UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
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2019 Annual Meeting of Shareholders and Proxy Statement
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From the Chairman, President and Chief Executive Officer
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March 29, 2019
Dear Shareholder:
We will hold our Annual Meeting of Shareholders at 8:30 AM, Eastern Time, on Wednesday, May 15, 2019, in the Great Room at The Regional Learning Alliance located at 850 Cranberry Woods Drive, Cranberry Township, Pennsylvania 16066.
Agenda
At our Annual Meeting, our shareholders will act on the following matters: (i) election of twelve (12) director-nominees named in the accompanying proxy statement to our Board of Directors; (ii) adoption of an advisory (nonbinding) resolution to approve the 2018 compensation of our named executive officers; (iii) ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for 2019; and (iv) any other matter that is properly presented at our Annual Meeting in compliance with our bylaws.
Your Vote is Important
Your vote is important regardless of how many shares of F.N.B. Corporation stock you own. If you hold stock in more than one account or name, you will receive a proxy card for each.
Whether or not you plan to attend our Annual Meeting, please complete, sign, date and promptly return the enclosed proxy card in the postage-paid envelope we have provided to ensure that your shares are represented at our Annual Meeting. Alternatively, you may vote by the Internet, by our QR Code feature or by telephone by following the instructions on your proxy card. By voting now, your vote will be counted even if you are unable to attend our Annual Meeting.
Please indicate on the card whether you plan to attend our Annual Meeting. If you attend and wish to vote in person, you may withdraw your proxy at that time.
As always, our directors, management and employees thank you for your continued interest in and support of F.N.B. Corporation.
Vincent J. Delie, Jr. Chairman, President and Chief Executive Officer |
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
How to Vote
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BY TELEPHONE Call the telephone number listed on your proxy card.
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We will also act on any other timely business that is properly submitted.
BY ORDER OF THE BOARD OF DIRECTORS,
James G. Orie, Chief Legal Officer and Corporate Secretary | ||
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VIA THE INTERNET Visit the website listed on your proxy card.
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BY MAIL Mail in a completed proxy card.
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IN PERSON Attend the annual meeting (see page for more information).
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BY QR CODE Scan QR Code on your proxy card.
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March 29, 2019
Pittsburgh, Pennsylvania
OUR NOTICE OF ANNUAL MEETING, 2019 PROXY STATEMENT, 2018 ANNUAL REPORT, FORM 10K AND OUR 2019 CORPORATE RESPONSIBILITY REPORT ARE AVAILABLE AT https://www.proxyvote.com.
Table of Contents
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Table of Contents
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Proxy Statement
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One North Shore Center
12 Federal Street
Pittsburgh, PA 15212
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Our proxy statement contains information relative to our Annual Meeting of Shareholders to be held on Wednesday, May 15, 2019, beginning at 8:30 AM, Eastern Time (ET), in the Great Room at The Regional Learning Alliance located at 850 Cranberry Woods Drive, Cranberry Township, Pennsylvania 16066 (Annual Meeting). This proxy statement also relates to any adjournment of our Annual Meeting. This proxy statement was prepared under the direction of the F.N.B. Corporation Board of Directors to solicit your proxy for use at the Annual Meeting. On March 29, 2019, we commenced the distribution of our proxy statement and the accompanying proxy card to our shareholders of record as of March 6, 2019. We will bear all costs of preparing and distributing our proxy materials to our shareholders. We will, upon request, reimburse brokers, nominees, fiduciaries, custodians and other record holders for their reasonable expenses in forwarding our proxy materials to beneficial owners.
We use the following terms in this proxy statement:
| We, us, our, F.N.B., Company, or Corporation means F.N.B. Corporation and its subsidiaries and affiliates; |
| Board means the joint F.N.B. Corporation and First National Bank of Pennsylvania Boards of Directors; |
| FNBPA or Bank means First National Bank of Pennsylvania; |
| F.N.B. Capital means F.N.B. Capital Corporation, LLC; and |
| CEO means Chief Executive Officer. |
2019 Proxy Statement 1
Summary
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F.N.B.s 2018 financial performance and capital returns highlighted below demonstrate that it is uniquely well-positioned to drive further valuation and fundamental performance.
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Record Net Income: We reported net income available to common shareholders of $364.8 million, an increase of 91% compared to 2017. | ||
Record Total Revenue: Total Revenue was $1.2 billion for 2018, an increase of 10% compared to full year 2017. | ||
Record Total Assets: We had total assets of $33.1 billion as of December 31, 2018, an increase of 5.4% from December 31, 2017. | ||
Record Total Loans: Total loans were $22.2 billion as of December 31, 2018, an increase of 5.5% from December 31, 2017. | ||
Record Total Deposits: Total deposits were $23.5 billion as of December 31, 2018, an increase of 4.7% from December 31, 2017. | ||
Continued Effective Management of Expenses: Continued to diligently manage expenses and generate positive operating leverage with an Efficiency Ratio of 54.8%. | ||
Prudent De-Risking Strategy: We successfully completed the sale of Regency Finance Company, which provided us with proceeds of approximately $140 million and a pre-tax gain of more than $5 million in the third quarter of 2018, while improving our long-term risk profile. | ||
Peer-Leading Operating Return on Average Tangible Common Equity (ROATCE): Once again delivered peer- leading operating returns of 18.5% for 2018. | ||
Operating Earnings Per Diluted Common Share (Operating EPS): We delivered 2018 Operating EPS of $1.13 driven by total average loan growth of 10.6% and total average deposit growth of 11.6%, resulting in a year-end loan-to-deposit ratio at 94.4%. | ||
Increased Non-Interest Income: Non-interest income increased more than 9% from 2017 as we continued to expand our fee-based businesses across our footprint, specifically capital markets, mortgage banking and wealth management. Capital markets, which includes businesses built from the ground up, grew 29%. | ||
Increased Tangible Book Value: We grew tangible book value per common share 10% in 2018, while paying out 43% of earnings to shareholders in 2018. Our dividend yield remains in the top quartile of peer banks. | ||
Strong Capital Management: The ratio of tangible common equity to tangible assets grew from 6.74% at December 31, 2017, to 7.05% at December 31, 2018. |
Since the 2008 financial crisis and the onset of the Great Recession, F.N.B. has produced positive operating leverage, controlled expenses and is positioned to generate long-term profitable growth.
* | Non-GAAP measures are used by management to measure performance in operating the business that management believes enhances investors ability to better understand the underlying business performance and trends related to core business activities. In this proxy statement, the following are references to non-GAAP measures: operating net income available to common shareholders; operating earnings per diluted common share (Operating EPS); tangible book value per common share; operating return on average tangible common equity (ROATCE); Efficiency Ratio; return on average tangible common equity; tangible common equity to tangible assets; and operating return on average tangible assets (ROATA). Please refer to Annex A (Non-GAAP to GAAP Reconciliations) to this proxy statement, where we include information to reconcile the non-GAAP measures to GAAP. |
2 F.N.B. Corporation
Summary
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Record Total Revenue and Net Income
Continued Execution of Organic Growth Objectives
Total Assets (Billions) 16% CAGR |
Total Loans and Deposits (Billions) 16% CAGRs | |
Peer-Leading Profitability Metrics
2019 Proxy Statement 3
Summary
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Our Director-Nominees Qualifications
and Key Board Governance Practices |
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Our director-nominee candidates for election at our 2019 Annual Meeting are a highly-qualified group of individuals, including all of our outside directors being independent, and collectively possessing diverse backgrounds and perspectives, skills and experience, and the requisite leadership qualities necessary to oversee F.N.B.s management and business operations.
2019 Director-Nominee Candidates for Election
Name | Age | Director Since |
Independent | Background and Relevant Experience | ||||||||
Pamela A. Bena |
54 | 2018 | Yes | Accounting, Auditing | ||||||||
William B. Campbell (Independent Lead Director) |
80 | 1975 | Yes | Former Business Owner | ||||||||
James D. Chiafullo |
61 | 2012 | Yes | Partner Regional Law Firm | ||||||||
Vincent J. Delie, Jr. (Chairman, President and CEO) |
54 | 2012 | No | F.N.B. CEO | ||||||||
Mary Jo Dively |
60 | 2018 | Yes | General Counsel Globally Top Tier Ranked University | ||||||||
Robert A. Hormell |
72 | 2015 | Yes | Government Advisor | ||||||||
David J. Malone |
64 | 2005 | Yes | CEO Investment and Insurance Advisory Firm | ||||||||
Frank C. Mencini |
54 | 2016 | Yes | Healthcare Consulting, Accounting | ||||||||
David L. Motley |
60 | 2013 | Yes | Consultant Strategic Planning and Executive Development | ||||||||
Heidi A. Nicholas |
64 | 2015 | Yes | Commercial Developer Housing | ||||||||
John S. Stanik |
65 | 2013 | Yes | Former CEO/Director Public Companies | ||||||||
William J. Strimbu |
58 | 1995 | Yes | CEO Transportation Company | ||||||||
4 F.N.B. Corporation
Summary
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As demonstrated by the Director Age and Board Tenure charts below (excluding grandfathered Lead Independent Director William Campbell), we have a well-balanced Board composition to ensure we are consistent with our careful Board succession planning process.
