DEF 14A of PNC Financial Services Group, Inc.
Filed Mar 13, 2024 · FY20230001193125-24-066850
Corporate Governance Highlights
Corporate Governance Highlights
Corporate Governance Highlights
| ∎ | Snapshot of corporate governance practices |
Corporate Governance Highlights
| Annual elections: | ∎ The entire Board is elected each year; we have no staggered elections. | | Majority vote standard: | ∎ The election of directors is subject to a majority voting requirement; any director who does not receive a majority of the votes cast in an uncontested election must tender his or her resignation to the Board. | | Robust independent oversight: | ∎ Our corporate governance guidelines require the Board to have a substantial majority (at least two-thirds) of independent directors. All of our current directors and nominees to the Board are independent, except our CEO. ∎ The Board regularly holds executive sessions of its independent directors, with no members of management present. ∎ All of our Board committees with specific areas of responsibility, except for the Risk Committee, are comprised entirely of directors who are independent under applicable standards. The membership of both the CEO and the Presiding Director on the Risk Committee enables them to maintain engagement and proficiency with the risk management process. | | Independent Board leadership: | ∎ The Board has a Presiding Director who serves as the lead independent director. ∎ The Presiding Director has specific duties relating to Board operations and governance, including approval of Board meeting agendas. |
Corporate Governance Highlights
| ii | THE PNC FINANCIAL SERVICES GROUP, INC. - 2024 Proxy Statement |
Corporate Governance Highlights
| Well-developed committee structure: | ∎ To operate more effectively, the Board conducts certain oversight and governing activities through a robust committee structure. The Board currently has seven committees focused on distinct areas of responsibility, as delineated below. | | | | Audit Committee Human Resources Committee Nominating and Governance Committee Risk Committee | Corporate Responsibility Committee Technology Committee Compliance Subcommittee | | Corporate responsibility and climate risk oversight: | ∎ The Board reviews PNC’s corporate responsibility strategic plan annually and receives updates on corporate responsibility matters at least quarterly. ∎ The Risk Committee additionally receives regular reports from management on climate-related risks. | | | CEO / senior executive succession planning: | ∎ Succession planning encompasses both long-term succession scenarios and contingencies or unplanned scenarios. ∎ At least annually, the Human Resources Committee reviews a detailed succession planning report from PNC’s talent management function. The report typically includes a discussion of the individual performance of each executive officer, as well as succession plans and development initiatives for other emerging talent. | | | Director education: | ∎ All new directors undergo a director orientation program, which includes written materials and personalized orientation sessions. ∎ Our continuing education program takes into account directors’ knowledge and experience and our risk profile, and includes training on complex products and services, our lines of business, significant risks to the company, applicable laws, regulations and supervisory requirements, and other relevant topics, as identified by the Board and members of senior management. | | | Board evaluations: | ∎ The Board and its committees and subcommittee each conduct a self-evaluation annually under the oversight of the Nominating and Governance Committee. Feedback is obtained through discussions among the Board, committee, and subcommittee members. Appropriate action plans are then developed to implement enhancements and other changes based on the feedback received. | | | Retirement policy: | ∎ The Board has set age 72 as the mandatory retirement age for directors, subject to waiver. | | | Directors’ external commitments: | ∎ Audit Committee members may not serve on the audit committees of more than three public companies, including PNC. ∎ The Board will consider a director’s availability to fulfill his or her responsibilities as a director if he or she serves on more than three other public company boards. | | | Shareholder engagement: | ∎ During 2023, we engaged with 210 unique firms representing approximately 50% of the ownership of our outstanding common stock. These discussions included participation from our investor relations team as well as our CEO and CFO, line of business leaders, and technology, risk, corporate responsibility, corporate governance and human resources teams. Management regularly reports to the independent directors regarding investor discussions and feedback on topics of interest. | |
Corporate Governance Highlights
| THE PNC FINANCIAL SERVICES GROUP, INC. - 2024 Proxy Statement | iii |
Corporate Governance Highlights
| ∎ | Snapshot of 2024 Board nominees |
Corporate Governance Highlights
| Name | Age | Director since | Independent | Committee & Subcommittee Memberships | Other Public Co. Boards | | Joseph Alvarado Former Chairman and CEO, Commercial Metals Company | 71 | 2019 | | Audit; Corporate Responsibility; Compliance | 3 | | Debra A. Cafaro Chairman and CEO, Ventas, Inc. | 66 | 2017 | | Audit; Human Resources (Chair) | 1 | | Marjorie Rodgers Cheshire Principal, A&R Development Corp. | 55 | 2014 | | Nominating and Governance; Risk; Corporate Responsibility (Chair); Compliance (Chair) | 1 | | William S. Demchak Chairman and CEO, The PNC Financial Services Group, Inc. | 61 | 2013 | — | Risk | — | | Andrew T. Feldstein (Presiding Director) Former CEO, BlueMountain Capital Management | 59 | 2013 | | Human Resources; Nominating and Governance (Chair); Risk; Corporate Responsibility | — | | Richard J. Harshman Former Chairman, CEO and President, Allegheny Technologies Incorporated (n/k/a ATI Inc.) | 67 | 2019 | | Audit (Chair); Human Resources; Nominating and Governance; Corporate Responsibility | 1 | | Daniel R. Hesse Former President and CEO, Sprint Corporation | 70 | 2016 | | Nominating and Governance; Risk; Technology (Chair) | 1 | | Renu Khator Chancellor, University of Houston System and President, University of Houston | 68 | 2022 | | Audit; Nominating and Governance | 1 | | Linda R. Medler Retired Brigadier General, United States Air Force and Founder, President and CEO, L A Medler & Associates, LLC | 67 | 2018 | | Risk; Technology; Compliance | 1 | | Robert A. Niblock Former Chairman, President and CEO, Lowe’s Companies, Inc. | 61 | 2022 | | Audit; Human Resources | 2 | | Martin Pfinsgraff Retired Senior Deputy Comptroller Large Bank Supervision, Office of the Comptroller of the Currency | 69 | 2018 | | Audit; Risk (Chair); Compliance | — | | Bryan S. Salesky Co-Founder and CEO, Stack AV Co. | 43 | 2021 | | Corporate Responsibility; Technology | — |
Corporate Governance Highlights
| iv | THE PNC FINANCIAL SERVICES GROUP, INC. - 2024 Proxy Statement |
Corporate Governance Highlights
| ∎ | Snapshot of Board diversity |
Corporate Governance Highlights
We strive for an effective board culture based on robust independent oversight. Consistent with this objective, we value diversity of perspective, experience, knowledge, education, age and skills among our Board members and maintain a commitment to periodic refreshment of Board membership. The charts below provide certain demographic information about this year’s nominees. For more information about our nominees and the composition of our Board, see “Item 1—Election of Directors.”
Corporate Governance Highlights
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Executive Compensation Highlights
| (1) Under SEC regulations, the incentive compensation amounts disclosed in the Summary compensation table on page 79 include the annual cash incentive award paid in 2024 for 2023 performance (the “Non-Equity Incentive Plan Compensation” column) and the long-term equity-based incentive award granted in 2023 for 2022 performance (the “Stock Awards” column). The amounts shown in the “Stock Awards” column of the Summary compensation table differ slightly from the amounts shown in the table above due to the impact of rounding related to fractional shares. |
Vote your shares
| Grants of plan-based awards in fiscal 2023 | 81 | | Outstanding equity awards at 2023 fiscal year-end | 82 | | Option exercises and stock vested in fiscal 2023 | 85 | | Pension benefits at 2023 fiscal year-end | 86 | | Non-qualified deferred compensation in fiscal 2023 | 88 | | CHANGE IN CONTROL AND TERMINATION OF EMPLOYMENT | 91 | | Benefits upon termination of employment | 91 | | Change of control agreements | 91 | | Equity-based grants | 92 | | Existing plans and arrangements | 93 | | Estimated benefits upon termination | 94 | | CEO PAY RATIO | 96 | | PAY VERSUS PERFORMANCE | 97 | | SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS | 102 | | Security ownership of directors and executive officers | 102 | | Security ownership of certain beneficial owners | 103 | | ITEM 2 — RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | 104 | | Audit, audit-related and permitted non-audit fees | 105 | | Procedures for pre-approving audit services, audit-related services and permitted non-audit services | 106 | | AUDIT COMMITTEE REPORT | 107 | | ITEM 3 — ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION | 108 | | ITEM 4 — APPROVAL OF THE PNC FINANCIAL SERVICES GROUP, INC. 2025 EMPLOYEE STOCK PURCHASE PLAN | 109 | | Equity Compensation Plan Information | 113 | | ITEM 5 — SHAREHOLDER PROPOSAL REGARDING REPORT ON RISK MANAGEMENT AND IMPLEMENTATION OF PNC’S HUMAN RIGHTS STATEMENT | 114 | | GENERAL INFORMATION | 119 | | Voting your shares | 119 | | How a proposal gets approved | 122 | | Participating in the annual meeting | 124 | | About our proxy materials | 125 | | SHAREHOLDER PROPOSALS FOR THE 2025 ANNUAL MEETING | 126 | | OTHER MATTERS | 127 | | ANNEX A — NON-GAAP TO GAAP RECONCILIATIONS | A-1 | | ANNEX B — THE PNC FINANCIAL SERVICES GROUP, INC. 2025 EMPLOYEE STOCK PURCHASE PLAN | B-1 | | ANNEX C — REGULATIONS FOR CONDUCT AT ANNUAL MEETING | C-1 |
Board composition and attributes
Board composition and attributes The slate of director nominees for the 2024 annual meeting was developed by the Board with the assistance of its Nominating and Governance Committee. The Board and its Nominating and Governance Committee consider Board composition holistically; their goal is to assure that the Board, as PNC’s highest governing body, has the experience, qualities, attributes and skills needed to enable effective oversight of PNC and its strategic direction. Accordingly, our slate of director nominees includes senior leaders with substantial experience in technology, cybersecurity, financial services, regulatory affairs, risk management, operations and strategic planning, finance and accounting, marketing and branding, corporate responsibility matters, talent management and succession planning. We also recognize the value of a Board that is diverse in perspectives and experience. We understand that a diverse board helps us reach better decisions and achieve better outcomes for our employees, customers and communities. In developing the slate of director nominees, the Nominating and Governance Committee considered demographic, cognitive, gender and ethnic diversity, as well as breadth of background, skills and experience and the incumbent directors’ contributions to the effectiveness of the Board. As of our 2024 annual meeting, the average tenure on our Board (including our CEO) will be approximately 6 years. The Board’s commitment to regular refreshment of its membership is evidenced by the addition of 13 new directors and 11 director retirements since our 2015 annual meeting of shareholders.
Board composition and attributes
| THE PNC FINANCIAL SERVICES GROUP, INC. - 2024 Proxy Statement | 5 |
Board composition and attributes
| Board diversity We believe a combination of newer and longer-tenured members as well as a range of backgrounds and overall experience help to maintain an effective board culture that is based on robust independent oversight. | |
Board composition and attributes
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Board composition and attributes
| 6 | THE PNC FINANCIAL SERVICES GROUP, INC. - 2024 Proxy Statement |
Board composition and attributes
The graphic below highlights the skills, experience and demographics of the Board as composed of our 12 director nominees. Each nominee, except Mr. Demchak, our CEO, is an independent director. For a discussion of the criteria PNC uses to determine director independence, see “Director and Executive Officer Relationships—Director independence” in this proxy statement.
Board composition and attributes
| | | | | | | | | | | | | | | Knowledge, Skills and Experience | | | | | | | | | | | | | | Large institution leadership | ∎ | ∎ | ∎ | ∎ | ∎ | ∎ | ∎ | ∎ | ∎ | ∎ | ∎ | ∎ | | Public company board | ∎ | ∎ | ∎ | ∎ | | ∎ | ∎ | ∎ | ∎ | ∎ | | | | Regulatory / risk management | | ∎ | ∎ | ∎ | ∎ | | ∎ | ∎ | ∎ | | ∎ | | | Finance / accounting / audit | ∎ | ∎ | | ∎ | | ∎ | | ∎ | | ∎ | ∎ | | | Financial services | | ∎ | | ∎ | ∎ | | | ∎ | | | ∎ | | | Marketing / branding / retail | | | ∎ | ∎ | | | ∎ | | | ∎ | | ∎ | | Corporate responsibility | ∎ | ∎ | ∎ | | ∎ | ∎ | ∎ | ∎ | | | | | | Technology / cybersecurity | | | | | | | ∎ | | ∎ | | ∎ | ∎ | | Talent management / succession planning | ∎ | ∎ | ∎ | ∎ | ∎ | ∎ | ∎ | ∎ | ∎ | ∎ | ∎ | ∎ | | Demographic Background | | | | | | | | | | | | | | Tenure (Years)* | 5 | 6 | 9 | 11 | 10 | 5 | 8 | 1 | 6 | 2 | 6 | 2 | | Age (Years)* | 71 | 66 | 55 | 61 | 59 | 67 | 70 | 68 | 67 | 61 | 69 | 43 | | Gender (Male / Female) | M | F | F | M | M | M | M | F | F | M | M | M | | Race / Ethnicity | | | | | | | | | | | | | | African American / Black | | | ∎ | | | | | | | | | | | Alaskan Native / Native American | | | | | | | | | | | | | | Asian, including South Asian | | | | | | | | ∎ | | | | | | Hispanic / Latino | ∎ | | | | | | | | | | | | | Native Hawaiian or Pacific Islander | | | | | | | | | | | | | | White | | ∎ | | ∎ | ∎ | ∎ | ∎ | | ∎ | ∎ | ∎ | ∎ | | Two or more races or ethnicities | | | | | | | | | | | | |
Board composition and attributes
| * As of April 24, 2024 |
Board composition and attributes
| THE PNC FINANCIAL SERVICES GROUP, INC. - 2024 Proxy Statement | 7 |
Board composition and attributes
| | Joseph Alvarado Director Since 2019 Age 71 Independent | Board committees / subcommittee: ∎ Audit ∎ Corporate Responsibility ∎ Compliance |
Board composition and attributes
Joseph Alvarado is the former Chairman, President and Chief Executive Officer of Commercial Metals Company (“CMC”), a Fortune 500 global metals company that under his leadership was active in recycling, manufacturing, fabricating and trading. In this role, Mr. Alvarado was responsible for the overall strategic leadership of CMC, with nearly 9,000 employees and operations in over 200 locations in more than 20 countries. Mr. Alvarado served as Chairman, President and CEO of CMC for approximately seven years, retiring in 2018. Mr. Alvarado previously served as Executive Vice President and Chief Operating Officer of CMC from 2010 to 2011, during which time he had full profit and loss and operating responsibility for the company’s diverse global businesses. Prior to his career with CMC, Mr. Alvarado was an Operating Partner for Wingate Partners and The Edgewater Funds from 2009 to 2010, where he consulted on new deal evaluation and portfolio company management. Mr. Alvarado worked for a number of other businesses throughout his career of more than four decades within the steel, metal processing, energy and chemical industries. Mr. Alvarado held the position of President at United States Steel Tubular Products, Inc. from 2007 to 2009; President and Chief Operating Officer at Lone Star Technologies from 2004 to 2007; Vice President, Long Product Sales and Marketing, North America at ArcelorMittal from 1998 to 2004; and Executive Vice President, Commercial for Birmingham Steel from 1997 to 1998. Mr. Alvarado also held various positions at Inland Steel Company from 1976 to 1997, ultimately serving as President, Inland Steel Bar Company (a division of Inland Steel Company) from 1995 to 1997. Mr. Alvarado received a BA in Economics from the University of Notre Dame and an MBA from Cornell University’s SC Johnson Graduate School of Management.
