Summary
PNC Financial Services Group, Inc. (PNC) filed an 8-K on September 12, 2008, to report on changes to its executive compensation arrangements, specifically the adoption of new Change of Control Employment Agreements. These new agreements replace previously disclosed severance agreements and are designed to comply with Section 409A of the Internal Revenue Code. The primary goal of this filing is to inform investors about the updated terms governing executive compensation in the event of a change in control of the company.
Key Highlights
- 1PNC has adopted new Change of Control Employment Agreements for its named executive officers, effective September 9, 2008.
- 2These new agreements replace the previously disclosed Change in Control Severance Agreements.
- 3The primary driver for the change is to ensure compliance with Section 409A of the Internal Revenue Code.
- 4While largely similar, the new agreements generally reduce or eliminate some payments and benefits compared to the prior agreements.
- 5A key modification is the reduction of the severance pay multiple to 1.5 times salary and bonus upon reaching age 65, a change from the prior agreement's more complex calculation.
- 6The new agreements clarify the specifics of rights and obligations upon a change of control, structured as employment agreements rather than severance agreements.
- 7The company estimates that, had these agreements been in place as of December 31, 2007, the aggregate severance and benefits for the top five executives would have decreased by $18.2 million, including a $11.0 million reduction in excise tax gross-up.