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Our Nominating and Corporate Governance Committee and our Board have identified the skills, experience and background criteria highlighted below as key necessary qualifications criteria and attributes to enable our Board to effectively discharge its oversight and fiduciary responsibilities. Moreover, in evaluating the background, skills and experience of our director-nominees, both our Nominating and Corporate Governance Committee and our Board understand that certain intangible qualities and attributes, such as each nominees commitment to shareholder interests, leadership, skills, temperament and judgment, ability to challenge management when appropriate, integrity and understanding of F.N.B.s values and culture are critical to an effectively functioning Board.
2019 Proxy Statement 5
Summary
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Fully Informed and Committed Board
with an Effective Board Culture |
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Our Board understands that the commitment necessary to best serve the interests of F.N.B.s various stakeholders is culturally and ethically driven and sets the tone for responsible decision-making throughout the organization.
Proactive, Engaged and Committed Board |
Our Culture | |
Shareholder Engagement: Continued our annual shareholder engagement program. In 2018, our senior management and members of our Board reached out to shareholders who own approximately 56% of our common stock and to leading proxy advisory firms, for the purpose of discussing corporate responsibility matters and our executive compensation practices. For additional information on shareholder engagement, please see Say-on-Pay Support and Investor Engagement in our Compensation Discussion and Analysis.
Empowered Independent Lead Director: Our Independent Lead Director is annually selected by independent directors and is empowered with robust, broad authority.
Effective Board Succession and Refreshment Processes: Robust Board succession and refreshment process as illustrated by the addition of 13 directors and transition of 17 directors since 2009 (which includes Director Gurgovits who will retire in accordance with our Director Retirement Policy at the conclusion of our Annual Meeting on May 15, 2019).
Committed Board: High rate of attendance at 2018 Board and committee meetings that averaged approximately 98%.
Board Aligned with Shareholders: Strong alignment with shareholder interests, since a substantial portion of director compensation is paid in F.N.B. common stock. |
Risk Oversight: We protect against excessive risk-taking through multiple lines of defense, including Board oversight.
Honesty and Integrity: Our Code of Conduct applies to all directors and employees, providing a framework for high-level ethical conduct.
Continuing to Evolve and Innovate: We strongly encourage directors to remain current on such topics as corporate governance, regulatory compliance, fiduciary oversight standards and corporate responsibility development, by requiring them to participate in internally-developed training programs. We also provide them with equity grant incentives for participation at qualified national, regional and local continuing board education programs and provide them access to topical board guidance articles by distinguished scholars and industry leaders. |
6 F.N.B. Corporation
Summary
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Robust and Effective Corporate Governance
Board-Level Risk Management Framework |
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Our corporate governance practices are designed, in part, to ensure the Board maintains appropriate and prudent oversight of its risk management and fiduciary oversight responsibilities. The following are fundamental aspects of the Boards risk management and fiduciary governance framework:
Board-Level Oversight of Strategic Plan, Risk Tolerance, Effectiveness of Controls and Financial Performance | Board Composition, Governance Structure and Practices | |
Approving, reviewing and monitoring performance under our strategic plan, our annual operating plan, risk management framework and risk appetite, audit controls and financial performance. Review performance related to new and acquired businesses relative to pre-established Board-approved benchmarks.
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Maintaining a Board composition that is appropriate for the Companys needs and utilizes an effective governance structure that enables the Board to effectively oversee the Companys risk profile, regulatory/legal compliance, audit controls, risk tolerance levels and strategic plan. | |
Board Oversight of CEO and Other Senior and Performance |
Board Oversight of Companys Integrity and Reputation | |
Overseeing succession planning for the Companys CEO and, as appropriate, other members of senior management. Our independent directors annually evaluate the performance of our CEO and review senior management accountability for implementing the Companys strategic plans, regulatory compliance, risk tolerance levels and risk management and audit control framework. Monitoring and evaluating the alignment of the compensation of senior management with the Companys compensation principles. |
Supporting the authority and independence of the Companys risk management (including compliance), legal and internal audit functions. Emphasizing a culture of ethics, legal/regulatory compliance, a proactive risk management framework, and an independent audit process. The Board and each committee possess authority to engage independent outside auditors, accountants, legal counsel and other independent outside professional advisors. | |
Board Accountability | ||
Regularly evaluate the Board corporate governance policies and practices to support the Boards ability to make sound, well-informed decisions by considering risks and opportunities, and to facilitate its oversight of senior management. Requiring our Board to complete annual training on such topics as regulatory compliance, risk management and prudent corporate governance practices. In 2018, 100% of our Board completed their required regulatory training. |
Regularly schedule Board executive session meetings with independent directors to discuss CEO and Company performance or other matters. Perform rigorous annual self-assessments to evaluate the effectiveness and performance of the Board, its committees and our individual directors. Independent Lead Director routinely meets with CEO, committee chairs and directors to discuss financial performance and governance-related matters. |
2019 Proxy Statement 7
Summary
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Key 2018 Compensation Decisions
| Salary Changes: Salary increases for the NEOs for 2018 averaged 2.5%. |
| Incentive Opportunities: Annual Incentive and Long-Term Incentive award opportunities remained the same from 2017 to 2018. |
| Performance Results: Strong financial results led to an above-target payout under the Executive Incentive Compensation Plan (EIC Plan). |
o | Operating EPS was 3.1% above budget and 21.7% above 2017. |
o | Operating ROATCE and Efficiency Ratio vs. Peer Group were at the 91st and 79th percentile, respectively. |
Shareholder Outreach
The Compensation Committee is proactively engaged with its shareholders. Specifically, the Committee is committed to communicating the successful execution of our long-term strategy as a result of our 72% say-on-pay result in 2018. In 2018, our senior management and members of our Board reached out to shareholders who own approximately 56% of our common stock and to a leading proxy advisory firm. We heard some key themes from these meetings, and made direct changes based on these themes as follows:
| Added ROATA as an additional metric to our long-term incentive plan (LTIP), utilizing ROATA as the primary metric and total shareholder return (TSR) as a modifier. This is consistent with our Compensation Committees ongoing efforts to identify the most appropriate performance measurements that optimally align our executive compensation practices with the Boards expectations regarding our strategic direction and long-term value creation and the interests of our shareholders. |
| To demonstrate pay and performance alignment of our compensation plans, we added a target pay opportunity graph to the Compensation Discussion & Analysis (CD&A) (see page 48) and more detailed disclosure concerning the strong link between achievement of our performance measures and the vesting of long-term equity awards. Specifically, this additional disclosure illustrates a direct correlation between our TSR performance metric and the fact that our long-term performance-based equity awards do not vest unless the performance metrics are achieved. |
| Reorganized the CD&A with particular emphasis on an Executive Summary to better and more clearly articulate performance, highlights of the compensation program and our holistic pay-setting process. |
Business Strategy
The Board of Directors is in full support of the business strategy of the Company. The Directors have approved a strategic plan which continues to be successfully executed by management. At the same time, the Company, through its compensation programs, believes in a pay-for-performance culture. To that point, and as highlighted in the CD&A, the realized pay levels through short- and long-term incentives directly reflect alignment with the shareholder value over a multi-year period.
2019 Proxy Statement 9
Summary
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F.N.B.s Board understands that we are in business to benefit all of our stakeholders by optimizing profits for shareholders, making peoples lives better, serving our customers financial needs, helping businesses thrive, providing opportunities for our colleagues, including those from diverse and different backgrounds and experiences, strengthening the communities we serve and doing all that we can to contribute to and promote a cleaner and more sustainable environment. Corporate culture, like many intangible assets, is difficult to measure, but we believe our commitments highlighted below, along with the corporate responsibility strategies detailed in our 2019 F.N.B. Corporation Corporate Responsibility Report (2019 Corporate Responsibility Report) (located on our website at www.fnb-online.com/about-us/community-involvement) best illustrate our corporate culture.
10 F.N.B. Corporation
Summary
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Communities and Employees |
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At F.N.B. Corporation, we believe that having the best interests of our customers, communities and employees as a high priority translates into a company that helps our communities to improve. We are dedicated to providing the highest level of customer service and offering a work environment that provides meaningful opportunities to develop significant professional and workplace skills to move careers forward and to contribute to our success. We have been repeatedly recognized across our regions for our differentiated client experience, high level service and product offerings, workplace culture, innovative technology and leadership in the community.