Board composition and attributes
| ∎ | Experience, Qualifications, Attributes or Skills: |
Board composition and attributes
The Board values Mr. Alvarado’s extensive business knowledge and experience in accounting, sales, manufacturing, planning and global operations.
Board composition and attributes
| ∎ | Other Public Company Directorships (within past five years): |
Board composition and attributes
Arcosa, Inc. Kennametal, Inc. Trinseo PLC
Board composition and attributes
| 8 | THE PNC FINANCIAL SERVICES GROUP, INC. - 2024 Proxy Statement |
Board composition and attributes
| | Debra A. Cafaro Director Since 2017 Age 66 Independent | Board committees: ∎ Audit ∎ Human Resources (Chair) ∎ Executive |
Board composition and attributes
Debra A. Cafaro is Chairman of the Board and Chief Executive Officer of Ventas, Inc. (“Ventas”), an S&P 500 company that is a leading owner of senior housing, healthcare and research properties. Building on her early career in law and 24-year tenure as CEO of Ventas, Ms. Cafaro is broadly engaged across the business, public policy and non-profit sectors. She is a past chair of the Real Estate Roundtable and the Economic Club of Chicago, and is a member of the American Academy of Arts & Sciences and The Business Council. She serves on the boards of the Civic Committee of the Commercial Club of Chicago, the Harvard Kennedy School Taubman Center, the University of Chicago and the Chicago Symphony Orchestra. Ms. Cafaro has been recognized multiple times by Harvard Business Review as one of the top 100 global CEOs and by Modern Healthcare as one of the top 100 leaders in healthcare. Ms. Cafaro received a JD from the University of Chicago Law School and a BA from the University of Notre Dame.
Board composition and attributes
| ∎ | Experience, Qualifications, Attributes or Skills: |
Board composition and attributes
The Board values Ms. Cafaro’s extensive corporate leadership, knowledge and experience. Her years of experience as a public company CEO in the financial sector provide insight into the oversight of financial and accounting matters. Her vision as a strategic thinker adds depth and strength to the Board in its oversight of PNC’s continued growth. The Board also values Ms. Cafaro’s active community involvement.
Board composition and attributes
| ∎ | Other Public Company Directorships (within past five years): |
Board composition and attributes
Ventas, Inc.
Board composition and attributes
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Board composition and attributes
| | Marjorie Rodgers Cheshire Director Since 2014 Age 55 Independent | Board committees / subcommittee: ∎ Nominating and Governance ∎ Risk ∎ Corporate Responsibility (Chair) ∎ Compliance (Chair) |
Board composition and attributes
Marjorie Rodgers Cheshire is a corporate board director and an investor in commercial real estate. She is a Principal of A&R Development Corp. (“A&R”), a diversified real estate investment company that owns and invests in large scale multifamily, mixed use and retail real estate in the Baltimore and Washington, D.C. markets. Ms. Cheshire additionally served as A&R’s President and Chief Operating Officer from 2004 to 2021, and was responsible for the firm’s business operations, asset management and strategic initiatives. Ms. Cheshire also spent many years in senior leadership positions in the media and sports industries. Ms. Cheshire was the Senior Director of Brand & Consumer Marketing for the National Football League, a Vice President of Business Development for Oxygen Media, and a Director and Special Assistant to the Chairman and CEO of ESPN. Early in her career, Ms. Cheshire worked as a consultant at The Boston Consulting Group and in brand management at Nestlé Foods. Ms. Cheshire is chair of the board of Baltimore Equitable Insurance and is a trustee of Johns Hopkins Medicine and Johns Hopkins Hospital. Ms. Cheshire received a BS in Economics from the Wharton School of the University of Pennsylvania and an MBA from the Stanford University Graduate School of Business.
Board composition and attributes
| ∎ | Experience, Qualifications, Attributes or Skills: |
Board composition and attributes
The Board values Ms. Cheshire’s executive management experience and her background in real estate marketing and media, as well as her active involvement in the Baltimore community.
Board composition and attributes
| ∎ | Other Public Company Directorships (within past five years): |
Board composition and attributes
Empowerment & Inclusion Capital I Corp. (until December 2022) Exelon Corporation
Board composition and attributes
| 10 | THE PNC FINANCIAL SERVICES GROUP, INC. - 2024 Proxy Statement |
Board composition and attributes
| | William S. Demchak Director Since 2013 Age 61 Chairman and CEO | Board committees: ∎ Risk ∎ Executive |
Board composition and attributes
William S. Demchak is the Chairman and Chief Executive Officer of PNC, one of the largest diversified financial services companies in the United States. Mr. Demchak joined PNC in 2002 as Chief Financial Officer. In July 2005, he was named head of PNC’s Corporate & Institutional Banking segment responsible for PNC’s middle market and large corporate businesses, as well as capital markets, real estate finance, equity management and leasing. Mr. Demchak was promoted to Senior Vice Chairman in 2009 and named Head of PNC Businesses in August 2010. He held the office of President from April 2012 through February 2024 and has served as Chief Executive Officer since April 2013 and as Chairman since April 2014. Before joining PNC in 2002, Mr. Demchak served as the Global Head of Structured Finance and Credit Portfolio for JPMorgan Chase (“JPMorgan”). He also held key leadership roles at JPMorgan prior to its merger with the Chase Manhattan Corporation in 2000. He was actively involved in developing JPMorgan’s strategic agenda and was a member of the company’s capital and credit risk committees. Mr. Demchak is a member and past chairman of the board of directors of the Bank Policy Institute and is a member of The Business Council and the Federal Advisory Committee for the Federal Reserve. In addition, he is the past chairman of the Allegheny Conference on Community Development and is a member of the boards of directors of the Extra Mile Education Foundation and the Pittsburgh Cultural Trust. Mr. Demchak received a BS from Allegheny College and an MBA from the University of Michigan.
Board composition and attributes
| ∎ | Experience, Qualifications, Attributes or Skills: |
Board composition and attributes
The Board believes that the current CEO should also serve as a director. Under the leadership structure discussed elsewhere in this proxy statement, a CEO-director acts as a liaison between directors and management, and assists the Board in its oversight of the company. Mr. Demchak’s experience and strong leadership provide the Board with insight into the business and strategic priorities of PNC.
Board composition and attributes
| ∎ | Other Public Company Directorships (within past five years): |
Board composition and attributes
BlackRock, Inc. (until May 2020)
Board composition and attributes
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Board composition and attributes
| | Andrew T. Feldstein Director Since 2013 Age 59 Independent Presiding Director | Board committees: ∎ Human Resources ∎ Nominating and Governance (Chair) ∎ Risk ∎ Corporate Responsibility ∎ Executive (Chair) |
Board composition and attributes
Andrew T. Feldstein, our Presiding Director, is the former Chief Executive Officer of BlueMountain Capital Management (now known as Assured Investment Management, a subsidiary of Assured Guaranty) (“BlueMountain”) and was the Chief Investment Officer for both Assured Guaranty and BlueMountain. Under Mr. Feldstein’s leadership, BlueMountain was a leading alternative asset manager with $18 billion in assets under management. Assured Guaranty is a leading provider of financial guaranty insurance. Prior to co-founding BlueMountain in 2003, Mr. Feldstein spent over a decade at JPMorgan where he was a Managing Director and served as Head of Structured Credit, Head of High Yield Sales, Trading and Research, and Head of Global Credit Portfolio. Mr. Feldstein is a trustee of Third Way, a public policy think tank, and a member of the Harvard Law School Leadership Council. Mr. Feldstein received a BA from Georgetown University and a JD from Harvard Law School.
Board composition and attributes
| ∎ | Experience, Qualifications, Attributes or Skills: |
Board composition and attributes
The Board values Mr. Feldstein’s extensive financial and risk management expertise. As founder and former CEO of BlueMountain and through his senior management positions at JPMorgan, Mr. Feldstein built a reputation for innovation and significant insight into risk management. The Board believes these skills are particularly valuable to Mr. Feldstein’s role as Presiding Director and to the Board’s effective oversight of risk management, as well as a valuable resource to PNC as it continues to grow its business and strengthen its balance sheet.
Board composition and attributes
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Board composition and attributes
| | Richard J. Harshman Director Since 2019 Age 67 Independent | Board committees: ∎ Audit (Chair) ∎ Human Resources ∎ Nominating and Governance ∎ Corporate Responsibility ∎ Executive |
Board composition and attributes
Richard J. Harshman is the retired Executive Chairman and former President and Chief Executive Officer of Allegheny Technologies Incorporated (now known as ATI Inc.) (“ATI”), a global manufacturer of technically advanced specialty materials and complex parts and components. Mr. Harshman served as President and CEO of ATI from 2011 through 2018. Mr. Harshman previously served in other roles at ATI, including President and Chief Operating Officer from 2010 to 2011, Executive Vice President and Chief Financial Officer from 2000 to 2010 and other roles of increasing responsibility since 1996. Mr. Harshman began his career as an internal auditor at Teledyne, Inc., a predecessor company to ATI, in 1978. Mr. Harshman is active within the Pittsburgh community, including through his service with several non-profit boards. Mr. Harshman is a member of the Executive Committee of the Board of Trustees of the Pittsburgh Cultural Trust (the “Cultural Trust”) and is the Cultural Trust’s immediate past chair. Mr. Harshman also is a member of the Executive Committee of the Board of Directors of the United Way of Southwestern Pennsylvania. Previously, Mr. Harshman served as the chair of the Allegheny Conference on Community Development and as a member of the board of trustees of Robert Morris University, in addition to his service with other Pittsburgh-based non-profit organizations. Mr. Harshman received a BS in Accounting from Robert Morris University and was previously licensed as a Certified Public Accountant by the California Board of Accountancy.
Board composition and attributes
| ∎ | Experience, Qualifications, Attributes or Skills: |
Board composition and attributes
The Board values Mr. Harshman’s depth of experience with the operational, human capital management, sustainability and financial aspects of leading a public company, including as chief executive officer, chief financial officer and chief operating officer. The Board also values Mr. Harshman’s active involvement in the Pittsburgh community and his prior board leadership experience as the lead independent director for another publicly-traded company.
Board composition and attributes
| ∎ | Other Public Company Directorships (within past five years): |
Board composition and attributes
Allegheny Technologies Incorporated (n/k/a ATI Inc.) (until May 2019) Ameren Corporation
Board composition and attributes
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Board composition and attributes
| | Daniel R. Hesse Director Since 2016 Age 70 Independent | Board committees: ∎ Nominating and Governance ∎ Risk ∎ Technology (Chair) |
Board composition and attributes
Daniel R. Hesse is the former President and Chief Executive Officer of Sprint Corporation (“Sprint”), one of the United States’ largest wireless carriers, serving from 2007 to 2014. A well-known advocate for the conscience-driven corporation and its responsibility in creating an equitable, inclusive and sustainable world, during his tenure as CEO of Sprint, Mr. Hesse was a recipient of the Responsible CEO Lifetime Achievement Award from Corporate Responsibility Magazine. Mr. Hesse received a BA from the University of Notre Dame, an MBA from Cornell University and an MS from Massachusetts Institute of Technology where he was awarded the Brooks Thesis Prize.
Board composition and attributes
| ∎ | Experience, Qualifications, Attributes or Skills: |
Board composition and attributes
Mr. Hesse brings extensive corporate leadership experience to the Board, having served in a variety of executive positions, including as CEO of Sprint. His years of experience in the wireless communications industry provide insight into the dynamic and strategic issues overseen by the Board. The broad spectrum of technological issues in this industry give him a strong understanding to assist the Board in its oversight of technological issues.
Board composition and attributes
| ∎ | Other Public Company Directorships (within past five years): |
Board composition and attributes
Akamai Technologies, Inc. Tech and Energy Transition Corporation (until March 2023)
Board composition and attributes
| 14 | THE PNC FINANCIAL SERVICES GROUP, INC. - 2024 Proxy Statement |
Board composition and attributes
| | Renu Khator Director Since 2022 Age 68 Independent | Board committees: ∎ Audit ∎ Nominating and Governance |
Board composition and attributes
Renu Khator holds the dual titles of Chancellor of the University of Houston System (“UH System”) and President of the University of Houston (“UH”). She also serves as a professor in UH’s Department of Government and International Affairs. As Chancellor of the UH System, Dr. Khator oversees a four-university organization that serves more that 76,000 students. During her tenure as President since 2008, UH has experienced record-breaking research funding, enrollment and private support, as well as earning Tier One status in 2011, with the Carnegie Foundation elevating it to the top category of research universities. Prior to her appointment at UH, Dr. Khator had a 22-year career at the University of South Florida, most recently serving as Provost and Senior Vice President and as a professor in the Department of Government and International Affairs. Dr. Khator is currently a member of the Association of Governing Boards of Colleges and Universities Council of Presidents, and she has been named to the American Academy of Arts and Sciences. She previously served as a member of the Indian Prime Minister’s Empowered Expert Committee and the U.S. Department of Homeland Security’s Academic Advisory Council, and she was 11th District Chair of the Federal Reserve Bank of Dallas. Dr. Khator received a BA in Liberal Arts from Kanpur University, India and an MA and PhD in Political Science from Purdue University.
Board composition and attributes
| ∎ | Experience, Qualifications, Attributes or Skills: |
Board composition and attributes
The Board values Dr. Khator’s significant leadership experience in academia and expertise in economic development and funding research for community programs, which will be instrumental in expanding opportunities and executing on strategies as PNC continues to invest for growth. The Board also values Dr. Khator’s active involvement in the Houston community.
Board composition and attributes
| ∎ | Other Public Company Directorships (within past five years): |
Board composition and attributes
The Camden Property Trust
Board composition and attributes
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Board composition and attributes
| | Linda R. Medler Director Since 2018 Age 67 Independent | Board committees / subcommittee: ∎ Risk ∎ Technology ∎ Compliance |
Board composition and attributes
Linda Medler is a retired USAF Brigadier General with more than 20 years of experience developing cutting-edge cyber and technology strategies for highly regulated public and private institutions, as well as within the highest levels of government. She is the founder, President and CEO of L A Medler & Associates, a boutique cybersecurity consulting company. She previously served as the Chief Information Security Officer for Raytheon Missile Systems, and also as an Executive and Senior Officer for the Department of Defense, where she led mission-critical business, technology and cybersecurity strategies. In 2014, Ms. Medler completed 30 years of total military service, including 27 years of service in the U.S. Air Force, retiring as a Brigadier General. She began her military service as an enlisted U.S. Marine. Her last position held was Director of Capability and Resource Integration for the United States Cyber Command. Her previous assignments included Director of Communications and Networks for the Joint Staff, Joint Chiefs of Staff Deputy CIO, Chief of Staff for Air Force Materiel Command, and Commander/Vice Commander for the 75th Air Base Wing. Ms. Medler received a BBA in Management & Computer Information Systems from the University of Arkansas at Little Rock, an MS in National Security & Strategic Studies from the Naval War College, and an MBA in Management Information Systems Concentration from the University of Arizona.
Board composition and attributes
| ∎ | Experience, Qualifications, Attributes or Skills: |
Board composition and attributes
The Board values Ms. Medler’s extensive leadership experience and her deep knowledge of cybersecurity and information technology. Her years of experience leading cybersecurity, information technology and multi-function organizations facing a broad range of technology and operational issues provide the Board with valuable cyber and technology risk expertise, as well as a strong understanding of emerging technology and digital business transformation strategies, to facilitate effective governance and oversight of the cybersecurity and technology issues facing PNC.
