What are the main changes to BB&T's executive compensation for 2017?

The primary changes involve a significant shift in the structure of long-term incentives. BB&T has increased the proportion of Performance Share Units (PSUs) to 50% of all equity awards, eliminated stock options, and incorporated a Total Shareholder Return (TSR) modifier into both PSU and Long-Term Incentive Performance Award (LTIP) programs. These changes aim to enhance long-term alignment with shareholder value creation.

How does the new PSU structure link pay to performance?

PSUs are designed with a three-year performance period and are subject to a Return on Common Equity (ROCE) metric measured against a peer group. Performance at the 50th percentile relative to peers yields a 100% payout, with potential for up to 125% at higher performance levels. Additionally, a TSR modifier can further adjust payouts based on BB&T's TSR performance relative to peers, and all awards are subject to a performance hurdle and risk-based vesting, including potential forfeiture for operating losses or negative risk outcomes.

Why did BB&T eliminate stock options?

The elimination of stock options was a direct response to shareholder feedback. The company is shifting its long-term incentive focus towards PSUs and LTIPs, which are more directly tied to specific performance metrics like ROCE and TSR, thereby better aligning executive compensation with shareholder interests and outcomes.

What are the key performance hurdles for the long-term incentive awards?

For PSUs, BB&T must first achieve an average ROCE performance hurdle of at least 3% for any payout to be earned. Furthermore, 100% of the long-term incentive awards are subject to risk-based vesting criteria and can be reduced or forfeited if there is an aggregate operating loss for the performance period or if a negative risk outcome occurs.

TRUIST FINANCIAL CORP 8-K: Leadership Changes

Summary

This 8-K filing from Truist Financial Corp (TFC), formerly BB&T Corporation, details significant changes to its executive compensation program, effective for the 2017 grant year. The Compensation Committee, in response to shareholder feedback, has reoriented the long-term incentive plan to emphasize performance-based awards. Key changes include a shift towards Performance Share Units (PSUs), which will now constitute 50% of all equity awards, and the elimination of stock options entirely. The enhanced program aims to align executive pay more closely with shareholder interests by incorporating robust performance criteria and risk-based vesting. The new structure subjects 100% of long-term incentives to performance hurdles and includes a Total Shareholder Return (TSR) modifier that can adjust payouts based on the company's TSR relative to its peers. This signifies a stronger commitment to performance-driven compensation and a move away from traditional option grants.

Key Highlights

150% of 2017 equity awards granted as Performance Share Units (PSUs), with the remainder as Restricted Stock Units (RSUs).
2Elimination of stock options for 2017 equity awards, a direct response to shareholder feedback.
3Inclusion of a Total Shareholder Return (TSR) modifier in the Long-Term Incentive Plan (LTIP), impacting payouts based on relative TSR performance.
4Two-thirds of 2017 long-term incentives (PSUs and LTIP) are now subject to rigorous performance criteria.
5100% of long-term incentives for 2017 are tied to performance hurdles and risk-based vesting requirements.
6PSUs performance metrics include Return on Common Equity (ROCE) relative to peers and a TSR modifier, with a maximum payout of 125%.
7No base salary increases for named executive officers in 2017, and RSU terms remain unchanged from 2016.

TRUIST FINANCIAL CORP 8-K Report, Executive Changes (Feb 22, 2017)

Summary

Key Highlights

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