Highlights include:
A top mobile app among Mid-Atlantic regional banks for features and innovation (S&P Global Market Intelligence 2018 US Mobile Banking Market Report) | ||
Nationally recognized with the Presidents E Award for Export Service. The E Award is the highest recognition any U.S. entity can receive for making a significant contribution to the expansion of U.S. exports (United States Department of Commerce 2018) | ||
Top 10 Regional Bank (Bankrate.com 2019) | ||
Winner of the United Ways 2018 Fred Rogers Good Neighbor Award, celebrating corporations and individuals who have dedicated countless hours to improving the community through volunteerism (United Way of Southwestern Pennsylvania 2018) | ||
Best Places to Work in Western Pennsylvania (Pittsburgh Business Times 2011-2018) | ||
Top Workplaces in Pittsburgh (Pittsburgh Post-Gazette 2011-2018) | ||
Top Workplaces in Northeast Ohio (The Plain Dealer 2015-2018) | ||
Best Places to Work in Baltimore, Finalist (Baltimore Business Journal 2017-2018) | ||
Winner of more than 40 Greenwich Excellence Awards since 2009, including six awards in 2017 for satisfaction among Small Business clients both nationally and regionally (Greenwich Associates 2018)* | ||
Americas 100 Best Banks (Forbes 2019) | ||
List of Americas Most Just Companies (JUST Capital 2018) | ||
Top 100 Organizations in Central Pennsylvania F.N.B. Corporation (PA Business Central 20142019) | ||
Lead sponsored the African American Directors Forum in 2017 and 2018, which is dedicated to promoting the elevation of African Americans on public company boards and C-suite executive management positions |
2019 Proxy Statement 11
About Our Annual Meeting
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Who can attend our Annual Meeting?
All shareholders as of the close of business on March 6, 2019 (the record date), or their duly appointed proxies, may attend our Annual Meeting. Even if you currently plan to attend our Annual Meeting, we recommend that you vote by any of the applicable methods described in the response to the question, How do I vote? so that your vote will be counted at our Annual Meeting if you later decide not to attend.
If your shares are held in street name by your bank or brokerage firm, you will need to bring a valid form of identification along with a copy of a brokerage statement reflecting your ownership of F.N.B. stock as of the March 6, 2019, record date, and check in at the registration desk at our Annual Meeting.
What are the requirements for admittance to the Annual Meeting?
Only shareholders as of the record date have a right to attend the Annual Meeting. In order to be admitted to the Annual Meeting, you will need to present a government-issued photo identification (such as a drivers license or passport) and, if you hold your shares in an account at a bank or brokerage firm, recent evidence of ownership of our common stock as of the record date (such as a brokerage account statement, a letter of proxy from your broker, or other intermediary). Entrance after the Annual Meeting has commenced will be prohibited. If you are representing an entity that is a shareholder, you must also present documentation showing your authority to attend and act on behalf of the entity (such as a power of attorney, written proxy to vote or letter of authorization on the entitys letterhead). We reserve the right to limit the number of representatives for any entity that may be admitted to the meeting. No cameras, recording equipment, large bags or packages will be permitted in the Annual Meeting. The use of cell phones, smart phones, tablets and other personal communication devices during the Annual Meeting is also prohibited.
What is a proxy?
Your proxy gives us authority to vote your shares and tells us how to vote your shares at the Annual Meeting or any adjournment. Three of our employees, who are called proxy holders (or proxies for short) and are named on the proxy card, will vote your shares at the Annual Meeting according to the instructions you give on the proxy card.
Why are you soliciting a proxy from me?
Our Board of Directors is soliciting your proxy to make sure that your vote is properly submitted and received on time, and to improve the efficiency of the Annual Meeting. We may ask for, or solicit, proxies using several methods.
We may solicit proxies by mail, personal interviews, telephone or fax. We may also use the Internet to solicit proxies. F.N.B. officers or employees may solicit proxies but will not receive any special compensation for doing so. We have engaged the firm of Laurel Hill Advisory Group, LLC to assist us with soliciting proxies.
What will our shareholders vote on at our Annual Meeting?
Our shareholders will vote on each of the following proposals which our Board recommends you vote FOR, at our Annual Meeting:
| Proposal 1. Election of the twelve (12) nominees for directors named in this proxy statement, each to serve for a term of one year and until the election of their successors; |
| Proposal 2. Adoption of an advisory (nonbinding) resolution to approve the 2018 compensation of our named executive officers; |
| Proposal 3. Ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for 2019; and |
| Any other business that may come before our Annual Meeting in compliance with the advance notice and other applicable provisions of our bylaws (described in the Shareholder Proposals discussion in this Proxy Statement). |
12 F.N.B. Corporation
About Our Annual Meeting
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Who is entitled to vote at our meeting?
Our Board has set March 6, 2019, as the record date for our Annual Meeting. Only holders of record of our common stock at the close of business on the record date are entitled to receive notice of and to vote at our Annual Meeting and any adjournment of our Annual Meeting. F.N.B. shareholders who plan to attend our Annual Meeting may obtain driving directions to the meeting location by contacting our shareholder services representative at (888) 981-6000 and asking to be connected to extension 4254.
What are the voting rights of our shareholders?
The only class of our securities that is outstanding and entitled to vote at our Annual Meeting is our common stock. As of the March 6, 2019, record date, we had 323,810,141 shares of our common stock each entitled to one vote per share with respect to each matter to be voted on at our Annual Meeting.
What is a quorum?
On March 6, 2019, our record date, we had 324,500,253 shares of common stock outstanding. Under Pennsylvania law, we must have a quorum before we can consider proposals at our Annual Meeting. A quorum is the number of shares that must be present at the meeting. In determining if a quorum exists, we count the number of shares represented by shareholders in person, as well as the number of shares represented by proxies. If you return a signed and dated proxy card, vote by Internet, vote by our QR Code feature, vote by telephone or vote in person at our Annual Meeting, you will be considered present for purposes of establishing a quorum.
What constitutes a quorum in order to conduct the Annual Meeting?
To have a quorum, we need the presence of shareholders or their proxies who are entitled to cast at least a majority of the votes that all shareholders are entitled to cast. If you return a proxy, whether you vote for or against a proposal, abstain from voting or only sign and date your proxy card, your holdings will be counted toward the quorum.
Although a quorum may be achieved, not all proposals will be subject to the same voting or approval requirement. Shareholders who hold their shares in an account at a bank or brokerage firm (street name) may need to take additional precautions to ensure that their vote counts. We discuss the vote required to approve each proposal under the question immediately below.
What vote is required to approve each matter?
In general, for a proposal to be approved, it requires a majority of the votes cast on the matter. Votes cast are votes for or against the proposal. If you abstain from voting, it will not count as a vote cast. However, please see the summaries below for more specific information about how proposals are approved and how abstentions will be counted with respect to each proposal. With respect to Proposals 1, 2 and 3, if you desire to abstain, you must check the Abstain box on your proxy card, or select the appropriate option when voting by the Internet, by QR Code or by telephone.
PROPOSAL 1. ELECTION OF DIRECTORS
Our bylaws provide that in the circumstance of an uncontested director election, which is the case for this years director election, our directors are elected by a majority of the votes cast in person or by proxy at our Annual Meeting. Our Articles of Incorporation do not authorize cumulative voting for the election of directors. To receive a majority of votes cast means that the shares voted for a directors election exceed the number of votes cast against that directors election. Moreover, our bylaws provide that any incumbent director who does not receive a majority of votes cast will promptly tender his or her resignation to the Board. Upon recommendation of the Nominating and Corporate Governance Committee, the Board shall determine whether to accept the resignation. If there is a contested election (which is not the case in 2019), directors are elected by a plurality of votes cast at the meeting.
2019 Proxy Statement 13
About Our Annual Meeting
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PROPOSAL 2. SAY ON PAY ADVISORY VOTE ON EXECUTIVE COMPENSATION
A majority of the votes cast will be required to approve the advisory vote on 2018 executive compensation. Because your vote is advisory, it will not be binding on the Board or the Corporation. This matter is considered a non-routine matter and, as a result, there may be broker non-votes (see description of broker non-votes in the next section, below).
PROPOSAL 3. RATIFICATION OF AUDITOR
A majority of the votes cast will be required to approve the ratification of our Audit Committees selection of Ernst & Young LLP as our independent registered public accounting firm for 2019. This matter is considered a routine item, and brokers have the discretion to vote uninstructed shares on behalf of clients.
Impact of Broker Non-Votes or Abstentions
With respect to Proposals 1, 2 and 3, any broker non-votes or abstentions will not be included in the total votes cast and will not affect the results of the voting on these three proposals.
How do I vote?
You can vote either in person at our Annual Meeting or by proxy whether or not you attend our Annual Meeting. When you or your authorized attorney-in-fact grants us your proxy, you authorize us to vote your shares of our common stock in the manner you specify on your proxy card. Giving a proxy allows your shares to be voted at our Annual Meeting even if you do not attend the Annual Meeting in person. If your shares are held in street name, you will receive a separate card from your bank or brokerage firm with instructions about the manner in which you may vote your shares.