Board composition and attributes
| ∎ | Other Public Company Directorships (within past five years): |
Board composition and attributes
Target Hospitality Corp.
Board composition and attributes
| 16 | THE PNC FINANCIAL SERVICES GROUP, INC. - 2024 Proxy Statement |
Board composition and attributes
| | Robert A. Niblock Director Since 2022 Age 61 Independent | Board committees: ∎ Audit ∎ Human Resources |
Board composition and attributes
Robert A. Niblock is the former Chairman, President and Chief Executive Officer of Lowe’s Companies, Inc. (“Lowe’s”), which operates together with its subsidiaries as a home improvement retailer in the U.S. Mr. Niblock joined Lowe’s in 1993 and served in various financial roles throughout his career, including as Director of Taxation, Vice President and Treasurer, Senior Vice President, Finance, and Executive Vice President and Chief Financial Officer. Mr. Niblock retired from Lowe’s in 2018 as Chairman, President and Chief Executive Officer. Under his leadership as CEO from 2005 to 2018, the company’s revenues grew from $36.5 billion to $68.6 billion, and Lowe’s built a major digital business to expand the reach of its national stores. The company’s share price also more than tripled from the time of his appointment as CEO to the time of his retirement. Prior to joining Lowe’s, Mr. Niblock had a nine-year career with the accounting firm Ernst & Young LLP. Mr. Niblock received a BS in Accounting from the University of North Carolina at Charlotte.
Board composition and attributes
| ∎ | Experience, Qualifications, Attributes or Skills: |
Board composition and attributes
The Board values Mr. Niblock’s significant financial expertise, knowledge of the retail industry and experience in building a digital presence, which will be instrumental to PNC as it expands its digital presence and pursues transformative growth.
Board composition and attributes
| ∎ | Other Public Company Directorships (within past five years): |
Board composition and attributes
ConocoPhillips Lamb Weston Holdings, Inc.
Board composition and attributes
| THE PNC FINANCIAL SERVICES GROUP, INC. - 2024 Proxy Statement | 17 |
Board composition and attributes
| | Martin Pfinsgraff Director Since 2018 Age 69 Independent | Board committees / subcommittee: ∎ Audit ∎ Risk (Chair) ∎ Executive ∎ Compliance |
Board composition and attributes
Martin Pfinsgraff retired as Senior Deputy Comptroller Large Bank Supervision of the Office of the Comptroller of the Currency (the “OCC”) in February 2017. He held the position of Deputy Comptroller for Credit and Market Risk from 2011 to 2013. Mr. Pfinsgraff served on the Executive Committee of the OCC and as a member of the Senior Supervisors Group, an international committee comprised of supervisors from 10 Organisation for Economic Co-operation and Development (“OECD”) member countries and the European Central Bank. Prior to his career with the OCC, Mr. Pfinsgraff held various positions from 2000 to 2009 at iJet International, a provider of operating risk management solutions, including Chief Operating Officer and Chief Financial Officer. Mr. Pfinsgraff held various positions with Prudential Financial’s operating subsidiaries from 1989 through 2000, including as Treasurer of Prudential Insurance and CFO and President, Capital Markets of Prudential Securities. Mr. Pfinsgraff received a BBA in Psychology from Allegheny College and an MBA from Harvard Business School.
Board composition and attributes
| ∎ | Experience, Qualifications, Attributes or Skills: |
Board composition and attributes
The Board values Mr. Pfinsgraff’s leadership experience as well as his extensive knowledge of the financial services industry and the regulatory requirements applicable to the industry. His experience in banking regulation, risk management and finance, along with his years of executive leadership, provide the Board with additional skills to oversee complex regulatory, risk management and financial matters.
Board composition and attributes
| 18 | THE PNC FINANCIAL SERVICES GROUP, INC. - 2024 Proxy Statement |
Board composition and attributes
| | Bryan S. Salesky Director Since 2021 Age 43 Independent | Board committees: ∎ Corporate Responsibility ∎ Technology |
Board composition and attributes
Bryan S. Salesky is a co-founder and has served as the Chief Executive Officer of Stack AV Co., a developer and provider of advanced autonomous systems designed to meet the safety, reliability and efficiency demands of the trucking industry, since the company’s inception in 2023. Mr. Salesky founded and served as the CEO of Argo AI, LLC, a self-driving technology platform company that partnered with leading automakers to develop the software, hardware, maps and cloud-support infrastructure to power self-driving vehicles, from 2016 to 2022. Previously, Mr. Salesky spent more than a decade in roles of increasing responsibility across leading technology companies, including Google and Carnegie Mellon University’s National Robotics Engineering Center (“NREC”). Mr. Salesky brings significant experience across the robotics and software engineering disciplines. In addition to co-leading Carnegie Mellon University’s team that won the 2007 DARPA Urban Challenge autonomous vehicle race, he managed a portfolio of NREC’s largest commercial programs, including autonomous mining trucks for Caterpillar. While at Google, Mr. Salesky was responsible for the development and manufacture of the company’s self-driving hardware portfolio, which included self-driving sensors, computers and several vehicle development programs. Mr. Salesky is chair of the board of directors of the Greater Pittsburgh Chamber of Commerce, a member of the board of directors of the Allegheny Conference on Community Development, and serves on the board of trustees of the University of Pittsburgh. Mr. Salesky received a BS in Computer Engineering from the University of Pittsburgh.
Board composition and attributes
| ∎ | Experience, Qualifications, Attributes or Skills: |
Board composition and attributes
Mr. Salesky has built a reputation for strategic vision and entrepreneurism in the technology and artificial intelligence industries. The Board believes these skills are particularly valuable to PNC as it continues to invest in new product innovation and growth. The Board also values Mr. Salesky’s active involvement in the Pittsburgh community.
Board composition and attributes
| THE PNC FINANCIAL SERVICES GROUP, INC. - 2024 Proxy Statement | 19 |
Board composition and attributes
Our Board and executive management seek to manage PNC for the long-term, to maximize shareholder value and opportunities for growth, through all phases of the economic cycle. In furtherance of this objective, the Board is committed to maintaining strong corporate governance practices that help protect PNC’s value for its shareholders and other stakeholders.
∎ Substantial majority of independent directors
∎ Substantial majority of independent directors Robust independent oversight is one of the cornerstones of PNC’s strong corporate governance practices. We have long maintained a Board with a substantial majority of directors who are not PNC employees and who otherwise qualify as independent under the corporate governance rules of the New York Stock Exchange (the “NYSE”). The NYSE requires at least a majority of corporate directors to be independent from management.
∎ Substantial majority of independent directors
| THE PNC FINANCIAL SERVICES GROUP, INC. - 2024 Proxy Statement | 21 |
∎ Substantial majority of independent directors
Mr. Demchak is the only director and nominee who is not independent under our corporate governance guidelines and the NYSE’s corporate governance rules, due to his employment by PNC as its CEO. The Board has affirmatively determined that each of the other 11 directors and nominees named in this proxy statement is independent. See “Director and Executive Officer Relationships” in this proxy statement for a description of our annual evaluation of director independence.
Human Resources Committee
| ∎ | Preparing surveys of competitive pay practices |
Human Resources Committee
| ∎ | Analyzing our director compensation packages and providing related reports to management and the Nominating and Governance Committee, which is responsible for overseeing compensation for PNC’s non-employee directors |
Description of Changes
We may also provide other incidental benefits to our non-employee directors from time to time, including tickets to cultural, social, sporting or other events and small gifts for holidays, birthdays or special occasions. In limited circumstances, we may provide travel on corporate aircraft for personal purposes, such as when a family emergency arises or a seat is available on a previously scheduled flight. We determine the value of these benefits based on the incremental cost to PNC and we include the amount in the “All Other Compensation” column of the Non-employee director compensation in 2023 table below. Director stock ownership requirement. The Board has adopted a common stock ownership guideline for our non-employee directors. Under this guideline, each non-employee director must own shares of PNC common stock (including phantom stock units issued pursuant to the Directors Deferred Compensation Plan) with a value of at least five times the value of his or her annual base retainer. Until a director meets this ownership level, he or she must purchase or acquire common stock or stock units that equal at least 25% of the annual retainer for that year. Directors are expected to satisfy the stock ownership requirement by making open market purchases or by deferring their cash retainers into stock units under the Directors Deferred Compensation Plan as described above. As of December 31, 2023, the minimum ownership threshold for non-employee directors was valued at $525,000, reflecting the increased Board retainer amount approved in April 2023. All of our directors serving at that time, other than Bryan S. Salesky, who was appointed in October 2021, and Renu Khator, who was appointed in May 2022, satisfied the minimum ownership threshold.
Director compensation in 2023
Director compensation in 2023 The table below shows the compensation we provided to our non-employee directors for their service in 2023. In addition to the compensation components described above, the table below reflects committee and subcommittee meeting fees earned by non-employee directors for meetings held from January 1 through June 30, 2023. As discussed above, such meeting fees were discontinued from the non-employee director compensation program effective as of July 1, 2023. Prior to discontinuation of these meeting fees, committee and subcommittee members received $1,500 per meeting for the first six committee or subcommittee meetings and $2,000 per meeting for each additional meeting thereafter.
Director compensation in 2023
| Name | Fees Earned(a) ($) | Stock Awards(b) ($) | All Other Compensation(c) ($) | Total ($) | | Joseph Alvarado | 128,500 | 169,913 | 5,000 | 303,413 | | Debra A. Cafaro | 190,000 | 169,913 | 5,000 | 364,913 | | Marjorie Rodgers Cheshire | 234,500 | 169,913 | 5,000 | 409,413 | | Andrew T. Feldstein | 246,500 | 169,913 | 5,000 | 421,413 | | Richard J. Harshman | 204,000 | 169,913 | — | 373,913 | | Daniel R. Hesse | 181,500 | 169,913 | 5,000 | 356,413 | | Renu Khator | 127,000 | 169,913 | — | 296,913 | | Linda R. Medler | 128,500 | 169,913 | 5,000 | 303,413 | | Robert A. Niblock | 140,000 | 169,913 | 5,000 | 314,913 | | Martin Pfinsgraff | 203,000 | 169,913 | — | 372,913 | | Bryan S. Salesky | 106,000 | 169,913 | — | 275,913 | | Former Directors: | | | | | | Toni Townes-Whitley* | 58,000 | 169,913 | — | 227,913 | | Michael J. Ward** | 53,500 | — | — | 53,500 |
Director compensation in 2023
*Ms. Townes-Whitley served as a director through June 30, 2023. **Mr. Ward served as a director through our previous annual meeting on April 26, 2023.
Director compensation in 2023
| THE PNC FINANCIAL SERVICES GROUP, INC. - 2024 Proxy Statement | 47 |
Director compensation in 2023
| (a) This column includes, as applicable, the Board annual retainer and additional retainers for (i) the Presiding Director, (ii) the chairs of the committees and subcommittees, and (iii) the members of the Audit Committee, the Risk Committee, and the Human Resources Committee. The amounts in this column are inclusive of amounts voluntarily deferred by certain directors under our Directors Deferred Compensation Plan, a non-qualified defined contribution plan, as follows: Debra A. Cafaro ($190,000); Marjorie Rodgers Cheshire ($46,900); Andrew T. Feldstein ($246,500); Richard J. Harshman ($51,000); Daniel R. Hesse ($181,500); Renu Khator ($127,000); Robert A. Niblock ($70,000); Bryan S. Salesky ($53,000); and Michael J. Ward ($53,500). |
Director compensation in 2023
| Directors who deferred amounts into the account that tracks PNC common stock under the Directors Deferred Compensation Plan were credited with cash-payable stock units based on the closing price of our common stock on the dates of deferral. |
Director compensation in 2023
| (b) The amounts in this column reflect the grant date fair value under Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation—Stock Compensation (“FASB ASC Topic 718”) of 1,329 DSUs awarded to each director under our Outside Directors Deferred Stock Unit Program as of April 26, 2023, the date of grant. The grant date fair value is calculated based on the NYSE closing price of our common stock on the date of grant of $127.85 per share. |
Director compensation in 2023
| None of our non-employee directors had any outstanding stock options or unvested stock awards as of December 31, 2023. |
Director compensation in 2023
| (c) For Mses. Cafaro, Cheshire and Medler and Messrs. Alvarado, Feldstein, Hesse and Niblock, this column includes the dollar amount of matching gifts made by us in 2023 to charitable organizations. No non-employee director received incidental benefits having a value in excess of $10,000 in 2023, and there were no incremental costs to PNC for personal use of our corporate aircraft by any non-employee director in 2023. |
Director compensation in 2023
| 48 | THE PNC FINANCIAL SERVICES GROUP, INC. - 2024 Proxy Statement |
Director compensation in 2023
This Compensation Discussion and Analysis (“CD&A”) explains our executive compensation philosophy, describes our compensation programs and reviews our compensation decisions for the following named executive officers:
Director compensation in 2023
| 2023 performance summary | 50 | | Shareholder engagement and 2023 say-on-pay response | 51 | | Our engagement outreach and participants | 51 | | What we learned from shareholders | 51 | | Our compensation program | 53 | | Compensation principles | 53 | | Key program features | 53 | | What we do (and don’t do) | 54 | | Regulatory expectations | 54 | | Total compensation framework | 55 | | Setting total compensation targets | 55 | | Evaluating performance | 56 | | Incentive compensation program | 57 | | Other compensation and benefits | 60 | | 2023 performance and compensation decisions | 61 | | 2023 targets | 61 | | 2023 performance | 61 | | 2023 compensation decisions | 63 | | 2023 CEO compensation decision | 64 | | 2023 NEO compensation decisions | 65 | | Five-year RSU retention award | 68 | | Prior long-term incentive awards | 68 | | Compensation policies and practices | 69 | | Compensation and risk | 69 | | Independent compensation consultant | 69 | | Peer group | 69 | | Executive stock ownership and retention requirements | 70 | | Clawback and forfeiture | 71 | | Approval of severance agreements | 73 | | Limiting perquisites | 73 | | Guidelines on the use of discretion | 74 | | Restrictions on trading, hedging and pledging | 74 | | Consideration of tax deductibility | 74 | | Glossary of performance metrics | 75 |
2023 performance summary
| ∎ | Delivered value to our shareholders, while managing the balance sheet for long-term success: |
Key program features
| ∎ | We provide incentives for performance over different time horizons (short- and long-term). |
Key program features
| ∎ | We embed performance goals into a significant portion of our long-term incentives and include a risk-based performance review that could reduce or eliminate the awards. |
Key program features
| ∎ | We connect pay to company performance, relative to both our internal objectives and controls as well as the performance of a carefully selected peer group. |
Key program features
| ∎ | We consider market data and trends when making pay decisions. |
Key program features
| ∎ | We place a substantial majority of compensation at risk, including deferring at least 50% of compensation into equity-based long-term incentives that are not payable for several years. |
Total compensation framework
| ∎ | The incentive compensation target is composed of annual cash and long-term equity-based awards, and the Committee establishes a specific minimum percentage of compensation that will be delivered through long-term equity-based awards. |
Total compensation framework
| ∎ | Under our program, the CEO receives at least 70% of total compensation (i.e., base salary and incentive compensation) in the form of long-term equity-based incentive awards, as illustrated below. All other NEOs receive at least 50% of total compensation in the form of long-term equity-based incentive awards. |
Setting total compensation targets
∎ At least 50% of compensation is equity-based and not payable for several years. The Committee believes that a significant portion of compensation should be at risk, tied to PNC stock performance and not payable for several years. Accordingly, at the beginning of the performance year, the Committee establishes a specific minimum percentage of each executive’s total compensation that will be delivered through long-term equity-based awards. For 2023, the Committee established minimum equity percentages for each NEO ranging from 50% to 70%. The specific mix of cash and equity for each NEO is discussed in more detail in “—2023 compensation decisions.” ∎ We split the equity-based incentive between two forms of awards. Each NEO who receives a long-term equity-based incentive award generally receives the award in two primary forms, a Performance Share Unit (“PSU”) representing 60% of the value of the long-term award, and a Restricted Share Unit (“RSU”) representing 40% of the value. Payouts under these awards are deferred over multiple years. For information on the terms of these awards, see “—Our compensation program—Incentive compensation program.”
