, 2010, to February 28, 2007. This means that the rights issued under the plan will expire shortly, and the plan itself will cease to be in effect. This action could potentially affect future corporate actions or takeover defenses.

What is the special award granted to William S. Demchak?

William S. Demchak received a performance unit incentive award tied to the performance of PNC's asset and liability (A&L) management function. This award has a three-year performance period (2007-2009) and a payout potential of up to 200% of the target award, based on the A&L unit's financial returns relative to a benchmark. The payout will be in cash and is subject to his continued employment and the committee's discretion.

PNC 8-K: Material Agreements & Shareholder Matters

Summary

This 8-K filing from PNC Financial Services Group, Inc. details significant actions taken by its Personnel and Compensation Committee regarding executive compensation for the 2007 award period. The committee established performance goals and business criteria for annual incentive awards under the 1996 Executive Incentive Award Plan, which will be submitted for shareholder approval. A key aspect is the calculation of the compensation pool, based on a percentage of adjusted pre-tax net income, and the factors influencing downward adjustments, including earnings per share (EPS) targets adjusted for specific items like the BlackRock obligation and acquisition costs. The structure of award payouts, combining cash and restricted stock with a vesting period, is also outlined.

Key Highlights

1The Compensation Committee set performance goals for 2007 annual incentive awards for top executives under the 1996 plan.
2Awards for the top five executives will be based on a compensation pool calculated as a maximum of 0.2% of adjusted consolidated pre-tax net income.
3Performance goals include adjusted EPS targets, relative performance against peers (ROA, ROE), business unit performance, and individual executive assessment.
4The 1996 plan, as amended, will be submitted to shareholders for approval at the 2007 annual meeting.
52007 annual incentive awards will be paid in a mix of cash (75%) and restricted stock/units (25%), with the stock portion subject to a three-year vesting period.
6William S. Demchak received a special performance unit grant tied to the performance of the asset and liability (A&L) management function over a three-year period (2007-2009).
7PNC's Board amended its Rights Agreement to accelerate the expiration of outstanding shareholder rights from May 25, 2010, to February 28, 2007, effectively terminating the shareholder rights plan.

PNC FINANCIAL SERVICES GROUP, INC. 8-K Report, Material Agreement (Feb 20, 2007)

Summary

Key Highlights

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