If you hold your shares directly, to vote by proxy you must do one of the following:
| Vote by mail.* Complete, sign, date and return the enclosed proxy card in the envelope provided (the envelope requires no postage if mailed in the United States) or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. |
| Vote in person at the Annual Meeting. If you are a registered shareholder and attend our Annual Meeting, you may deliver your completed proxy card in person or request a voting ballot to vote in person at the meeting. Even if you returned a proxy to us before our Annual Meeting, you may revoke it and vote in person. |
| Vote by Internet* at www.proxyvote.com. Instructions are provided on your proxy card. If you vote by Internet, you should not return your proxy card. |
| Vote by QR Code* by scanning the QR Code on your proxy card with your mobile device. If you vote by QR Code, you should not return your proxy card. |
| Vote by telephone* at 1-800-690-6903. Instructions are provided on your proxy card. If you vote by telephone, you should not return your proxy card. |
*Proxies voted by mail, by Internet, by QR Code or by telephone must be received by 11:59 PM Eastern Time, on May 14, 2019, in order to be counted in the vote.
If you hold your F.N.B. shares in an account at a bank or brokerage firm, and you want to vote in person at our Annual Meeting, you will need to obtain a signed proxy card from the brokerage firm or the bank that holds your F.N.B. stock. If your F.N.B. stock is registered in the name of a bank or brokerage firm, you also may be eligible to vote your shares electronically by Internet, by the QR Code on your proxy card and/or notice card, or by telephone. Many banks and brokerage firms participate in programs such as the Broadridge Financial Solutions, Inc. online program. These programs provide eligible shareholders who receive a paper copy of this proxy statement the opportunity to vote by the Internet, by QR Code or by telephone. If your bank or brokerage firm is participating in one of these programs, your proxy card will contain instructions for voting by Internet, by QR Code or by telephone. If your proxy card does not reference Internet, QR Code or telephone information, please complete and return the proxy card in the enclosed self-addressed, postage-paid envelope.
14 F.N.B. Corporation
About Our Annual Meeting
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How will my shares be voted if I give my proxy but do not specify how my shares should be voted?
If you sign, date and return your proxy card, but do not provide voting instructions, or if you do not provide voting instructions when voting over the Internet, we will vote your shares represented by that proxy as recommended by our Board of Directors (see What are the Boards voting recommendations?), and this vote will count as a vote cast.
Can I change my vote after I have voted?
You may revoke your proxy and change your vote at any time before it is voted at our Annual Meeting. You may change your vote by delivering a written notice of revocation to our Corporate Secretary at F.N.B. Corporation, One North Shore Center, 12 Federal Street, Suite 503, Pittsburgh, PA 15212, by signing and returning a new proxy card with a later date, by voting by the Internet, by scanning the QR Code on your proxy card with your mobile device at a later date, by telephone, or by attending the Annual Meeting and voting in person. Only your latest instruction will be counted; however, your attendance at our Annual Meeting will not automatically revoke your proxy unless you vote again at our Annual Meeting or specifically request that your prior proxy be revoked by delivering a written notice of revocation prior to our Annual Meeting to our Corporate Secretary at F.N.B. Corporation, One North Shore Center, 12 Federal Street, Suite 503, Pittsburgh, Pennsylvania 15212.
How do I vote if my shares are held in street name?
If you hold your shares in street name in an account at a bank or brokerage firm, we generally cannot mail our proxy materials directly to you. Instead, your bank or brokerage firm will forward our proxy materials to you and tell you how to give them instructions for voting your F.N.B. shares.
Please ensure that you instruct your bank or brokerage firm how to vote your shares. Under New York Stock Exchange (NYSE) rules applicable to brokers, your broker has discretionary authority to vote your shares without receiving your instructions on routine matters. The only routine matter before our Annual Meeting will be the ratification of Ernst & Young LLP as the Corporations independent registered public accounting firm for 2019. All of the other proposals that will be considered at our Annual Meeting are non-routine matters. Your bank or brokerage firm does not have discretionary authority to vote on a non-routine matter unless you provide them with your voting instructions. The inability of your bank or brokerage firm to vote on a matter absent direction from you (while using its discretionary authority to vote on routine matters) is known as a broker non-vote on the non-routine matter. Therefore, in order to have your vote counted, please ensure that you instruct your bank or brokerage firm how to vote your shares with respect to the election of our directors, the advisory nonbinding resolution to approve the 2018 compensation of our named executive officers and the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for 2019.
How do I vote my 401(k) Plan shares?
If you participate in the F.N.B. Corporation Progress Savings 401(k) Plan (401(k) Plan), you may vote the number of shares of common stock credited to your account as of the record date. You may vote by instructing T. Rowe Price, the trustee of our 401(k) Plan, pursuant to the voting instruction card being mailed with this proxy statement to plan participants. The trustee will vote your shares in accordance with your duly executed voting instruction card, provided that the trustee receives it by 3:00 AM, Eastern Time, on Friday, May 10, 2019.
In the case of the 401(k) Plan, if you do not return your voting instruction card, the shares credited to your plan account will be voted by the trustee in the same proportion that it votes the shares for which it timely received voting instruction cards.
You may also revoke a previously given proxy card until 3:00 AM, Eastern Time, on Friday, May 10, 2019, by filing with the trustee either a written notice of revocation or a properly completed and signed voting instruction card or Internet vote, telephone vote, or scanned QR code vote having a later date.
How will we conduct the business of our Annual Meeting?
Our bylaws govern the organization and conduct of business at our shareholder meetings. Our bylaws specify that our Board Chairman is to preside at our shareholder meetings. Our Board Chairman, Vincent J. Delie, Jr., will serve as Chairman of our Annual Meeting and call the meeting to order. As Chairman of our Annual Meeting,
2019 Proxy Statement 15
About Our Annual Meeting
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Board Chairman Delie will determine, at his discretion, the order of the business to be conducted at our Annual Meeting and the procedure for our Annual Meeting. Board Chairman Delie will announce the opening and closing of the polls for each matter on which our shareholders will vote at our Annual Meeting.
Who can answer my questions?
Should you have questions concerning these proxy materials or our Annual Meeting or should you wish to request additional copies of this proxy statement or proxy card, you may contact our Corporate Secretary, at (888) 981-6000 and ask to be connected to extension 9833435.
How can I avoid receiving more than one set of proxy materials in future years?
If two or more registered shareholders live in your household or if a registered shareholder maintains two or more shareholder accounts, you may have received more than one set of our proxy materials. At your request, we will household your proxy materials (i.e., only one annual report and one proxy statement will be delivered to your address); however, a separate proxy card will be delivered for each account. On the proxy card, there will be a householding election where you will indicate if you consent to receive your proxy materials in a single package per household. Please refer to the section titled, Householding of Proxy Materials at the end of this proxy statement.
Is my vote confidential?
We process proxy instructions, ballots and voting tabulations that identify individual shareholders in a manner that protects your voting privacy. We will not disclose your vote either within the Company or to third parties, except:
| As necessary to meet applicable legal requirements; |
| To allow for the tabulation and certification of votes; and |
| To facilitate a successful proxy solicitation. |
Where can I find the voting results of the Annual Meeting?
We will announce the preliminary voting results at our Annual Meeting. The judges of election will tally the final voting results, and we will include the final voting results in a Form 8-K, which we will file with the Securities and Exchange Commission (SEC) by May 21, 2019.
Who is paying for the cost of this proxy solicitation?
The Company is paying the costs of the solicitation of proxies. The Company has retained Laurel Hill Advisory Group, LLC to assist in obtaining proxies by mail, facsimile or email from registered holders, brokerage firms, bank nominees and other institutions for the Annual Meeting. The estimated cost of such service is $8,000 including out-of-pocket expenses. Laurel Hill Advisory Group, LLC may be contacted at 888-742-1305.
The Company will also reimburse brokerage firms and other persons representing beneficial owners of shares held in street name for their reasonable costs associated with:
| Forwarding the Notice of our Annual Meeting to beneficial owners. |
| Forwarding printed proxy materials by mail to beneficial owners who specifically request them. |
| Obtaining beneficial owners voting instructions. |
In addition to soliciting proxies by mail, certain of our directors, officers and regular employees, without additional compensation, may solicit proxies on our behalf personally or by telephone, facsimile or email.
16 F.N.B. Corporation
Proposal 1. Election of Our Board of Directors
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PROPOSAL 1. ELECTION OF OUR BOARD OF DIRECTORS
We are asking shareholders to elect the 12 nominees named in this proxy statement and identified in the table titled, Current Directors and Nominees for Election at Our Annual Meeting, to serve on the F.N.B. Board of Directors until the 2020 Annual Meeting of Shareholders or until their successors have been duly elected and qualified.
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All 12 of the nominees currently serve on our Board of Directors.
11 nominees are independent, and one nominee serves as the Companys Chairman and CEO.