Evaluating performance
| Category of Metric | Metrics Evaluated | | Financial Performance | Net interest income | | | Noninterest income* | | | EPS growth* | | (measured against prior year, current year budget and peer group) | Return on assets* | | | Return on equity* | | | Risk-adjusted efficiency ratio* | | Capital, Risk and Expense Management | Tangible book value | | | CET1 ratio | | | Loans to deposits ratio | | (measured against prior year and to the extent available, peer group) | Net charge-offs to average loans | | | Allowance for loan and lease losses to total loans | | | Noninterest expense* |
Evaluating performance
| Category of Metric | Metrics Evaluated | | Business Growth | Average loan balances | | | Allowance for loan and lease losses | | | Average interest-bearing deposits | | (measured against prior year, current year budget and to the extent available, peer group) | Average noninterest-bearing deposits | | | Average total deposits | | | Average noninterest-bearing deposits mix | | | Assets under administration | | | Mortgage origination value | | Total Shareholder Return (“TSR”) | | | | One-year | | (measured against peer group and the S&P banking index) | Three-year | | | Five-year |
Incentive compensation program
Incentive compensation program Determination of incentive compensation levels. The incentive compensation target awarded by the Committee includes two components: (1) an annual incentive award payable in cash and (2) a long-term incentive award that is equity-based and granted in two different forms (PSUs and RSUs). Step 1: After the performance year ends, the Committee evaluates PNC’s aggregate performance for the year, as well as the individual performance of each NEO, and determines an incentive compensation amount to be awarded to each executive, expressed as a percentage of the total compensation target set at the beginning of the performance year. Step 2: Once the Committee determines the final incentive compensation amount, it is divided between the annual cash incentive and the long-term equity-based incentive. The long-term incentive award makes up at least 50% of the value of the total compensation awarded to the NEO. The Committee’s evaluation of 2023 performance and the related compensation decisions made by the Committee for each NEO are described in the “—2023 performance and compensation decisions—2023 compensation decisions” section. Long-term incentive awards (equity-based). The long-term incentive is equity-based and granted through two separate awards — PSUs and RSUs. The Committee made these grants to NEOs in the first quarter of 2024 (for 2023 performance) and in the first quarter of 2023 (for 2022 performance). These awards, and all other equity-based awards, are made under PNC’s shareholder-approved 2016 Incentive Award Plan.
Incentive compensation program
| Name of Award | % of Long- Term Incentive Value | Vesting Schedule | Metrics | Payout Range (% of Target) | Stock or Cash Payout | | PSU | 60% | After three-year performance period ends | PNC’s return on equity (ROE), as adjusted, compared to performance targets | 0–150% | Stock | | | | | EPS growth, as adjusted, rank against our peer group | | | | RSU | 40% | Annual installments over three years | Time-based | 0–100% | Stock |
Incentive compensation program
PSUs. With respect to 2023 performance, in the first quarter of 2024 the Committee granted to certain of our senior executives, including all NEOs, PSUs that represent an opportunity to receive shares of PNC common stock. The payout is based on how PNC performs against two corporate performance metrics over a three-year performance period. Performance against these two metrics generates a percentage (the corporate performance factor). The award may be decreased if PNC fails to satisfy a risk performance metric or based on a discretionary risk performance review conducted by the Committee. After applying any risk-related performance adjustment (and if PNC satisfies the risk performance metric), the resulting percentage is applied to the number of target PSUs to determine the final number of units available for settlement. The PSUs have a maximum payout opportunity of 150% of target. Payout of any award under the PSUs also requires the satisfaction of service requirements and other award conditions. Two corporate performance metrics. The two corporate performance metrics include an absolute metric (an internal PNC measurement against a target) and a relative metric (PNC performance against our peer group). The absolute metric is PNC’s three-year average return on equity (“ROE”), as adjusted, compared to three-year ROE performance targets established in advance by the Committee. The relative metric is PNC’s three-year average EPS growth, as adjusted, compared to the three-year average EPS growth of our peer group.
Incentive compensation program
The chart below shows the corporate performance metrics for the 2024 PSU grants (the corporate performance metrics for the 2023 grants were disclosed in last year’s proxy statement). For the 2024 PSU grants, the Committee maintained the same three-year average ROE maximum level of 13.0% and the threshold level of 8.00% as the prior year PSU awards, while adjusting the target level based on the overall economic environment and PNC’s risk appetite. In approving the grid, the Committee also considers an analysis of PNC’s cost of capital and a multi-year pro forma analysis of ROE.
Incentive compensation program
| 2024 PSU Award (2024-2026 Performance Period) | | Three-year average EPS growth, as adjusted (relative) | | | | | | PNC percentile rank (25th percentile or below) | PNC percentile rank (50th percentile) | PNC percentile rank (75th percentile or above) | | Three-year average ROE, as adjusted (absolute) | 13.00% | 100.0% | 125.0% | 150.0% | | | 11.50% | 87.5% | 112.5% | 137.5% | | | 10.50% | 75.0% | 100.0% | 125.0% | | | 9.50% | 62.5% | 87.5% | 100.0% | | | 8.00% | 50.0% | 75.0% | 87.5% | | | Below | 0.0% | 25.0% | 50.0% |
Incentive compensation program
| ∎ | Other adjustments: Adjustments will also be made on an after-tax basis for the impact to PNC and the companies in our peer group, as appropriate, of items resulting from changes in federal tax law, discontinued operations (as such term is used under GAAP), and any acquisition costs and merger integration costs. |
Incentive compensation program
Committee’s limited discretionary ability under PSUs. Under the terms of the PSUs, the Committee has limited discretion to adjust the final payout. The Committee may increase or decrease the size of the final payout to maintain the intended economics of the award if circumstances change. These circumstances include external events affecting PNC or members of its peer group or its financial statements that are outside of PNC’s control and not reasonably anticipated. Further, in evaluating the corporate performance metrics, after applying the specific adjustments discussed above, the Committee may also consider other unusual or nonrecurring adjustments (applied on a consistent basis) in determining the final award payout percentage. RSUs. With respect to 2023 performance, in early 2024 the Committee also granted to certain of our senior executives, including all NEOs, RSUs that represent an opportunity to receive shares of PNC common stock. The RSUs vest pro rata over three years, with each of the three annual installments (tranches) vesting on the anniversary of the grant date (or if later, the date the Committee determines that all risk conditions have been satisfied). Vesting also requires the satisfaction of service requirements and other award conditions. Risk-related metrics applicable to both PSUs and RSUs. The risk provisions described in this section apply to both of our long-term incentive awards — the PSUs and the RSUs. Objective risk-based performance metric. All long-term incentive awards are subject to risk-based performance reviews. The primary risk-based metric measured as part of this review is the Basel III common equity Tier 1 capital ratio (the “CET1 Ratio”). At the end of the performance year, PNC’s minimum required CET1 Ratio was 7.0%.
Incentive compensation program
| ∎ | Impact of risk-based performance metric under PSUs: For each year during the three-year performance period that PNC fails to meet the CET1 Ratio, one-third of the target number of PSUs granted will be eligible for forfeiture. After the three-year performance period ends, the Committee will conduct a final performance review and may reduce the number of target shares available for payout if PNC did not meet the CET1 Ratio for one or more years during the performance period. |
Incentive compensation program
| ∎ | Impact of risk-based performance metric under RSUs: Each RSU tranche is subject to the same risk-related performance metric that will be applied to the PSUs, with all or a portion of that tranche being eligible for forfeiture. After the year ends, the Committee will conduct a risk-based performance review and may decrease the number of shares available for payout under the applicable RSU tranche if PNC did not meet the CET1 Ratio as of the end of the most recent year before the vesting date of that tranche. |
Incentive compensation program
Subjective risk-based performance review. In addition, and independent from the evaluation of the CET1 Ratio, the Committee may conduct another risk performance review for the PSUs and the RSUs. This discretionary review would generally occur in connection with a risk-related action of potentially material consequence to PNC. If the Committee exercises its discretion to conduct a risk performance review, the Committee will review and determine if a reduction to the corporate performance factor for risk performance is appropriate for the PSUs or if a reduction for risk performance is appropriate for the applicable RSU tranche. Dividend equivalent payments. Both the PSUs and the RSUs will accrue cash dividend equivalents during their respective performance periods. For the PSUs, the accrued dividend equivalents will be adjusted by the same percentage as the target PSUs at the time of payout and will then be paid out in cash. For the RSUs, the accrued dividend equivalents with respect to a tranche will pay out in cash at the same time, and will be adjusted by the same payout percentage, as the RSUs to which they relate.
Other compensation and benefits
Other compensation and benefits In addition to the components included in the total compensation target outlined above, our executive compensation program also includes limited perquisites (to increase efficiency and focus on our business), change of control arrangements (for continuity of management in connection with a potential change of control) and health and retirement plans (to promote health and wellness and post-retirement financial security). More information on perquisites can be found in the “—Compensation policies and practices—Limiting perquisites” section of this CD&A. For a detailed discussion on change of control agreements, see “Change in Control and Termination of Employment—Change of control agreements” in this proxy statement.
2023 performance
| Financial performance metrics | 2023 results | 2023 budget | 2022 results | 2023 results vs. 2023 budget | 2023 results vs. 2022 results | | Net interest income (in millions) | $13,916 | $14,480 | $13,014 | -3.89% | +6.93% | | Noninterest income (in millions)* | $7,574 | $8,207 | $8,133 | -7.71% | -6.87% | | Diluted EPS* | $12.85 | $15.76 | $13.80 | -18.46% | -6.88% | | Diluted EPS (excluding FDIC special assessment)*(2) | $13.86 | $15.76 | $13.80 | -12.06% | +0.43% | | Diluted EPS (excluding noncore noninterest expense adjustments)** (non-GAAP)(2) | $14.10 | $15.76 | $13.85 | -10.53% | +1.81% | | ROE* | 11.66% | 14.04% | 12.59% | -16.95% | -7.39% | | ROE (excluding FDIC special assessment)*(2) | 12.49% | 14.04% | 12.59% | -11.04% | -0.79% | | ROA* | 1.02% | 1.17% | 1.11% | -12.82% | -8.11% | | Risk-adjusted efficiency ratio* | 68.51% | 64.04% | 64.81% | -6.98%(1) | -5.71%(1) | | Risk-adjusted efficiency ratio (excluding noncore noninterest expense)*(3) | 65.41% | 64.04% | 64.81% | -2.14%(1) | -0.93%(1) | | Other key performance metrics | 2023 results(1) | | 2022 results(1) | | | | Net income (in millions) | $5,647 | | $6,113 | | | | Tangible book value per share** (non-GAAP) | $85.08 | | $72.12 | | | | Annual total shareholder return | 2.7% | | -18.6% | | | | CET1 Ratio | 9.9% | | 9.1% | | |
2023 performance
| ∎ | Delivered value to our shareholders, while managing the balance sheet for long-term success |
2023 performance
| ∎ | Continued to deliver strong long-term shareholder returns, ranking 2nd in our peer group over the past 10 years while maintaining one of the highest share price-to-forward earnings multiples in the peer group. |
2023 compensation decisions
2023 compensation decisions Based on a comprehensive evaluation of PNC’s 2023 performance, as described above and in the following sections, the Committee determined that it was appropriate to award incentive compensation that for some NEOs was at the target amount, and for some NEOs, was above the target amount. Consistent with our program, the Committee also decided to award 70% of the CEO’s overall pay mix in the form of long-term incentive compensation and 30% of his overall pay mix in cash compensation. When applying this mix to the CEO’s variable incentive compensation, this same ratio translates to 75% of the CEO’s incentive compensation awarded in the form of long-term incentive compensation and 25% awarded in annual cash incentive compensation. The Committee’s rationale for its decision is detailed in the “—2023 CEO compensation decisions” section that follows the table below. 2023 NEO incentive compensation awards. For each of our NEOs, the table below compares the incentive compensation target to the actual incentive compensation awarded for the 2023 performance year. The incentive compensation awarded for 2022 performance differs from what we disclose in the Summary compensation table in the Compensation Tables section.
2023 compensation decisions
SEC regulations require PNC to include incentive awards from two different performance years: the annual cash incentive award based on 2023 performance (and paid in 2024) and the long-term equity-based incentive award based on 2022 performance (and awarded in 2023). The long-term equity-based incentive award based on 2023 performance (and awarded in 2024) will be included in next year’s Summary compensation table. For Ms. Guild, this year’s Summary compensation table also includes, for 2023, the grant date fair value of the 5-year retention RSU granted to her and described in more detail in the “—Five-year RSU retention awards” section. We exclude the grant date fair value of that award in the table below.
2023 compensation decisions
| (1) Under SEC regulations, the incentive compensation amounts disclosed in the Summary compensation table on page 79 include the annual cash incentive award paid in 2024 for 2023 performance (the “Non-Equity Incentive Plan Compensation” column) and the long-term equity-based incentive award granted in 2023 for 2022 performance (the “Stock Awards” column). For Ms. Guild, the amount in the “Stock Awards” column also includes the grant date fair value in connection with the 5-year equity award granted to her in February 2023. Please see “—Five-year RSU retention award” for additional information about this award. Finally, for each NEO, the amounts shown in the “Stock Awards” column of the Summary compensation table differ slightly from the amounts shown in the table above due to the impact of rounding related to fractional shares. |
2023 CEO compensation decision
the lowest non-interest bearing to interest-bearing deposit shifts in the peer group. During the year, PNC continued to strengthen its capital levels, allowing us to acquire $16.6 billion in capital commitments facilities from Signature Bridge Bank, N.A. The Committee also noted that, despite the volatility in the industry, PNC’s shares continued to trade at one of the highest share price-to-earnings multiples in the peer group in 2023, reflecting recognition from stakeholders of the consistent value delivered by PNC. The Committee attributes this strength and consistency to Mr. Demchak’s leadership and influence across PNC as well as the larger financial services sector. Long-term performance durability. In evaluating Mr. Demchak’s performance, the Committee focused on his demonstrated long-term performance consistency, noting that PNC’s 10-year TSR ranked 2nd in the peer group and PNC’s 5-year TSR ranked in the second quartile of the peer group. The Committee did take into account PNC’s 3-year TSR, which ranked in the third quartile of the peer group but balanced this result against the longer-term view in light of the volatile year for bank stocks. The Committee also considered the durability of PNC’s strong levels of capital and liquidity and credit quality metrics, as reflected by:
2023 CEO compensation decision
| ∎ | Net loan charge-offs to average loans, which remained below historical levels in 2023 at 0.22%, and was one of the lowest in our peer group. |
Five-year RSU retention awards
Five-year RSU retention awards As an integral part of our talent philosophy, PNC actively cultivates a culture of internal growth and works to sustain and retain a robust talent pipeline well-versed in PNC’s corporate values. Recognizing the disruptive and costly nature of losing key talent, as part of its regular talent management review, PNC may consider granting an additional five-year equity-based recognition award to individual members of senior management when warranted. These awards are intended to serve distinct retention objectives or acknowledge significant promotions of senior leaders throughout the organization, and, in very select circumstances, may be awarded to executive officers. As part of this program, Ms. Guild received a five-year restricted share unit award (“5-Year RSU”) with a grant date value of $2,000,000 in February 2023. Ms. Guild was not a NEO in any prior years. In determining the grant of this award, the Committee reviewed the overall technology labor market, which remains fiercely competitive and characterized by a constant demand for top-tier talent across all industries. Ms. Guild is a visible leader across the technology industry with three decades of experience in financial services. The financial services industry faces an ongoing challenge in securing and retaining technology leadership adept in cutting-edge technology and cybersecurity. In addition to the heightened emphasis on technology talent, particularly as it relates to regulatory expectations within the financial services industry, the Committee also considered the importance of technology to PNC’s strategic objectives. As previously mentioned, one of PNC’s core strategic priorities is to leverage technology to create efficiencies that help us better serve customers. The Committee granted Ms. Guild this 5-Year RSU in recognition of our technology leadership’s indispensable experience and expertise in achieving these objectives. In determining the $2,000,000 grant date value of Ms. Guild’s award, the Committee conducted a comprehensive review of similarly positioned executives while considering the five-year term of the award. The 5-Year RSU awards span a five- year vesting period, with 25% vesting on each of the 3rd and 4th anniversaries of the grant date and the remaining 50% on the 5th anniversary of the grant date. This award does not include the ability to continue vesting following a qualifying retirement and has a maximum payout of 100% of target. This award incorporates the same risk-based performance metrics as the PSUs and RSUs previously described, with the potential to decrease payouts based on objective and subjective risk management evaluations.
Prior long-term incentive awards
Prior long-term incentive awards At meetings held on January 30 and February 16, 2024, the Committee also approved payouts from awards that had previously been granted to each of our NEOs. The Committee evaluated performance and risk-based metrics for the outstanding long-term incentive awards that vested based on performance for the period ended December 31, 2023. The Committee approved a payout for each award in accordance with the terms and conditions of the applicable award agreement.
Prior long-term incentive awards
| Grant Year | Type of Award | Grantees | Performance Period | Payout | Form of Payment | | 2021 | Restricted Share Units | All NEOs | 2021–2023 | 100% vested (2023 Tranche) | Paid in stock | | 2022 | | | 2022–2024 | | | | 2023 | | | 2023–2025 | | | | 2021 | Performance Share Units | All NEOs | 2021–2023 | 105.56% | Paid in stock | | 2022 | | | 2022–2024 | Not applicable (three-year performance period not completed) | Not applicable | | 2023 | | | 2023–2025 | | |
Prior long-term incentive awards
RSUs. The RSUs vest in annual installments over three years. At a meeting held on January 30, 2024, the Committee determined that the risk-based performance criteria had been satisfied for the 2023 tranche of each of the outstanding RSU grants awarded to the NEOs in 2021, 2022 and 2023, and those tranches vested 100%. PSUs. The PSUs vest based on performance over a three-year period. At a meeting held on February 16, 2024, the Committee determined that the PSU grants awarded to each NEO in 2021 had vested and that the risk performance criteria had been satisfied. The Committee approved a payout of 105.56% for the 2021 PSU award. The 2021 PSU awards have the same material terms and conditions as the 2023 and 2024 PSUs. The Committee reviews PNC’s ROE and EPS growth for each year of the three-year performance period. Under the terms of the 2021 PSU awards, we adjust these two metrics, as appropriate, for certain items, including discontinued operations (under GAAP), acquisition costs and merger integration costs, changes in U.S. federal tax law, and the net impact on PNC related to the sale of its equity stake in BlackRock. (See Annex A for a reconciliation of non-GAAP financial measures to GAAP, and for additional information about the adjustments to GAAP measures.)
Prior long-term incentive awards
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Prior long-term incentive awards
Once the three-year performance period ends, we take the average of each metric over the performance period to determine an overall corporate performance factor. We compare our average annual ROE to previously disclosed performance targets and compare our average year-over-year EPS growth to our peer group, consistent with the grid below:
Prior long-term incentive awards
| | 2021 PSU Award (2021-2023 Performance Period) | Three-year average EPS growth, as adjusted (relative) | | | | | | PNC percentile rank (25th percentile or below) | PNC percentile rank (50th percentile) | PNC percentile rank (75th percentile or above) | | Three-year average ROE, as adjusted (absolute) | 13.00% | 100.0% | 125.0% | 150.0% | | | 11.50% | 87.5% | 112.5% | 137.5% | | | 10.50% | 75.0% | 100.0% | 125.0% | | | 9.50% | 62.5% | 87.5% | 100.0% | | | 8.00% | 50.0% | 75.0% | 87.5% | | | Below | 0.0% | 25.0% | 50.0% |
Prior long-term incentive awards
Impact from PNC’s sale of its equity stake in BlackRock phased out in 2021. The calculated adjustment for the net impact on PNC related to the sale of its equity stake in BlackRock impacted PNC’s adjusted ROE calculation for the 2021 performance year only. There were no Blackrock-related adjustments to ROE for either the 2022 or 2023 performance years since this Blackrock-related impact phased out in 2021. Limited discretion under 2021 PSU award. The limited discretionary provisions of the 2021 PSU are the same as the provisions described earlier relating to the 2023 PSU awards: The Committee may consider other unusual or nonrecurring adjustments in determining the corporate performance factor and final payout percentage. In addition, the Committee may reduce or increase the payout under the award to maintain the intended economics of the award in light of changed circumstances — meaning external events affecting PNC, its financial statements or members of its peer group that are substantially outside of PNC’s control and could not reasonably be planned for as of the grant date. In determining the corporate performance factor and final payout percentage, the Committee did consider the unusual or nonrecurring adjustment related to a special assessment by the FDIC following the bank failures that occurred in March 2023. Following these bank failures, the FDIC invoked the systemic risk exception to support uninsured depositors of the failed institutions. To recover losses to the Deposit Insurance Fund, the FDIC levied a special assessment to be collected from PNC and other bank holding companies, including all of PNC’s peers. When considering the payout for the 2021 PSU awards, the Committee discussed the significant impact to expenses of the $515 million FDIC special assessment, an event outside of PNC’s control. In calculating ROE and EPS growth, the Committee adjusted expenses to remove this unusual and recurring expense for both PNC and PNC’s peers. The Committee did not consider workforce reduction charges in its determination of the final payout percentage for the 2021 PSU awards. The FDIC special assessment adjustment resulted in a final payout percentage of 105.56%. Without this adjustment, the formulaic final payout percentage for the PSUs was 102.54%.
Independent compensation consultant
Independent compensation consultant The Committee retains Meridian Compensation Partners, LLC as its independent compensation consultant. For a discussion of this relationship and the considerations the Committee takes into account when determining independence, see the discussion under the heading “Corporate Governance—Board committees—Human Resources Committee.”
Peer group
Peer group The Committee selects a peer group each year. We use this group to help measure relative performance and to determine payouts under our long-term incentive awards. We also use this group for general compensation comparisons. In approving a peer group, the Committee analyzes several factors, including the mix and complexity of businesses, the
Peer group
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Peer group
markets being served, market capitalization, asset size and changes resulting from mergers or shifts in strategic direction. We also look at the companies with whom we generally compete for talent. We use the same peer group for both performance and compensation comparisons. Each year, the Committee reviews the composition of the peer group with management and its independent compensation consultant. For 2023, the Committee believed that the existing peer group generally provided a balanced mix of institutions considering our size, mix and scope of businesses, products and services, and sources of executive talent. The peer group currently includes the following 11 companies, with assets and market capitalization for PNC and our peer group measured as of December 31, 2023 and revenue for PNC and our peer group measured for the full year:
Peer group
| Peer Group Company | Ticker Symbol | Peer | Assets (in billions) | Peer | Revenue (in billions) | Peer | Market Capitalization (in billions) | | Bank of America Corporation | BAC | JPM | $3,875.4 | JPM | $158.1 | JPM | $489.3 | | Capital One Financial Corporation | COF | BAC | $3,180.2 | BAC | $98.6 | BAC | $265.8 | | Citizens Financial Group, Inc. | CFG | WFC | $1,932.5 | WFC | $82.6 | WFC | $177.1 | | Fifth Third Bancorp | FITB | USB | $663.5 | COF | $36.8 | USB | $67.4 | | JPMorgan Chase & Co. | JPM | PNC | $561.6 | USB | $28.0 | PNC | $61.6 | | KeyCorp | KEY | TFC | $535.3 | TFC | $23.4 | COF | $49.9 | | M&T Bank Corporation | MTB | COF | $478.5 | PNC | $21.5 | TFC | $49.2 | | Regions Financial Corporation | RF | CFG | $222.0 | MTB | $9.6 | FITB | $23.5 | | Truist Financial Corporation | TFC | FITB | $214.6 | FITB | $8.7 | MTB | $22.8 | | U.S. Bancorp | USB | MTB | $208.3 | CFG | $8.2 | RF | $17.9 | | Wells Fargo & Company | WFC | KEY | $188.3 | RF | $7.6 | CFG | $15.5 | | | | RF | $152.2 | KEY | $6.4 | KEY | $13.5 |
Peer group
After a review by the Committee, the peer group for 2024 remained unchanged from 2023.
Approval of severance agreements
Approval of severance agreements We have a Board-approved policy regarding shareholder approval of future severance arrangements. Under this policy, PNC will not enter into an arrangement with an executive officer that provides for additional severance benefits in an amount exceeding 2.99 times the sum of the executive officer’s annual base salary and target bonus for the year of termination, unless the future severance arrangement is approved by the affirmative vote of a majority of votes cast by shareholders on the matter. The Board retains the right to amend, terminate or waive the policy and will promptly disclose any such change. We have made this policy available in the Governance Documents section of www.pnc.com/corporategovernance. None of our change of control agreements contain any excise tax “gross-up” provisions. For a more detailed discussion on change of control agreements, see “Change of Control and Termination of Employment—Change of control agreements” in this proxy statement.
Glossary of performance metrics
Glossary of performance metrics This glossary describes some of the performance metrics that the Committee may use to evaluate performance and make compensation decisions.
Glossary of performance metrics
| Capital and risk metrics | | | ∎ Capital ratios | Bank regulators have established risk-based and leverage capital ratios to evaluate our capital adequacy and financial strength. The regulatory capital rules establish certain minimum requirements for these ratios, as well as a capital conservation buffer requirement, in order to avoid limitations on capital distributions and certain discretionary incentive compensation payments. For the four-quarter period beginning Oct. 1, 2023, PNC and its banking subsidiary, PNC Bank, National Association, must maintain a common equity Tier 1 capital ratio of at least 7.0%, which is the regulatory minimum. PNC currently exceeds all required regulatory capital ratios. | | Expense metrics | | | ∎ Efficiency ratio | The efficiency ratio is a measure of how effectively a company is utilizing the resources generated by operations during the year. The ratio divides our noninterest expense (such as compensation and benefits, occupancy costs, equipment and marketing) by our revenue. Consequently, a lower efficiency ratio is an indication that resources are being used more effectively. A bank’s efficiency ratio will be affected by its particular business model. We calculate risk-adjusted efficiency ratio by adding our net charge-offs incurred during the year to our noninterest expense, which helps to show the quality of our overall credit decisions, as net charge-offs represent the actual credit losses that we incur. | | Profitability metrics | | | ∎ Earnings per share (EPS) and EPS growth | EPS is a common metric used by investors to evaluate the profitability of a company. It shows the earnings (net income) attributable to common shareholders we make on each outstanding share of common stock. While EPS represents a specific dollar amount, EPS growth represents the percentage growth of EPS over the previous year. EPS growth helps us to compare our annual earnings strength to our peer group. | | ∎ Return on assets (ROA) | Investors often evaluate banks by their asset size, with loans and investment securities making up the largest components of assets. ROA is our full-year net income divided by our full-year average assets and represents how efficiently we use assets to generate net income. | | ∎ Return on equity (ROE) | Return on equity measures profitability by showing how much profit we generate (net income) with the money our shareholders have invested (equity). It shows how efficiently we deploy our investors’ funds. Return on equity measures total annual net income divided by average total shareholders’ equity. | | Revenue metrics | | | ∎ Net interest income | Net interest income measures interest income (the revenue generated from lending and other activities) less all interest expenses (such as interest paid on deposits and borrowings). It is a good bank performance indicator as it measures how effectively a bank has deployed its funding sources. | | ∎ Noninterest income | Noninterest income measures the fees and other revenue we derive from our businesses (other than interest income). A healthy mix of net interest income and noninterest income provides diverse earnings streams and lessens a bank’s reliance on the interest rate environment. | | Valuation metrics | | | ∎ Tangible book value per share | This financial measure takes our total tangible common shareholders’ equity (it excludes intangible assets such as goodwill) and divides that by the number of shares outstanding. This provides investors with an objective valuation method and allows them to compare relative values of similar companies. | | ∎ Total shareholder return (TSR) | TSR is a common metric used to show the total returns to an investor in our common stock. The TSR considers the change in stock price from the beginning of the measurement period, as well as the reinvestment of any dividends paid during the measurement period. |
Glossary of performance metrics
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Risk management at PNC
| Enterprise risk appetite statement | | | We dynamically manage our risk appetite to optimize long-term shareholder value while supporting our employees, customers, and communities. In doing so, we: | | | ∎ | Achieve our business objectives and protect our brand by accepting risks that are understood, quantifiable, and analyzed through all phases of the economic cycle. | | ∎ | Earn trust and loyalty from all stakeholders, including employees, customers, communities, and shareholders. | | ∎ | Reward individual and team performance by taking into account risk discipline and performance measurement. | | ∎ | Practice disciplined capital and liquidity management so that we can operate effectively through all economic cycles. |
Risk management at PNC
between fixed and variable compensation; cash and equity-based compensation; and annual and long-term compensation. We base awards on the Committee’s assessment of a variety of quantitative and qualitative performance measurements, both on an absolute and a relative basis. Compensation decisions also rely on discretion to consider other factors, such as effective risk management, delivering a superior customer experience, compliance with controls and ethical duties, commitment to diversity and inclusion, competition for top talent, market-based pay levels and the need to attract and engage our leaders. As discussed in the CD&A, the long-term incentive program includes grants to NEOs and certain other executives that include a risk-based performance metric. Payouts under these grants could be forfeited if we do not meet the CET1 Ratio described in “Compensation Discussion and Analysis—Our compensation program—Incentive compensation program.” We also have a broad-based clawback and incentive compensation adjustment policy as described in “Compensation Discussion and Analysis—Compensation policies and practices—Clawback and forfeiture.” We maintain an equity program for approximately 158 senior leaders below the executive levels that is designed to help ensure that their incentive compensation awards reflect risk-adjusted performance outcomes that would pay out, if at all, over a three-year period. These senior leaders receive a portion of their incentive compensation in an equity-based award that is subject to the same risk-related performance metric that will be applied to the PSU and RSU grants made to NEOs and certain other executives. Additionally, the equity award agreements for these senior leaders all contain an enterprise-wide risk-based review trigger, while the agreements for senior leaders in business segments (as opposed to those in administrative or control functions) contain an additional, business-specific risk-based review trigger. If a risk-based review is triggered, the applicable review committee will determine whether a downward adjustment is warranted, up to a complete cancellation of the share units in that year’s tranche.