The Board and the Nominating and Corporate Governance Committee have concluded that each of our nominees should be recommended for re-nomination as a director after considering, among other things, the nominees (1) professional skills, education, background and experience; (2) executive, C-suite or senior-level leadership or policy-making positions; (3) public company board experience; (4) diversity; (5) intangible attributes, including prior contributions to the Board; (6) prior F.N.B. Board experience; (7) Board attendance and participation; (8) self-assessment results regarding performance on the Board; (9) temperament and judgement; and (10) education and specialized experience or skills relevant to the Board needs.
The nominees have skills and expertise in a wide range of areas, including technology, cybersecurity, accounting and auditing, financial advice, law and governmental regulation, financial services, insurance, risk management, transportation, healthcare, commercial development and public company experience.
The nominees are able to devote the necessary time and effort to F.N.B. matters. |
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THE BOARD RECOMMENDS THAT YOU VOTE FOR EACH OF THE NOMINEES.
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We do not know of any reason why any nominee named in this proxy statement would be unable to serve as a director if elected. If any nominee is unable to serve, the shares represented by all valid proxies will be voted for the election of such other person as may be nominated in accordance with our bylaws. Proxies cannot be voted for a greater number of persons than the number of nominees named in this proxy statement.
2019 Proxy Statement 17
Proposal 1. Election of Our Board of Directors
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Current Directors and Nominees for Election at Our Annual Meeting |
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Name | Age | Director Since |
Independent | Committee Memberships | ||||||||
Pamela A. Bena |
54 | 2018 | Yes | Audit; Risk | ||||||||
William B. Campbell (Independent Lead Director) |
80 | 1975 | Yes | Executive; Nominating and Corporate Governance | ||||||||
James D. Chiafullo |
61 | 2012 | Yes | Credit Risk and CRA; Nominating and Corporate Governance (Chair) | ||||||||
Vincent J. Delie, Jr. (Chairman, President and CEO) |
54 | 2012 | No | Credit Risk and CRA (Ex Officio); Executive (Chair) | ||||||||
Mary Jo Dively |
60 | 2018 | Yes | Credit Risk and CRA; Risk | ||||||||
Stephen J. Gurgovits(1) |
75 | 1981 | No | Credit Risk and CRA; Executive | ||||||||
Robert A. Hormell |
72 | 2015 | Yes | Compensation; Nominating and Corporate Governance | ||||||||
David J. Malone |
64 | 2005 | Yes | Audit; Compensation (Chair) | ||||||||
Frank C. Mencini |
54 | 2016 | Yes | Audit (Chair); Executive; Nominating and Corporate Governance; Risk (Ex Officio) | ||||||||
David L. Motley |
60 | 2013 | Yes | Compensation; Credit Risk and CRA; Risk | ||||||||
Heidi A. Nicholas |
64 | 2015 | Yes | Audit; Executive; Risk (Chair) | ||||||||
John S. Stanik |
65 | 2013 | Yes | Audit; Compensation | ||||||||
William J. Strimbu |
58 | 1995 | Yes | Compensation; Credit Risk and CRA (Chair); Nominating and Corporate Governance |
(1) | Director Gurgovits will retire in accordance with our Director Retirement Policy on May 15, 2019, at the conclusion of our Annual Meeting. |
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Relevant biographical information concerning each of our director-nominees for election at our Annual Meeting may be found below, including a brief discussion of the specific experience, qualifications, attributes or skills that led to our Boards conclusion regarding each director-nominees qualifications to serve on our Board in light of our business and structure. In considering whether to re-nominate each of the director-nominees, the Board, with the assistance of the Nominating and Corporate Governance Committee and in collaboration with our Independent Lead Director and Board Chairman, reviewed the qualifications of each director-nominee and engaged in the process described later in this proxy statement in the section titled, Criteria and Considerations for Recommending Director-Nominees.
18 F.N.B. Corporation
Proposal 1. Election of Our Board of Directors
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PAMELA A. BENA
Committees: Audit Committee Risk Committee |
Director Since: 2018
Age: 54
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Professional Experience Heeter Printing, printing company Vice President of Finance (2017-present) TMS International Corporation, industrial services company Manager of Financial Reporting (2015-2017) EHS Support LLC, environmental, health and safety company Chief Financial Officer (2015) American Bridge Company, privately-held construction company Senior Vice President of Finance (1994-2013)
Charitable Work and Community Involvement Women for Economic Leadership Development (WELD), develops and advances womens leadership to strengthen the economic prosperity of the communities it serves. Member | ||||
Director Qualifications Ms. Benas substantial and varied background, experience, and skills relative to audit, finance, accounting, regulatory compliance and risk management, including preparation of financial statements in accordance with GAAP, preparation of periodic SEC disclosure filings and the attendant quarterly review process, make her an ideal addition to the Board and its Audit and Risk Committees. Her broad-based experience and thorough understanding of audit/accounting principles and regulatory compliance considerations provides Ms. Bena the necessary tools to effectively contribute to the Board and Audit and Risk Committees. |
WILLIAM B. CAMPBELL
Independent Lead Director
Committees: Executive Nominating and Corporate Governance
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Director Since: 1975 (Founding Director)
Age: 80
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Professional Experience Retired Shenango Steel Erectors, Inc., commercial building construction company Owner
Charitable Work and Community Involvement Shenango Valley Industrial Development Authority Former Director Westminster College Former Trustee
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Director Qualifications Mr. Campbells background includes his historical knowledge and unique perspective on the various challenges that the financial services industry has confronted during his Board tenure. This provides him with the requisite decision-making background, and knowledge regarding corporate governance. His thorough understanding of Board responsibilities, along with his ability to act as an effective liaison to promote a cohesive board, qualify him as an excellent choice to serve as our Independent Lead Director. Mr. Campbells adherence to sound corporate governance principles, high ethical standards and his strong commitment to the maintenance of a clear independence of the Board from management, qualify him to serve as a member of our Board, its Nominating and Corporate Governance Committee, Executive Committee and to serve as Independent Lead Director. |
2019 Proxy Statement 19
Proposal 1. Election of Our Board of Directors
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JAMES D. CHIAFULLO
Committees: Credit Risk and Nominating and Corporate Governance (Chair) |
Director Since: 2012
Age: 61
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Professional Experience Cohen & Grigsby, P.C., law firm Partner (1999-present)
Charitable Work and Community Involvement Epilepsy Foundation of Western/Central PA Board Member Emeritus (active) The Pittsburgh Foundation Director, Chiafullo Family Fund Verland Foundation Counsel National Association of Corporate Directors Three Rivers Chapter Chairman Emeritus (active)
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Director Qualifications The breadth and depth of Mr. Chiafullos corporate and transactional legal experience, along with his particular focus in the areas of corporate governance, fiduciary duties and responsibilities, regulatory compliance and finance, provide him the necessary background to assist the F.N.B. Board with its oversight responsibilities of F.N.B.s strategies, financial performance, business operations and Board succession process. Moreover, Mr. Chiafullos extensive hands-on experience working with sophisticated technology systems and his legal work involving a major U.S. retailer in connection with cybersecurity threats and breaches, amply illustrate that he possesses the requisite background to offer the Board insight into these critical challenges. Mr. Chiafullos extensive corporate governance, credit, transactional and legal expertise provides the Board and its Nominating and Corporate Governance Committee and Credit Risk and CRA Committee with a director who is uniquely qualified to help the Board to properly evaluate the governance, business, credit, financial, regulatory and risk issues. |
VINCENT J. DELIE, JR.