Summary compensation table
Summary compensation table
Summary compensation table
| | | | Stock Awards ($)(b) | | | | | | | | Name & Principal Position | Year | Salary ($)(a) | Annual Stock Award ($) | Other Stock Award ($) | Total Stock Awards ($) | Non-Equity Incentive Plan Compensation ($)(c) | Change in Pension Value & Nonqualified Deferred Compensation Earnings ($)(d) | All Other Compensation ($)(e) | Total ($) | | William S. Demchak | 2023 | 1,200,000 | 12,750,115 | — | 12,750,115 | 4,410,000 | 792,588 | 797,603 | 19,950,306 | | Chairman and CEO | 2022 | 1,200,000 | 15,000,015 | — | 15,000,015 | 3,050,000 | — | 223,475 | 19,473,490 | | | 2021 | 1,200,000 | 12,000,025 | — | 12,000,025 | 3,800,000 | 338,606 | 167,639 | 17,506,270 | | Robert Q. Reilly | 2023 | 700,000 | 2,750,146 | — | 2,750,146 | 2,187,500 | 455,897 | 45,317 | 6,138,860 | | Exec. VP and CFO | 2022 | 700,000 | 3,250,021 | 5,571,087 | 8,821,108 | 2,050,000 | — | 43,992 | 11,615,100 | | | 2021 | 700,000 | 2,805,130 | — | 2,805,130 | 2,550,000 | 192,456 | 43,292 | 6,290,878 | | Michael P. Lyons | 2023 | 700,000 | 5,460,084 | — | 5,460,084 | 2,450,000 | 36,693 | 22,200 | 8,668,977 | | President and Head of | 2022 | 700,000 | 6,600,091 | 10,939,578 | 17,539,669 | 2,940,000 | 28,408 | 17,292 | 21,225,369 | | Corporate & Instit. Banking | 2021 | 700,000 | 5,525,190 | — | 5,525,190 | 3,700,000 | 24,112 | 23,262 | 9,972,564 | | E William Parsley, III | 2023 | 700,000 | 5,100,109 | — | 5,100,109 | 2,700,000 | 198,119 | 23,161 | 8,721,389 | | Exec. VP and COO | 2022 | 700,000 | 6,300,365 | 10,331,946 | 16,632,311 | 2,700,000 | — | 21,600 | 20,053,911 | | | 2021 | 700,000 | 5,525,190 | — | 5,525,190 | 3,500,000 | 67,139 | 21,400 | 9,813,729 | | Deborah Guild* | 2023 | 584,615 | 1,875,064 | 2,000,123 | 3,875,187 | 1,400,000 | 26,955 | 22,343 | 5,909,100 | | Exec. VP, Head of Enterprise | | | | | | | | | | | Technology & Security | | | | | | | | | |
Summary compensation table
Note: Mr. Demchak served as Chairman, President and Chief Executive Officer through February 2024. Mr. Lyons was promoted from Executive Vice President to President in February 2024, with Mr. Demchak continuing as Chairman and CEO. *Ms. Guild was not an NEO in 2022 or 2021.
Summary compensation table
| (a) This column includes any salary amounts deferred by an NEO under qualified (ISP) or non-qualified (DCIP) benefit plans. We describe these plans under “—Non-qualified deferred compensation in fiscal 2023.” See the Non-qualified deferred compensation in fiscal 2023 table in this proxy statement for the aggregate deferrals during 2023. |
Summary compensation table
| (b) For 2023, this column includes (i) for each NEO, the grant date fair value of annual equity awards (whole shares only) calculated in accordance with FASB ASC Topic 718 and (ii) for Ms. Guild only, the grant date fair value of a 5-Year RSU award (whole shares only) calculated in accordance with FASB ASC Topic 718. |
Summary compensation table
| The annual equity awards were granted on February 16, 2023, consisting of PSUs and RSUs. The grant date fair value of each PSU and RSU award is calculated using the target number of units underlying the award and a per share value based on the NYSE closing price of our common stock on the date of grant of $158.30. The 5-Year RSU award was granted on February 23, 2023. The grant date fair value of the 5-Year RSU award is calculated using the target number of units underlying the award and a per share value based on the NYSE closing price of our common stock on the date of grant of $158.10. |
Summary compensation table
| If PNC’s performance during the applicable measurement period results in the maximum number of units vesting, our NEOs would be entitled to receive a maximum award with a grant date fair value as follows: |
Summary compensation table
| | Grant Date Fair Value of Maximum Award | | | | NEO | Performance Share Units | Restricted Share Units | 5-Year RSU Award | | William S. Demchak | $11,475,009 | $5,100,109 | — | | Robert Q. Reilly | $2,475,179 | $1,100,027 | — | | Michael P. Lyons | $4,913,949 | $2,184,065 | — | | E William Parsley, III | $4,590,067 | $2,040,012 | — | | Deborah Guild | $1,687,478 | $750,025 | $2,000,123 |
Summary compensation table
| See "—Grants of plan-based awards in fiscal 2023" for additional information regarding the grants we made in 2023, "—Outstanding equity awards at 2023 fiscal year-end" for additional information regarding equity awards outstanding at December 31, 2023, and "—Option exercises and stock vested in fiscal 2023" for additional information regarding option exercise and stock vesting activity during 2023. |
Summary compensation table
| (c) Our NEOs received an annual incentive award paid in cash early in 2024, which is reflected in this column for the 2023 performance year. |
Summary compensation table
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Summary compensation table
| (d) The dollar amounts in this column include the increase in the actuarial value of our Qualified Pension Plan, ERISA Excess Pension Plan and Supplemental Executive Retirement Plan. We describe these plans in “—Pension benefits at 2023 fiscal year-end” in this proxy statement. The amounts include both (i) the change in value due to an additional year of service, compensation changes and plan amendments (if any), and (ii) the change in value attributable to other assumptions, most significantly the discount rate. |
Summary compensation table
| We do not pay above-market or preferential earnings on any compensation that is deferred on a basis that is not tax-qualified, including such earnings on non-qualified defined contribution plans. For additional information regarding how we calculate the earnings on our deferred compensation plans, see “—Non-qualified deferred compensation in fiscal 2023” in this proxy statement. |
Summary compensation table
| (e) The amounts in this column include, for all NEOs, net of any reimbursements to PNC: (i) perquisites and other personal benefits; (ii) the dollar value of matching contributions made by us to the ISP; (iii) the insurance premiums paid by us in connection with our Key Executive Equity Program; and (iv) the executive long-term disability premiums paid by us. |
Summary compensation table
All Other Compensation for 2023 consisted of the following:
Summary compensation table
| NEO | Perquisites and Other Personal Benefits* | Registrant ISP Contributions | Insurance Premiums** | Other | Total to Summary Compensation Table | | William S. Demchak | $739,372 | $13,200 | $45,031 | — | $797,603 | | Robert Q. Reilly | $11,190 | $13,200 | $20,927 | — | $45,317 | | Michael P. Lyons | $10,000 | $12,200 | — | — | $22,200 | | E William Parsley, III | $10,000 | $13,161 | — | — | $23,161 | | Deborah Guild | $10,000 | $12,343 | — | — | $22,343 |
Summary compensation table
| * The dollar amount of the perquisite represents the incremental cost to PNC of providing the benefit. This column includes the cost of financial consulting and tax preparation services for Messrs. Demchak, Reilly and Parsley and the cost of personal use of corporate aircraft by Messrs. Demchak and Lyons and Ms. Guild during 2023. The incremental cost of Mr. Demchak’s use of the aircraft in 2023 was $100,000. Mr. Demchak used his time sharing agreement for flights in excess of this amount during 2023. The incremental cost to PNC of personal aircraft use is calculated by multiplying the total number of personal flight hours by the average direct variable operating costs (including costs related to fuel, maintenance expenses related to operation of the plane during the year, and landing and parking fees) per flight hour for the particular aircraft for the year, plus crew expenses attributable to the personal use. Since the aircraft are used primarily for business travel, we do not include in the calculation the fixed costs that do not change based on usage, such as crew salaries and other maintenance and inspection and capital improvement costs intended to cover a multiple-year period. For Mr. Demchak, this column also includes the cost of physical security services ($628,182) that are in addition to security arrangements provided while at work or on business travel. During 2023, PNC provided physical security services to Mr. Demchak due to verified incidents regarding his personal safety. PNC determined it was in the Company’s business interest to introduce these security measures for his safety and security. We view these security services as a necessary and appropriate business expense, but have reported incremental costs to us of the arrangements because they may be viewed as conveying a personal benefit to him. The NEOs each have a corporate travel credit card not generally available to all employees, for which there is no incremental cost to PNC. |
Summary compensation table
| ** We pay premiums for certain of the NEOs in connection with our Key Executive Equity Program, which is a split-dollar insurance arrangement. In addition, we pay long-term disability premiums on behalf of certain of our NEOs. New participants have not been permitted in either program since 2007. The dollar amounts under the “Insurance Premiums” column include the 2023 premiums we paid in connection with our Key Executive Equity Program on behalf of Mr. Demchak ($40,534) and Mr. Reilly ($16,732). These premiums represent the full dollar amounts we paid for both the term and non-term portions of this plan. The amounts under this column also include the long-term disability premiums we paid on behalf of Mr. Demchak ($4,497) and Mr. Reilly ($4,195). |
Summary compensation table
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Grants of plan-based awards in fiscal 2023
Grants of plan-based awards in fiscal 2023
Grants of plan-based awards in fiscal 2023
| | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(a) | | | Estimated Future Payouts Under Equity Incentive Plan Awards(b) | | | Grant Date Fair Value of Stock and Option Awards ($)(c) | | Award Type | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | | | William S. Demchak | | | | | | | | | | Annual Incentive Award | — | — | 3,900,000 | — | | | | | | PSUs | February 16, 2023 | | | | — | 48,326 | 72,489 | 7,650,006 | | RSUs | February 16, 2023 | | | | — | 32,218 | 32,218 | 5,100,109 | | Robert Q. Reilly | | | | | | | | | | Annual Incentive Award | — | — | 2,050,000 | — | | | | | | PSUs | February 16, 2023 | | | | — | 10,424 | 15,636 | 1,650,119 | | RSUs | February 16, 2023 | | | | — | 6,949 | 6,949 | 1,100,027 | | Michael P. Lyons | | | | | | | | | | Annual Incentive Award | — | — | 2,900,000 | — | | | | | | PSUs | February 16, 2023 | | | | — | 20,695 | 31,043 | 3,276,019 | | RSUs | February 16, 2023 | | | | — | 13,797 | 13,797 | 2,184,065 | | E William Parsley, III | | | | | | | | | | Annual Incentive Award | — | — | 2,700,000 | — | | | | | | PSUs | February 16, 2023 | | | | — | 19,331 | 28,997 | 3,060,097 | | RSUs | February 16, 2023 | | | | — | 12,887 | 12,887 | 2,040,012 | | Deborah Guild | | | | | | | | | | Annual Incentive Award | — | — | 1,400,000 | — | | | | | | PSUs | February 16, 2023 | | | | — | 7,107 | 10,661 | 1,125,038 | | RSUs | February 16, 2023 | | | | — | 4,738 | 4,738 | 750,025 | | 5-Year RSU award | February 23, 2023 | | | | | 12,651 | 12,651 | 2,000,123 |
Grants of plan-based awards in fiscal 2023
| (a) The amounts listed in the “Target” column relate to the target annual cash incentive award for the 2023 performance year. Annual cash incentive awards for 2023 were paid in 2024. All incentive compensation — cash and equity-based — is payable based on performance, and total compensation targets are established to help the Human Resources Committee determine the appropriate amount of incentive compensation payable upon achievement of target performance. The amount listed in the “Target” column shows the target annual cash incentive amount included in the total compensation target approved by the Committee for each NEO on February 16, 2023. |
Grants of plan-based awards in fiscal 2023
| (b) The amounts listed in these columns include the grants of the PSUs, RSUs and 5-Year RSU award as further described in “Compensation Discussion and Analysis—Our compensation program—Incentive compensation program” and “Compensation Discussion and Analysis—2023 performance and compensation decision—Five-year RSU retention awards.” As there is no guaranteed minimum payout for these awards, and in the case of the PSUs, the Human Resources Committee has discretion to decrease any award otherwise payable, we have not included a “Threshold” amount. The “Target” amount represents 100% of the grant for the PSUs, the RSUs and the 5-Year RSU award. The “Maximum” amount represents 150% of the grant (rounded down to whole shares) for the PSUs and 100% of the grant for the RSUs and the 5-Year RSU award. For the PSUs, the performance period began on January 1, 2023 and will end on December 31, 2025. For the RSUs, the performance period began on January 1, 2023 and will end on December 31, 2025, with a vesting opportunity for one-third of the grant on each of the three anniversaries of the grant date. For the 5-Year RSU award, the performance period began on February 23, 2023 and will end on February 23, 2028, with a vesting opportunity of one-quarter on each of the third and fourth anniversaries of the grant date and the remaining half on the fifth anniversary of the grant date. |
Grants of plan-based awards in fiscal 2023
| (c) The grant date fair value of each PSU, RSU award is calculated in accordance with FASB ASC Topic 718 based on the NYSE closing price of our common stock on February 16, 2023, the date of grant, of $158.30 per share. The grant date fair value of the 5-Year RSU award is calculated in accordance with FASB ASC Topic 718 based on the NYSE closing price of our common stock on February 23, 2023, the date of grant, of $158.10 per share. The amounts listed in this column represent the grant date fair value of each award based upon achievement at the target level. |
Grants of plan-based awards in fiscal 2023
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Outstanding equity awards at 2023 fiscal year-end
Outstanding equity awards at 2023 fiscal year-end The following tables show, for each NEO, the outstanding equity awards as of December 31, 2023. These awards include the following:
Outstanding equity awards at 2023 fiscal year-end
| Name of Award | Vesting Schedule | Metrics | Payout Range (% of target) | Stock or Cash Payout | | Performance Share Units (PSUs) | After three-year performance period ends | PNC’s return on equity (ROE) compared to performance targets EPS growth rank against our peer group | 0–150% | Stock | | Restricted Share Units (RSUs) | Annual installments over three years | Time-based | 0–100% | Stock | | Performance-Based Restricted Share Units (PRSUs) | After five-year performance period ends | Total shareholder return rank against our peer group | 0–125% | Stock | | 5-Year Restricted Share Units (5-Year RSU award) | Beginning in third year of award term, annual installments of 25%, 25%, and 50% | Time-based | 0–100% | Stock |
Outstanding equity awards at 2023 fiscal year-end
With respect to the performance-based equity awards that vested based on performance for the period ended December 31, 2023, the Human Resources Committee made performance-based and risk-based determinations in the first quarter of 2024, as described in “Compensation Discussion and Analysis—2023 performance and compensation decisions” in this proxy statement.
Outstanding equity awards at 2023 fiscal year-end
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Outstanding equity awards at 2023 fiscal year-end
| | Stock Awards | | | | | | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(a) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(a) | | William S. Demchak | | | | | | | 47,707(b) | 7,387,429 | | | | | 10,044(c) | 1,555,313 | | | | | | | 42,729(d) | 6,616,586 | | | 18,991(e) | 2,940,756 | | | | | | | 48,326(f) | 7,483,281 | | | 32,218(g) | 4,988,957 | | | | Robert Q. Reilly | | | | | | | 11,152(b) | 1,726,887 | | | | | 2,348(c) | 363,588 | | | | | | | 9,258(d) | 1,433,601 | | | 4,115(e) | 637,208 | | | | | | | 10,424(f) | 1,614,156 | | | 6,949(g) | 1,076,053 | | | | | | | 35,363(h) | 5,475,961 | | Michael P. Lyons | | | | | | | 21,965(b) | 3,401,280 | | | | | 4,625(c) | 716,181 | | | | | | | 18,801(d) | 2,911,335 | | | 8,356(e) | 1,293,927 | | | | | | | 20,695(f) | 3,204,621 | | | 13,797(g) | 2,136,465 | | | | | | | 69,440(h) | 10,752,784 | | E William Parsley, III | | | | | | | 21,965(b) | 3,401,280 | | | | | 4,625(c) | 716,181 | | | | | | | 17,947(d) | 2,779,093 | | | 7,977(e) | 1,235,238 | | | | | | | 19,331(f) | 2,993,405 | | | 12,887(g) | 1,995,552 | | | | | | | 65,583(h) | 10,155,528 | | Deborah Guild | | | | | | | 2,668(b) | 413,140 | | | | | 562(c) | 87,026 | | | | | | | 4,808(d) | 744,519 | | | 2,137(e) | 330,914 | | | | | | | 7,107(f) | 1,100,519 | | | 4,738(g) | 733,679 | | | | | | | 12,651(i) | 1,959,007 |
Outstanding equity awards at 2023 fiscal year-end
| (a) The market value is calculated based on the NYSE closing price of our common stock on December 29, 2023 (the last trading day of the year) of $154.85 per share. |
Outstanding equity awards at 2023 fiscal year-end
| (b) 2021 PSUs. The performance conditions applicable to the award were satisfied as of December 31, 2023, and the 2021 PSUs vested on February 16, 2024 based on achievement at 105.56% of the target level. |
Outstanding equity awards at 2023 fiscal year-end
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Outstanding equity awards at 2023 fiscal year-end
| (c) 2021 RSUs. The third and final tranche of the award vested on February 11, 2024. |
Outstanding equity awards at 2023 fiscal year-end
| (d) 2022 PSUs (Performance Not Yet Achieved). The award is scheduled to vest in early 2025 based on achievement of the applicable performance conditions over a three-year performance period ending December 31, 2024. The number of PSUs included in the table above is based on achievement at the target level. See the description of the 2022 PSUs in the “Compensation Discussion and Analysis” section of our 2022 proxy statement. |
Outstanding equity awards at 2023 fiscal year-end
| (e) 2022 RSUs. The second tranche of the award vested on February 10, 2024, and the remaining tranche is scheduled to vest on February 10, 2025. |
Outstanding equity awards at 2023 fiscal year-end
| (f) 2023 PSUs (Performance Not Yet Achieved). The award is scheduled to vest in early 2026 based on achievement of the applicable performance conditions over a three-year performance period ending December 31, 2025. The number of PSUs included in the table above is based on achievement at the target level. See the description of the 2023 PSUs in the “Compensation Discussion and Analysis” section of our 2023 proxy statement. |
Outstanding equity awards at 2023 fiscal year-end
| (g) 2023 RSUs. The first tranche of the award vested on February 16, 2024, and the remaining two tranches are scheduled to vest in approximately equal annual installments on February 16, 2025 and February 16, 2026. |
Outstanding equity awards at 2023 fiscal year-end
| (h) 2022 PRSUs (Performance Not Yet Achieved). The award is scheduled to vest in mid-2027 based on achievement of the applicable performance conditions over a five-year period ending June 12, 2027. The number of 2022 PRSUs included in the table above is based of achievement at the target level. See the description of the 2022 PRSUs in the “Compensation Discussion and Analysis” section of our 2023 proxy statement. |
Outstanding equity awards at 2023 fiscal year-end
| (i) 2023 5-Year RSU. The first two tranches of the award, each constituting 25% of the award, are scheduled to vest on February 23, 2026 and February 23, 2027, respectively, and the last tranche constituting the balance of the award is scheduled to vest on February 23, 2028. |
Outstanding equity awards at 2023 fiscal year-end
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Option exercises and stock vested in fiscal 2023
Option exercises and stock vested in fiscal 2023
Option exercises and stock vested in fiscal 2023
| | Option Awards(a) | | Stock Awards(b) | | | NEO | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | | William S. Demchak | — | — | 73,013 | 11,602,022 | | Robert Q. Reilly | — | — | 17,360 | 2,758,423 | | Michael P. Lyons | — | — | 36,783 | 5,844,327 | | E William Parsley, III | — | — | 36,127 | 5,740,079 | | Deborah Guild | — | — | 13,155 | 1,761,395 |
Option exercises and stock vested in fiscal 2023
| (a) No NEO exercised outstanding options during 2023, and as of December 31, 2023, no NEO held any option awards. |
Option exercises and stock vested in fiscal 2023
| (b) These columns include the total units approved for payout in connection with previously granted PSUs and RSUs. These columns also include shares that vested but were withheld for tax purposes. |
Option exercises and stock vested in fiscal 2023
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Pension benefits at 2023 fiscal year-end
Pension benefits at 2023 fiscal year-end The principal elements of our post-employment compensation are a qualified defined benefit cash balance pension plan, a non-qualified excess cash balance pension plan and a non-qualified supplemental executive retirement plan, each described in this section, as well as a qualified defined contribution savings plan and a non-qualified deferred compensation and incentive plan as described in “—Non-qualified deferred compensation in fiscal 2023” in this proxy statement. Cash balance pension plan. We maintain a pension plan for most of our full-time employees. The pension plan is a defined benefit cash balance pension plan under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and is intended to be qualified under Section 401(a) of the Code. Each calendar quarter, eligible participants receive “earnings credits” based on a percentage of eligible compensation. Earnings credit percentages for employees who were plan participants on December 31, 2009 are based on a schedule using the participant’s age and years of credited service at that date and are frozen at that level. Earnings credits for all employees who become participants on or after January 1, 2010 are a flat 3% of eligible compensation. The plan defines eligible “compensation” as regular earnings plus eligible variable compensation, such as paid annual incentives. Eligible “compensation” does not include deferrals under the terms of the non-qualified deferred compensation and incentive plan; these are instead taken into account under our excess pension plan described below. We generally limit eligible variable compensation for a plan year to a total of 100% of the first $25,000 plus 50% of the next $225,000. For participants who had accrued benefits prior to 1999 under the pension plan formula then in effect, an initial cash balance “account” was established based on the present value of the accrued benefits at the time of the conversion to the current program. Plan participants generally receive quarterly “interest credits” at a rate of one-fourth of the annual interest rate on 30-year Treasury securities. Employees who were already plan participants as of December 31, 2009 receive a minimum interest credit. We contribute to the plan an actuarially determined amount necessary to fund the total benefits payable to participants. Actuaries calculate total contributions instead of contributions for each individual participant. Excess pension plan. We maintain an ERISA excess pension plan, which is a supplemental non-qualified pension plan. The excess benefits under this plan equal the difference, if any, between a participant’s benefit under the qualified pension plan computed without regard to applicable Code limits and taking into account amounts deferred under the non-qualified deferred compensation and incentive plan, and the participant’s actual benefit under the qualified pension plan. Supplemental executive retirement plan. We maintain a supplemental executive retirement plan for certain executive officers. As part of its ongoing review of compensation practices, the Personnel and Compensation Committee (now known as the Human Resources Committee) decided in 2007 to eliminate future plan participation for new executive officers. This plan provides earnings credits based on a percentage of annual incentives awarded under eligible executive bonus plans in accordance with a schedule based on the participant’s age and years of credited service. This plan also provides quarterly interest credits that mirror the interest credits under the qualified pension plan. Executive officers who participated in the supplemental executive retirement plan on December 31, 1998 and who were at least age 50 with five or more years of credited service receive grandfathered benefits based on the pension formula in effect prior to 1999. For executive officers at or above a certain organizational level who participated on December 31, 1998 but who did not meet the requirements for legacy benefits, we doubled the earnings credit percentages in order to mitigate the effect of the transition to the cash balance pension formula.
Pension benefits at 2023 fiscal year-end
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Pension benefits at 2023 fiscal year-end
| NEO | Plan Name | Number of Years Credited Service (#)(a) | Present Value of Accumulated Benefit ($)(b) | Payments During Last Fiscal Year | | William S. Demchak | Qualified Pension Plan | 21 | 396,960 | — | | | ERISA Excess Pension Plan | 21 | 2,984,759 | — | | | Supplemental Executive Retirement Plan | 21 | 5,256,821 | — | | | Total | | 8,638,540 | — | | Robert Q. Reilly | Qualified Pension Plan | 36 | 611,879 | — | | | ERISA Excess Pension Plan | 36 | 1,260,787 | — | | | Supplemental Executive Retirement Plan | 36 | 2,146,535 | — | | | Total | | 4,019,201 | — | | Michael P. Lyons | Qualified Pension Plan | 12 | 102,502 | — | | | ERISA Excess Pension Plan | 12 | 197,844 | — | | | Supplemental Executive Retirement Plan | N/A | — | — | | | Total | | 300,346 | — | | E William Parsley, III | Qualified Pension Plan | 20 | 352,307 | — | | | ERISA Excess Pension Plan | 20 | 1,660,076 | — | | | Supplemental Executive Retirement Plan | N/A | — | — | | | Total | | 2,012,383 | — | | Deborah Guild | Qualified Pension Plan | 10 | 87,924 | — | | | ERISA Excess Pension Plan | 10 | 76,060 | — | | | Supplemental Executive Retirement Plan | N/A | — | — | | | Total | | 163,984 | — |
Pension benefits at 2023 fiscal year-end
| (a) To compute the number of years of service, we use the same plan measurement date that we use for our 2023 audited consolidated financial statements. Credited service, where applicable, is generally equal to actual full years of service; however, for purposes of determining the level of benefits earned in the Qualified Pension Plan and ERISA Excess Pension Plan, credited service has been frozen as of December 31, 2009. As of that date, the NEOs had the following years of credited service: Mr. Demchak, 7; Mr. Reilly, 22; and Mr. Parsley, 6. Mr. Lyons and Ms. Guild were hired after service accruals ceased to be applicable for purposes of calculating the amount of Qualified Pension Plan and ERISA Excess Pension Plan benefits. |
Pension benefits at 2023 fiscal year-end
| (b) We compute the present values shown here as of December 31, 2023 in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 715, Compensation—Retirement Benefits, as specified in applicable SEC regulations. The amounts do not necessarily reflect the amounts to which the NEOs would be entitled under the terms of these plans as of December 31, 2023. |
Pension benefits at 2023 fiscal year-end
We calculate the present values for the plans by projecting the December 31, 2023 account balances to an assumed retirement age of 65, using an interest crediting rate of (i) 4.60% for Mr. Demchak, Mr. Reilly and Mr. Parsley, and (ii) 4.00% for Mr. Lyons and Ms, Guild, who are not eligible for the guaranteed minimum annual interest crediting rate since they became plan participants after January 1, 2010. We then apply a discount rate of 5.25% for the Qualified Pension Plan and 5.10% for other plans to discount the balances back to December 31, 2023. See Note 16—Employee Benefit Plans in the Notes to Consolidated Financial Statements in the Form 10-K for additional information regarding the discount rates and other material assumptions.
Pension benefits at 2023 fiscal year-end
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Non-qualified deferred compensation in fiscal 2023
Non-qualified deferred compensation in fiscal 2023 We offer an incentive savings plan (“ISP”) in which most of our employees can participate after they meet any applicable service requirements, and for designated employees who exceed a compensation threshold, we also offer a non-qualified deferred compensation and incentive plan (“DCIP”). Prior to establishing the DCIP in 2012, we offered a non-qualified supplemental incentive savings plan (“SISP”), which was a supplement to the ISP, and a non-qualified deferred compensation plan (“DCP”), in each case for certain designated employees who exceeded applicable compensation thresholds. Incentive savings plan (ISP). The ISP is a defined contribution 401(k) plan that is intended to be qualified under Section 401(a) of the Code. During 2023, participants could elect to contribute between 1% and 75% of eligible compensation to the plan each year as pre-tax or Roth after-tax elective deferrals (or a combination of pre-tax and Roth after-tax elective deferrals), subject to Code limits. Participants who are age 50 or older may contribute additional pre-tax amounts called “catch-up contributions” each year. For 2023, we made employer matching contributions on behalf of eligible participants equal to 100% of elective deferrals up to 4% of eligible compensation. Matching contributions were made in cash. Participants direct the investment of their accounts among the investment options offered under the plan, and their account balances are adjusted for gains or losses resulting from those investment directions. Deferred compensation and incentive plan (DCIP). We maintain a DCIP for designated employees who exceed a compensation threshold. Participants can elect to defer up to 20% of base salary and/or up to 75% of eligible short-term incentive pay earned with respect to a plan year. The DCIP’s plan year is the calendar year. Participants can direct the investment of their accounts among the hypothetical investment alternatives made available under the plan, and their accounts are adjusted for deemed investment gains or losses resulting from such investment directions. Supplemental incentive savings plan (SISP) and deferred compensation plan (DCP). Effective January 1, 2012, the SISP and DCP were frozen to new participants and to the deferral of amounts earned on and after January 1, 2012. Distributions from these plans are paid in cash in accordance with the participant’s election. Participants with existing account balances can direct the investment of their accounts among the hypothetical investment alternatives made available under the plan, and their accounts are adjusted for deemed investment gains or losses resulting from such investment directions. Investment options. ISP, DCIP, SISP and DCP participants have the investment options listed on page 90. The employee directs investment of contributions under each plan. Investment options include several collective funds and mutual funds (including BlackRock mutual funds). ISP, SISP and DCP participants may also hold investments in a PNC common stock fund; however, we no longer permit new contributions or transfers into the PNC common stock fund. DCIP, SISP and DCP investments are invested on a phantom basis and are considered “deemed” investments.