Chairman
Committees: Credit Risk and CRA (Ex Officio) Executive (Chair) |
Director Since: 2012
Age: 54
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Professional Experience F.N.B. Corporation, financial services corporation CEO, President and Board Member (2012-present) Board Chairman (December 2017-present) First National Bank of Pennsylvania President, Board Member (2009-present) CEO (2011-present)
Charitable Work and Community Involvement United Way of Allegheny County Board Member Allegheny Conference on Community Development Board Member Team Pennsylvania Board Member | ||||
Director Qualifications Mr. Delie has more than 31 years of experience in the financial services industry which has included executive management roles with F.N.B. and other large financial institutions. During his leadership tenure with F.N.B., including serving as the Companys CEO since 2012, F.N.B. has grown from $8 billion in assets (2008) to more than $33 billion. Mr. Delies leadership of F.N.B. has produced significant expansion in terms of scale, geographic market, complexity of operations, revenue growth and the scope of its available products and services. Under Mr. Delies stewardship, F.N.B. has experienced record profitability and FNBPA has been recognized by various regional and national publications and firms which evaluate the quality of bank products and service offerings and deployment of innovative technology. In addition, Mr. Delie has built a strong risk management framework which enables F.N.B. to continue on its trajectory to remain one of the leading financial services companies in the United States. Mr. Delies significant accomplishments, experience, knowledge and leadership make him uniquely qualified to serve on our Board. |
20 F.N.B. Corporation
Proposal 1. Election of Our Board of Directors
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MARY JO DIVELY
Committees: Credit Risk and CRA Risk |
Director Since: 2018
Age: 60
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Professional Experience Carnegie Mellon University, private, non-profit research-based university Vice President and General Counsel (2002-present)
Charitable Work and Community Involvement Childrens Hospital of Pittsburgh Foundation Board Member Board of Trustees of Childrens Hospital of Pittsburgh Member Board of Visitors of UPMC Health System Member Pittsburgh Theological Seminary Board Member | ||||
Director Qualifications Ms. Divelys extensive and substantial legal background and experience, especially with respect to emerging risk management issues, such as business technology and cybersecurity, and the attendant regulatory environment, make her particularly suited to assist F.N.B. and its Board and Risk Committee in its oversight responsibilities of these critical matters. Ms. Dively will also help the Board, our Risk Committee and the FNBPA Credit Risk and CRA Committee remain diligent and proactive with evolving technology and cybersecurity issues, as well as the legal issues related to these matters. |
ROBERT A. HORMELL
Committees: Compensation Nominating and Corporate Governance |
Director Since: 2015
Age: 72
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Professional Experience Retired SEDA Council of Governments, public development organization serving 11 central Pennsylvania counties Chief Operating Officer/Chief Financial Officer F.N.B. Corporation Board Member (2015-present) First National Bank of Pennsylvania Board Member (2008-present)
Charitable Work and Community Involvement Presbyterian Senior Living Services Corporation Chair Presbyterian Senior Living Investment Corporation Board Member Faith Affordable Housing Corporation (Cape Coral, FL) Board Member SEDA-COG Joint Rail Authority Board Member Warrior Run Community Corporation, encourages communication and cooperation between six municipalities within the Warrior Run School District Board Member Warrior Run Education Foundation, foundation supporting educational improvements in the Warrior Run School District Special Advisor to the Chairman | ||||
Director Qualifications Mr. Hormell offers the Corporation a unique background, which includes previous financial institution board service and community and governmental advisory experience. Mr. Hormells key governmental, community and civic contacts have been important to F.N.B.s efforts to serve various communities within its markets. In addition, Mr. Hormell serves as an advocate on issues related to senior housing and medical care and has a fundamental understanding of challenges attendant to economic and regional development within Pennsylvania. Mr. Hormells background positions him to make significant contributions to the continued success of F.N.B., particularly within the central Pennsylvania communities in which the Corporations principal subsidiary, FNBPA, operates. Mr. Hormells extensive knowledge and leadership experience qualify him for service on our Board, our Nominating and Corporate Governance Committee and Compensation Committee. |
2019 Proxy Statement 21
Proposal 1. Election of Our Board of Directors
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DAVID J. MALONE
Committees: Audit Compensation (Chair) |
Director Since: 2005
Age: 64
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Professional Experience Gateway Financial Group, Inc., financial services group President and CEO (2005-present) Highmark, Inc., health insurer Board Member and Compensation Committee Member Allegheny Health Network, non-profit, eight hospital academic medical system in western Pennsylvania Board Member
Charitable Work and Community Involvement Allegheny Conference on Community Development Board Member, Executive Committee member, Personnel & Compensation Committee member, and Workplace Committee Chair Robert Morris University Board of Trustees Trustee, Executive, Finance and Governance Committee Member United Way, Board of Trustees Trustee, Governance and Executive Committee Chair Strategic Investment Fund Chair Pittsburgh Foundation Investment Committee Member Pittsburgh Penguins Foundation Board Member | ||||
Director Qualifications Mr. Malones experience as CEO of a financial services firm, which specializes in providing financial and insurance advice to businesses and high net worth individuals, and his board position with a major health care provider, provide him with the requisite background and appropriate perspective for assisting our Board with confronting challenges and issues attendant to a financial services organization operating in a heavily regulated industry. Mr. Malones experience in the financial sector and his diverse board experience, along with his demonstrated community involvement, qualify him for our Board, specifically for our Audit Committee, and to lead our Compensation Committee. |
FRANK C. MENCINI
Committees: Audit (Chair) Executive Nominating and Corporate Governance Risk (Ex-Officio)
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Director Since: 2016
Age: 54
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Professional Experience Inova Medical Group (Inova Health System), non-profit health organization in northern Virginia Chief Financial Officer (2017-present) Mencini Healthcare Associates, healthcare consulting firm President and CEO (2002-present) Arthur Anderson Partner (1988-2002)
Charitable Work and Community Involvement Inova Loudoun Hospital Various fundraising and finance volunteer positions Loudon County Public Schools Volunteer classroom reader and fundraising assistance Broadlands Community Fundraising and social event assistance | ||||
Director Qualifications As an experienced certified public accountant (CPA) who possesses extensive audit, regulatory compliance and business consulting experience, coupled with significant experience growing and leading a successful entrepreneurial business enterprise, including developing strategies to grow customers and profits, Mr. Mencini has a unique understanding of the challenges and issues confronting our shareholders. His deep and varied public accounting experience, and his background in internal controls and regulatory compliance matters, are extremely valuable to F.N.B. in view of our Companys complex operations. Likewise, Mr. Mencinis in-depth experience with providing direction to heavily-regulated financial services and healthcare firms relative to assessing data security risks and developing effective response and remediation plans, enable him to offer our Board knowledgeable and strategic insight regarding the dynamic and ever-increasing focus with respect to fraud, technology, cybersecurity, operational and client development issues. Mr. Mencini is a key resource for F.N.B. in overseeing and providing counsel on critical risk management, audit, and Board governance matters. |
22 F.N.B. Corporation
Proposal 1. Election of Our Board of Directors
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DAVID L. MOTLEY
Committees: Compensation Credit Risk and CRA Risk |
Director Since: 2013
Age: 60
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Professional Experience BlueTree Venture Fund, venture fund focused on early-stage life science and IT-related opportunities at the Series B stage of funding General Partner (2014-present) DLM-WCM, LLC, real estate development company General Partner (2016-present) MCAPS, LLC, professional services company providing construction management and IT capabilities and services CEO, President (2017present) Koppers, global wood treatment solutions company Board Member (2017present)
Charitable Work and Community Involvement Pittsburgh Gateways Corporation, community-based economic development group Board Member Allegheny Conference on Community Development Board Member African American Public Company Leadership Form Founder University of Pittsburgh Swanson School of Engineering Advisory Board Member Regional Industrial Development Corporation Board Member Inner City Junior Tennis Program Executive Director | ||||
Director Qualifications With over three decades of working and consulting with corporate and business leaders regarding strategic development, implementation and executive advising for more than 40 businesses in the United States across multiple industry sectors, Mr. Motley is especially qualified to serve as a key resource for the Corporations strategic planning processes and executive leadership development. Moreover, since the previous 10 years of Mr. Motleys career have been spent in the heavily regulated life sciences sector, he is specially positioned to be sensitive to the heightened financial services regulatory environment that F.N.B. must navigate in order to succeed. Mr. Motley is involved in developing and participating in various forums and programs designed to promote African American public company board members and C-Suite leadership positions, as well as providing insight into F.N.B.s diversity and inclusiveness initiatives. Mr. Motleys background and experience enables him to make significant contributions to our Board and the Compensation Committee, the FNBPA Credit Risk and CRA Committee, and Risk Committee. |
HEIDI A. NICHOLAS
Committees: Audit Executive Risk (Chair)
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Director Since: 2015
Age: 64
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Professional Experience Nicholas Enterprises, firm that engages in the development and management of commercial and multi-tenant residential real estate in central Pennsylvania Principal (2001-present)
Charitable Work and Community Involvement Central Pennsylvania Festival of the Arts, a five-day visual and performing arts festival Board Member Penn State University Hospitality Real Estate Strategy Group, conducts teaching, research, and outreach in real estate and strategy in the hotel industry Advisor
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Director Qualifications Ms. Nicholas investment in, and management of, a large commercial and multi-family residential portfolio and her deep familiarity with the real estate industry, coupled with her significant and comprehensive finance and complex transaction experience, afford her the necessary background to be an important contributor to our Board. Her experience has enabled her to have a firm understanding of the critical issues and challenges facing F.N.B. and has been valuable in her role on the Audit Committee, Executive Committee, and as Chair of the Risk Committee. |
2019 Proxy Statement 23
Proposal 1. Election of Our Board of Directors
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JOHN S. STANIK
Committees: Audit Compensation |
Director Since: 2013
Age: 65
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Professional Experience Retired Ampco-Pittsburgh Corporation, publicly-held international company, specializing in manufacturing forged and cast rolls for the metals industry and other specialty industrial equipment CEO and Director (2015-2018) Calgon Carbon Corporation, publicly-held environmental products and services company CEO, President and Director (2003-2012) Chairman (2007-2012) Huber Engineered Chemicals, privately-held industrial chemicals manufacturing company Director (2012-present)
Charitable Work and Community Involvement Greater Pittsburgh American Health Association Volunteer Fair Oaks Foundation, foundation supporting botanical gardens, zoos, food banks and community centers and organizations involved with orchestras, higher education, animal welfare and human services Board Member | ||||
Director Qualifications Mr. Staniks extensive CEO, C-suite and board experience with public companies operating in very competitive industries enables him to offer the Corporation and its Board a unique combination of leadership, strategic, business planning and risk management skills, as well as a critical perspective on investor expectations. Moreover, Mr. Staniks prior experience as a public company CEO and director adds further benefit to the Board and its Compensation and Audit Committees in view of his extensive experience with investors, risk management, executive compensation and financial disclosures, as well as his full understanding of strategic considerations attendant to the Corporations expanding business growth opportunities and investment thesis. |
WILLIAM J. STRIMBU
Committees: Compensation Credit Risk and CRA (Chair) Nominating and Corporate Governance |
Director Since: 1995
Age: 58
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Professional Experience Nick Strimbu, Inc., trucking company with common carrier authority President (1982-present)
Charitable Work and Community Involvement Teamsters Local 261 and Employers Welfare Fund, health consortium in Western Pennsylvania and Eastern Ohio with approximately 5,000 constituents Trustee Christian H. Buhl Legacy Trust Board Member Community Foundation of Western Pennsylvania and Eastern Ohio Vice President, Board Member of multiple affiliates Shenango Valley Foundation Board Member Strimbu Memorial Fund Board Member and Executive Committee Member Sharon Regional Health System Former Board Chairman, Board Member and Committee Member | ||||
Director Qualifications Mr. Strimbus long-term executive and leadership experience in regional transportation, healthcare and philanthropic entities provide him a valuable perspective from which to contribute to our Board. We believe that Mr. Strimbus executive, operational, economic development, philanthropic and financial experience qualifies him to serve as a member of our Board, as Chair of the FNBPA Credit Risk and CRA Committee and as a member of our Compensation and Nominating and Corporate Governance Committees. |
24 F.N.B. Corporation
Proposal 1. Election of Our Board of Directors
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Criteria and Considerations for
Recommending Director-Nominees |
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The Nominating and Corporate Governance Committee assists the Board with reviewing and identifying individuals qualified to become F.N.B. Board members. This committee utilizes Board-approved criteria set forth in our Corporate Governance Guidelines (www.fnb-online.com under the About Us tab, selecting the Investor Relations and Shareholder Services option and scrolling to the Corporate Governance heading), along with the Board composition criteria described below for purposes of making its determinations relative to recommending nominees for directors at Annual Meetings and filling vacancies on the Board. Directors chosen to fill vacancies will hold office for a term expiring at the end of the next Annual Meeting.