Non-qualified deferred compensation in fiscal 2023
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Non-qualified deferred compensation in fiscal 2023
| NEO | Name of Plan | Executive Contributions in Last FY ($) | Aggregate Earnings in Last FY ($) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last FYE ($) | | | | (a) | (b) | | (c) | | William S. Demchak | Supplemental Incentive Savings Plan | — | 458,089 | — | 2,692,726 | | | Deferred Compensation & Incentive Plan | — | — | — | — | | | Deferred Compensation Plan | — | — | — | — | | | Total | — | 458,089 | — | 2,692,726 | | Robert Q. Reilly | Supplemental Incentive Savings Plan | — | 269,169 | — | 1,488,024 | | | Deferred Compensation & Incentive Plan | — | — | — | — | | | Deferred Compensation Plan | — | 854,297 | — | 4,728,513 | | | Total | — | 1,123,466 | — | 6,216,537 | | Michael P. Lyons | Supplemental Incentive Savings Plan | — | — | — | — | | | Deferred Compensation & Incentive Plan | — | — | — | — | | | Deferred Compensation Plan | — | — | — | — | | | Total | — | — | — | — | | E William Parsley, III | Supplemental Incentive Savings Plan | — | 744,973 | — | 3,911,596 | | | Deferred Compensation & Incentive Plan | — | — | — | — | | | Deferred Compensation Plan | — | — | — | — | | | Total | — | 744,973 | — | 3,911,596 | | Deborah Guild | Supplemental Incentive Savings Plan | — | — | — | — | | | Deferred Compensation & Incentive Plan | — | 93,180 | — | 274,746 | | | Deferred Compensation Plan | — | — | — | — | | | Total | — | 93,180 | — | 274,746 |
Non-qualified deferred compensation in fiscal 2023
| (a) Amounts in this column are included in the compensation reported in the Summary compensation table in this proxy statement. PNC made no contributions to these plans in 2023. |
Non-qualified deferred compensation in fiscal 2023
| (b) No amounts in this column have been reported in the Summary compensation table as none of our NEOs received above-market or preferential earnings. |
Non-qualified deferred compensation in fiscal 2023
| (c) We calculate the dollar amounts in this column by taking the aggregate balance at the end of fiscal year 2022 and adding the totals in the other columns to that balance. The aggregate balance at the end of fiscal year 2023 includes any unrealized gains and losses on investments. All contributions comprising a portion of the aggregate balance at the end of fiscal year 2023 were included in the compensation reported in the Summary compensation table in this proxy statement and prior years’ summary compensation tables, as applicable. |
Non-qualified deferred compensation in fiscal 2023
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Non-qualified deferred compensation in fiscal 2023
The following table shows the 2023 investment options for the DCP, DCIP, ISP and SISP, along with annual rates of return. See the preceding pages for an explanation of the DCP, DCIP, ISP and SISP. Ticker symbols are listed for investment options available to the general public.
Non-qualified deferred compensation in fiscal 2023
| Benchmark Performance | Ticker Symbol | DCP | DCIP | ISP/SISP | 2023 Annual Rate of Return | | BlackRock High Yield BR | BYHRX | X | X | X | 13.69% | | BlackRock Government Short Term Inv. Fund | | X | X | X | 5.11% | | BlackRock LifePath 2025 Fund | | X | X | X | 12.05% | | BlackRock LifePath 2030 Fund | | X | X | X | 14.27% | | BlackRock LifePath 2035 Fund | | X | X | X | 16.31% | | BlackRock LifePath 2040 Fund | | X | X | X | 18.32% | | BlackRock LifePath 2045 Fund | | X | X | X | 20.15% | | BlackRock LifePath 2050 Fund | | X | X | X | 21.23% | | BlackRock LifePath 2055 Fund | | X | X | X | 21.56% | | BlackRock LifePath 2060 Fund | | X | X | X | 21.56% | | BlackRock LifePath 2065 Fund | | X | X | X | 21.62% | | BlackRock LifePath Retirement Fund | | X | X | X | 11.16% | | BlackRock TIPS | | X | X | X | 4.03% | | Brandywine Intern’l Opp Fixed Inc Fund | LMOTX | X | X | | 7.22% | | PNC Common Stock Fund | PNC | X | | X | (1.73)% | | T. Rowe Price Stable Value Fund | | | X | X | 2.61% | | State Street S&P 500 Index Fund | | X | X | X | 26.28% | | State Street Russell Small/Mid Cap Index Fund | | X | X | X | 24.89% | | State Street Global All Cap Equity Ex-U.S. Index Fund | | X | X | X | 15.84% | | State Street Real Return ex Nat. Res. Index Fund | | | | X | 3.69% | | State Street U.S. Bond Index Fund | | X | X | X | 5.58% | | State Street International Equity Index Fund | | X | X | X | 18.51% | | State Street Emerging Markets Equity Index Fund | | X | X | X | 9.31% | | Vanguard Real Estate Index Fund | | | X | X | 9.37% | | FPA Crescent Fund | FPACX | X | X | | 20.27% | | Aberdeen Emerging Markets Fund | ABEMX | X | X | | 6.65% | | BlackRock Global Allocation I Fund | MALOX | X | X | | 12.62% | | First Eagle Overseas I Fund | SGOIX | X | X | | 10.74% | | Vulcan Large Cap Value Fund | VVPLX | X | X | | 41.77% | | Fiduciary Mgmt Small Cap Fund | FMIMX | X | X | | 24.87% |
Non-qualified deferred compensation in fiscal 2023
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CEO PAY RATIO
CEO PAY RATIO We are providing the following information about the relationship between the annual total compensation of William S. Demchak, our Chairman and CEO, and the annual total compensation of our median employee (other than Mr. Demchak). For the year ended December 31, 2023:
CEO PAY RATIO
| ∎ | The annual total compensation of Mr. Demchak was $19,973,770. |
CEO PAY RATIO
| ∎ | The annual total compensation of our median employee was $104,576 (see below for an explanation of how we calculate this amount). |
CEO PAY RATIO
| ∎ | The resulting ratio of Mr. Demchak’s annual total compensation to the annual total compensation of our median employee is 191 to 1. |
CEO PAY RATIO
We believe our ratio represents a reasonable estimate, calculated in a manner consistent with SEC regulations, based on the following methodology:
CEO PAY RATIO
| ∎ | To identify the median employee, we used the Form W-2 (Box 5) issued by the IRS for federal tax purposes as the compensation measure and evaluated the compensation for 56,088 active U.S. employees as of December 31, 2023 (this population excluded Mr. Demchak and all of our 178 non-U.S. employees).(1) We did not annualize the compensation of any employee who was employed by us for part of the year. |
CEO PAY RATIO
| ∎ | We calculated the 2023 annual total compensation for the selected median employee.(2) |
CEO PAY RATIO
| (1) As of December 31, 2023, we had 107 employees in the UK, 55 employees in Canada and 16 employees in Germany, representing less than 1% of our total employee population. |
CEO PAY RATIO
| (2) We calculated the annual total compensation for the median employee in accordance with SEC regulations, using the same methodology used to calculate Mr. Demchak’s total compensation in the Summary compensation table, and we also included PNC’s health care premium contributions for both the median employee and Mr. Demchak. As a result, Mr. Demchak’s annual total compensation for pay ratio purposes is slightly higher than the amount reported for him in the Summary compensation table in this proxy statement. See “Compensation Tables” in this proxy statement. |
CEO PAY RATIO
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CEO PAY RATIO
In accordance with regulations adopted by the SEC pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, we are providing the following disclosures regarding executive compensation for our principal executive officer (“PEO”) and named executive officers (“Non-PEO NEOs”) and company performance for the fiscal years listed below. We have identified one-year adjusted ROE (“Adjusted ROE”) as our Company-Selected Measure (“CSM”). In our view, Adjusted ROE represents the most important financial performance measure (not otherwise required to be disclosed in the table) used to link compensation actually paid (“CAP”) to our NEOs for the 2023 fiscal year to company performance. We chose Adjusted ROE as our CSM for evaluating pay versus performance because it is a key metric in our PSU awards under our long-term incentive program. See “Compensation Discussion and Analysis—Our compensation program—Evaluating performance” in this proxy statement for a discussion of the metrics used by the Human Resources Committee to evaluate performance. Our long-term incentive program and Adjusted ROE are described in more detail in “Compensation Discussion and Analysis—Our compensation program—Incentive compensation program.”
Pay versus performance table
Pay versus performance table
Pay versus performance table
| | | | | | Value of Initial Fixed $100 Investment based on: (4) | | | | | Year | Summary Compensation Table Total for PEO (1) ($) | Compensation Actually Paid to PEO (1)(2)(3) ($) | Average Summary Compensation Table Total for Non-PEO NEOs (1) | Average Compensation Actually Paid to Non- PEO NEOs (1)(2)(3) | TSR ($) | Peer Group TSR* ($) | Net Income (in millions) ($) | Adjusted ROE (5) | | (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | | 2023 | 19,950,306 | 20,752,986 | 7,359,582 | 7,251,664 | 112.44 | 104.72 | 5,647 | 11.66% | | 2022 | 19,473,490 | 18,419,052 | 12,309,964 | 12,394,784 | 109.49 | 94.38 | 6,113 | 12.59% | | 2021 | 17,506,270 | 26,625,622 | 7,940,191 | 11,637,177 | 134.45 | 116.81 | 5,725 | 9.59% | | 2020 | 15,879,053 | 13,080,702 | 6,890,142 | 5,608,478 | 97.27 | 86.24 | 7,558 | 9.39% |
Pay versus performance table
| * The Peer Group TSR utilizes the S&P 500 Banks Index (“S&P 500 Banks”), which we also utilize in the stock performance graph required by Item 201(e) of Regulation S-K included in our Annual Report on Form 10-K for the year ended December 31, 2023. |
Pay versus performance table
| (1) William S. Demchak was our PEO for each year presented. The individuals comprising the Non-PEO NEOs for each year presented are: |
Pay versus performance table
2020: Robert Q. Reilly, Michael P. Lyons, E William Parsley, III and Karen L. Larrimer 2021: Robert Q. Reilly, Michael P. Lyons, E William Parsley, III and Karen L. Larrimer 2022: Robert Q. Reilly, Michael P. Lyons, E William Parsley, III, Karen L. Larrimer and Gregory B. Jordan 2023: Robert Q. Reilly, Michael P. Lyons, E William Parsley, III and Deborah Guild
Pay versus performance table
| (2) CAP amounts shown have been calculated in accordance with Item 402(v) of Regulation S-K and do not reflect compensation actually earned, realized or received by the NEOs. |
Pay versus performance table
| (3) CAP reflects the Summary compensation table totals for our NEOs, as adjusted for certain amounts as set forth below. Amounts in the “Exclusion of Stock Awards” columns below are based on the totals from the “Stock Awards” column of the Summary compensation table. Amounts in the “Exclusion of Change in Pension Value” columns below reflect the amounts attributable to the change in pension value reported in the Summary compensation table. Amounts in the “Inclusion of Pension Service Cost” columns below are based on the service cost for services rendered during the listed year. |
Pay versus performance table
| Year | Summary Compensation Table Total for PEO ($) | Exclusion of Change in Pension Value for PEO ($) | Exclusion of Stock Awards for PEO ($) | Inclusion of Pension Service Cost for PEO ($) | Inclusion of Equity Values for PEO ($) | Compensation Actually Paid to PEO ($) | | 2023 | 19,950,306 | (792,588) | (12,750,115) | 377,527 | 13,967,856 | 20,752,986 | | 2022 | 19,473,490 | — | (15,000,015) | 370,608 | 13,574,969 | 18,419,052 | | 2021 | 17,506,270 | (338,606) | (12,000,025) | 478,826 | 20,979,157 | 26,625,622 | | 2020 | 15,879,053 | (1,399,380) | (10,320,237) | 393,939 | 8,527,327 | 13,080,702 |
Pay versus performance table
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Pay versus performance table
| Year | Average Summary Compensation Table Total for Non-PEO NEOs ($) | Average Exclusion of Change in Pension Value for Non-PEO NEOs ($) | Average Exclusion of Stock Awards for Non-PEO NEOs ($) | Average Inclusion of Pension Service Cost for Non- PEO NEOs ($) | Average Inclusion of Equity Values for Non-PEO NEOs ($) | Average Compensation Actually Paid to Non-PEO NEOs ($) | | 2023 | 7,359,582 | (179,416) | (4,296,382) | 71,325 | 4,296,555 | 7,251,664 | | 2022 | 12,309,964 | (15,249) | (9,598,689) | 65,950 | 9,632,808 | 12,394,784 | | 2021 | 7,940,191 | (95,656) | (4,165,160) | 83,017 | 7,874,785 | 11,637,177 | | 2020 | 6,890,142 | (299,797) | (3,927,655) | 73,084 | 2,872,704 | 5,608,478 |
Pay versus performance table
The amounts in the “Inclusion of Equity Values” columns above are derived from the amounts set forth in the following tables:
Pay versus performance table
| Year | Year-End Fair Value of Equity Awards Granted During Year That Remained Unvested as of Last Day of Year for PEO ($) | Change in Fair Value from Last Day of Prior Year to Last Day of Year of Unvested Equity Awards for PEO ($) | Vesting-Date Fair Value of Equity Awards Granted During Year that Vested During Year for PEO ($) | Change in Fair Value from Last Day of Prior Year to Vesting Date of Unvested Equity Awards that Vested During Year for PEO ($) | Fair Value at Last Day of Prior Year of Equity Awards Forfeited During Year for PEO ($) | Value of Dividends or Other Earnings Paid on Stock or Option Awards Not Otherwise Included for PEO ($) | Total - Inclusion of Equity Values for PEO ($) | | 2023 | 13,438,135 | 194,909 | — | 334,812 | — | — | 13,967,856 | | 2022 | 12,123,506 | (944,686) | — | 2,396,149 | — | — | 13,574,969 | | 2021 | 13,081,706 | 6,461,296 | — | 1,436,155 | — | — | 20,979,157 | | 2020 | 8,584,874 | 70,776 | — | (128,323) | — | — | 8,527,327 |
Pay versus performance table
| Year | Average Year- End Fair Value of Equity Awards Granted During Year That Remained Unvested as of Last Day of Year for Non-PEO NEOs ($) | Average Change in Fair Value from Last Day of Prior Year to Last Day of Year of Unvested Equity Awards for Non-PEO NEOs ($) | Average Vesting-Date Fair Value of Equity Awards Granted During Year that Vested During Year for Non-PEO NEOs ($) | Average Change in Fair Value from Last Day of Prior Year to Vesting Date of Unvested Equity Awards that Vested During Year for Non-PEO NEOs ($) | Average Fair Value at Last Day of Prior Year of Equity Awards Forfeited During Year for Non- PEO NEOs ($) | Average Value of Dividends or Other Earnings Paid on Stock or Option Awards Not Otherwise Included for Non-PEO NEOs ($) | Total - Average Inclusion of Equity Values for Non-PEO NEOs ($) | | 2023 | 4,453,842 | (174,429) | — | 17,142 | — | — | 4,296,555 | | 2022 | 9,201,403 | (504,672) | — | 936,077 | — | — | 9,632,808 | | 2021 | 4,773,399 | 2,545,225 | — | 556,161 | — | — | 7,874,785 | | 2020 | 3,439,287 | (322,598) | — | (243,985) | — | — | 2,872,704 |
Pay versus performance table
| (4) The comparison assumes $100 was invested for the period starting December 31, 2019 through the last business day of the listed year, for each of PNC and the S&P 500 Banks. |
Pay versus performance table
| (5) Adjusted ROE is a non-GAAP financial measure. See Annex A for a reconciliation of non-GAAP financial measures to GAAP and for additional information about the adjustments to GAAP measures. |
Pay versus performance table
The description and graphs below address, for the past four fiscal years, the relationship between PEO and Non-PEO NEO CAP as disclosed in the Pay vs performance table and (i) PNC’s cumulative TSR and the S&P 500 Banks’ cumulative TSR, (ii) PNC’s net income and (iii) PNC’s Adjusted ROE. Since our PEO receives a larger proportion of his total annual compensation in the form of long-term equity-based incentive awards, the impact of the increase in stock price (e.g., in 2021) on our PEO’s CAP is more significant than the impact on the average Non-PEO NEO CAP for that year. The average Non-PEO NEO CAP for 2022 includes one-time performance-based equity awards to three NEOs. For a discussion of how our Human Resources Committee assessed our performance and our NEO pay each year, see the “Compensation Discussion and Analysis” section in this proxy statement and in our 2023, 2022, and 2021 annual proxy statements.
Pay versus performance table
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