| Shareholders Interests. The individuals strong commitment to the ethical and diligent pursuit of shareholders best interests. |
| Professional Background and Experience. The individuals specific experience, background and education, as well as knowledge essential to the fiduciary oversight of the Companys businesses. |
| Leadership Roles. The individuals sustained record of substantial accomplishments and leadership in senior-level management positions in finance, law, business, government, education, technology or not-for-profit enterprises. |
| Judgment and Challenge. The individuals capability of evaluating complex business issues, ability to confront challenging circumstances and making sound judgments, and, when necessary, constructively challenging managements recommendations and actions. |
| Diversity. The individuals contribution to the diversity of the Board including differences of viewpoints, professional experience, education, skills and other demographics, such as race, gender and ethnicity, as well as the variety of attributes that contribute to the Boards collective strength. |
| Character and Integrity. The individuals character, integrity and interpersonal skills to work with other directors on our Board and executive management in ways that are effective and beneficial to the needs of the Company. |
| Time. The individuals willingness and ability to commit the necessary time and effort required for service on our Board and committees. |
| Independence. The individuals freedom from conflicts of interest that could interfere with their duties as a director. |
| Understands F.N.B.s Corporate Culture and Values. The individuals ability to effectively represent F.N.B. in the communities in which the Company operates. |
The Nominating and Corporate Governance Committee will evaluate all candidates suggested by other directors or third-party search firms (which the Company retains from time to time to help identify potential new director candidates), or a person recommended by a shareholder for nomination as a director in the same manner. For information on recommending a candidate for nomination as a director see, Shareholder Proposals and Nominations for the 2020 Annual Meeting.
The Board and Nominating and Corporate Governance Committee have concluded that each of our director-nominees should be recommended for re-nomination as a director. In considering whether to recommend re-nomination of a director for election at our Annual Meeting, the Board and the Nominating and Corporate Governance Committee considered, among other factors:
| The criteria for the nomination of directors described in our Corporate Governance Guidelines and summarized above. |
| Feedback from the annual Board and committee self-assessment process. |
| Attendance and preparedness for Board and committee meetings. |
| Outside board and other affiliations for actual or perceived conflicts of interest. |
| The overall contributions to the Board. |
2019 Proxy Statement 25
Proposal 1. Election of Our Board of Directors
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| The skill sets, background and experience needed for the Board to fulfill its responsibilities to the Company. |
| Adherence to Board and Company policies, including Code of Conduct and policies concerning F.N.B. stock ownership and continuing education requirements. |
Each of the nominees for election as a director was elected as a director at our 2018 Annual Meeting. Our Board believes that each of the nominees meets the criteria described above with high levels of professionalism, leadership, independence, intangible attributes uniquely suited for F.N.B., dedicated commitment to F.N.B. shareholder interests and F.N.B. corporate values, diversity, depth and breadth of experience that enables them to oversee management of the Company as an effective and engaged Board. No director or nominee has a family relationship to any other director-nominee for director or executive officer.
Security Ownership of Directors and Executive Officers
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The following table sets forth certain information as of the March 6, 2019, record date with respect to beneficial ownershipa of our common stock by: (i) each director and nominee; (ii) each currently employed NEO listed in the table entitled 2019 Summary Compensation Table under the section of this proxy statement entitled Executive Compensation and Other Proxy Disclosure; and (iii) all directors and executive officers as a group. As of the March 6, 2019, record date, we had 324,500,253 shares of common stock issued and outstanding. All persons named as beneficial owners of the Companys common stock have sole voting power and sole investment power with respect to the shares indicated as beneficially owned, otherwise we include a notation where the director or executive officer has shared voting or investment power with other persons.b
Name of Beneficial Owner | Shares Beneficially Owned |
Percentage Owned | ||||
Pamela A. Bena |
15,406 | * | ||||
William B. Campbell |
84,312 | (1) | * | |||
James D. Chiafullo |
58,987 | (2) | * | |||
Vincent J. Delie, Jr.#+ |
436,360 | * | ||||
Mary Jo Dively |
17,900 | * | ||||
Stephen J. Gurgovits |
301,888 | (3) | * | |||
Robert A. Hormell |
69,689 | * | ||||
David J. Malone |
85,602 | * | ||||
Frank C. Mencini |
35,705 | * | ||||
David L. Motley |
29,090 | * | ||||
Heidi A. Nicholas |
232,723 | (4) | * | |||
John S. Stanik |
42,730 | * | ||||
William J. Strimbu |
103,921 | (5) | * | |||
Vincent J. Calabrese, Jr.#+ |
196,324 | * | ||||
Gary L. Guerrieri#+ |
85,025 | (6) | * | |||
Robert M. Moorehead#+ |
41,167 | * | ||||
Barry C. Robinson#+ |
54,681 | * | ||||
All executive officers and directors as a group (19 persons)+ |
1,924,789 | (7) | 0.59% |
a | The term beneficial ownership means any person who, directly or indirectly, through any contract, agreement, arrangement, understanding, relationship or otherwise, has or shares voting or investment power with respect to F.N.B. common stock. |
b | Includes shares held or obtainable by the person within 60 days of March 6, 2019. This figure does not include time-based and performance-based restricted stock units (RSUs) granted to NEOs that do not vest within such sixty (60) day period (see footnote + below). |
# | Denotes a person who served as an executive officer of the Corporation during 2018. |
* | Unless otherwise indicated, represents less than 1% of all issued and outstanding common stock. |
26 F.N.B. Corporation
Proposal 1. Election of Our Board of Directors
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+ | The table does not include time-based or performance-based RSUs granted to NEOs, except to the extent that any of the same will vest within 60 days of March 6, 2019. Upon vesting, shares of common stock are issued on a one-for-one basis for such units. The amount of RSUs presently held by each NEO (with the performance-based RSUs being presented at target level) is as follows: Mr. Delie, 204,651 units; Mr. Calabrese, 63,044 units; Mr. Guerrieri, 25,327 units; Mr. Moorehead, 31,391 units; Mr. Robinson, 13,896 units; and all executive officers and directors as a group, 1,891,808 units. The number of shares actually issued upon the vesting of the units may be different based upon the Companys performance. |
(1) | Includes 2,072 shares owned by Mr. Campbells wife and 3,000 shares held in an IRA for Mr. Campbell. |
(2) | Includes 300 shares held in a custodial account for Mr. Chiafullos grandson. |
(3) | Includes 220 shares held in an IRA for Mr. Gurgovits. |
(4) | Includes 121,936 shares owned by the Fred Nicholas Marital Trust (Ms. Nicholas is Co-Trustee) and 90,990 shares owned by Nicholas Family Limited Partnership. |
(5) | Includes 1,900 shares owned by Mr. Strimbus children. |
(6) | Includes 719 shares held in a custodial account for Mr. Guerrieris daughter. |
(7) | Includes the amount of shares beneficially owned by Corporate Controller and Principal Accounting Officer, James L. Dutey, and Chief Legal Officer and Corporate Secretary, James G. Orie. |
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The table below lists the names of our current Executive Officers with their positions and ages. The table below does not include this information for CEO Vincent J. Delie, Jr. whose information is in the section of this proxy statement entitled Biographical Information Concerning Director-Nominees.
Name | Position with Company | Age as of Annual Meeting | ||
Vincent J. Calabrese, Jr. |
Chief Financial Officer | 56 | ||
James L. Dutey |
Corporate Controller and Principal Accounting Officer | 45 | ||
Gary L. Guerrieri |
Chief Credit Officer | 59 | ||
Robert M. Moorehead |
Chief Wholesale Banking Officer | 64 | ||
James G. Orie |
Chief Legal Officer and Corporate Secretary | 60 | ||
Barry C. Robinson |
Chief Consumer Banking Officer | 56 |
Vincent J. Calabrese, Jr. has served as our Chief Financial Officer since 2009. Mr. Calabrese joined the Company in 2007, serving as our Corporate Controller from 2007 to 2009. Prior to joining the Company, Mr. Calabrese was Senior Vice President, Controller and Chief Accounting Officer of Peoples Bank, Connecticut, from 2003 to 2007. During his 19-year tenure at Peoples Bank, Mr. Calabreses principal responsibilities included financial planning and reporting, accounting policies, general accounting operations and investor relations.
James L. Dutey joined our Company in January 2017 and has served as our Corporate Controller and Principal Accounting Officer since March 2017. Mr. Dutey has more than 23 years of accounting experience in the banking and financial services sectors. During his 12 years at Huntington Bancshares, Inc., Mr. Dutey served in various senior management roles, including Assistant Corporate Controller, with a primary focus on SEC and bank regulatory financial reporting requirements. Prior to joining Huntington Bancshares, Inc., Mr. Dutey was employed at KPMG LLP, ending his tenure there as senior manager for the assurance practice, primarily serving the banking industry. Mr. Dutey is a licensed Certified Public Accountant in the Commonwealth of Pennsylvania.
Gary L. Guerrieri became Chief Credit Officer of F.N.B. in April of 2011 and has been an Executive Vice President and Chief Credit Officer of FNBPA since 2005. In his role as Chief Credit Officer of the Company, Mr. Guerrieri is responsible for managing the entire credit function for the Company, including commercial and retail underwriting, credit administration, credit policy and credit risk management. He also has oversight of FNBPAs special assets, loan servicing and indirect lending functions. Prior to joining FNBPA in 2002, Mr. Guerrieri was an Executive Vice President of commercial banking with Promistar Financial Corporation, a bank holding Company that had been acquired by F.N.B. in 2002.
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Proposal 1. Election of Our Board of Directors
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Robert M. Moorehead became our Chief Wholesale Banking Officer in September 2015. From 2011 through 2015, Mr. Moorehead served as President of FNBPAs Pittsburgh Region. In his role as Chief Wholesale Banking Officer of the Company, Mr. Moorehead is responsible for managing Commercial Banking, Treasury Management, Investment Real Estate, Wealth Management, Private Banking, Insurance and International and Capital Markets. Prior to joining FNBPA, Mr. Moorehead was Senior Vice President and Regional Chief Credit Officer for First Niagara Bank from 2009 through 2011. Mr. Moorehead began his 44-year career at Equibank and, subsequently, joined National City Bank, where he served as Executive Vice President and Group Manager of Corporate Banking.
James G. Orie has been our Chief Legal Officer since 2004 and became Corporate Secretary in January 2015. Mr. Orie is principally responsible for the Corporations legal, regulatory, transactional and governance matters. Prior to joining F.N.B. as Corporate Counsel in 1996, Mr. Orie began his 34-year career as a financial services counsel with the Office of the Comptroller of the Currency, the Federal Home Loan Bank of Pittsburgh, Office of Thrift Supervision and, prior to joining F.N.B., as business leader of the Financial Services Practice Group of a Pittsburgh-based law firm.
Barry C. Robinson has served as our Chief Consumer Banking Officer since August 2015. As Chief Consumer Banking Officer, Mr. Robinson is responsible for leading the team which provides our full range of consumer financial products and services to our customers. Mr. Robinson joined our Company in July 2010 as Executive Vice President of our Consumer Banking operations, for which he had principal responsibility for strategic planning and oversight of the Companys consumer retail operations, including leading the development of our digital banking platform. Prior to joining the Company, Mr. Robinson held several key leadership and executive positions with large regional banks, including as regional leader in Cleveland, Ohio, of wealth management and private banking for PNC Bank and National City Bank, and head of corporate banking in Kentucky and Tennessee for National City Bank.
28 F.N.B. Corporation
Corporate Governance
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We are committed to effective corporate governance for the benefit of our shareholders, customers, employees and other stakeholders based on the fundamental principles of fairness, transparency, integrity and accountability which are the foundation of our Corporate Governance Guidelines.
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In performing its role, our Board of Directors is guided by our Corporate Governance Guidelines, which establish a framework for the governance of the Board and the management of our Company. The Corporate Governance Guidelines are annually reviewed, updated as appropriate, and, with the assistance of our Nominating and Corporate Governance Committee, approved by the Board. Our Corporate Governance Guidelines reflect broadly recognized and evolving best practice governance standards and regulatory requirements, including the NYSE corporate governance listing standards, SEC governance standards, The U.S. Investor Stewardship Group Governance Principles, and other widely accepted best practices promoted by proxy advisory firms, institutional investors and national organizations dedicated to promoting sound governance practices. We believe that the strength of F.N.B.s business and risk management processes reflects the high standards set by our rigorous governance structure. The full text of the Corporate Governance Guidelines is posted on our website at www.fnb-online.com/about-us, selecting the Investor Relations and Shareholder Services option and scrolling to the Corporate Governance heading.
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The Board is responsible for the oversight of management on behalf of the Companys shareholders. The Board and its committees meet regularly throughout the year to: (i) review and, where appropriate, approve long-term and short-term strategies, business and financial planning and performance, risk management, regulatory compliance, internal control and financial reporting and audit matters, executive compensation, Board and management succession, corporate culture, governance procedures and public, social and environmental responsibility matters; and (ii) provide oversight and guidance to, and regularly assess the performance of, the CEO and other senior executives. Here are some highlights regarding our corporate governance policies and practices:
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| Maintain an Overwhelmingly Independent Board. 11 of our 12 director-nominees are independent. Our independent directors are required to meet at least twice a year, but in practice, our Board regularly meets in executive sessions led by our Independent Lead Director. |
| Board Committees Composed of Independent Directors. Following our Annual Meeting, each of our Board Committees, which conduct regular meetings during the year (Audit, Compensation, Credit Risk and CRA, Nominating and Corporate Governance and Risk Committees), will be composed entirely of independent directors.* Each of these committees operates under a written charter (posted on the Corporations website at www.fnb-online.com/about-us, selecting the Investor Relations and Shareholder Services option and scrolling to the Corporate Governance heading) approved by the Board and annually reviewed by each committee. |
| Strive for Board Diversity and Seek Best Director Candidates. Our Corporate Governance Guidelines expressly state that we shall consider diversity, among other important factors, in connection with Board composition determinations. In addition to skills and experience, we believe that a Board composed of a mix of diverse backgrounds, including gender, age, race and ethnicity, creates a diversity of perspectives among the Board and thereby supports a more complex consideration of Company strategies and opportunities, and |
* | Under its committee charter, our Executive Committee is only authorized to determine matters which do not warrant convening a special meeting of the Board, but which should not be postponed until the next regular Board meeting, or other responsibilities which the Board may delegate to it. Our Executive Committee is chaired by our Board Chair/CEO who does not qualify as independent. The Executive Committee met two times in 2018. |
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Corporate Governance
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ultimately, a more productive Board. Our Board reflects an appropriate range of skills and professional expertise, as well as a broad range of diverse backgrounds. Of our director-nominees, 33% qualify as diverse under traditionally accepted diversity standards. |
| Shareholder Access to Board. Shareholders may communicate directly with our Board or any Board Committee or any individual director (see Communications with Our Board). |
| All Audit Committee Members Qualify Under All SEC, NYSE and Federal Bank Regulatory Standards. Each of our Audit Committee members qualifies as financially literate, a financial expert and independent under applicable SEC and NYSE standards and meet the stringent composition standards established by the federal bank regulatory agencies. In addition, our Board policy provides that Audit Committee members cannot serve on more than one other public Company audit committee without the approval of our Board. |
| Internal Auditor Reports Directly to Audit Committee. Our internal auditor, who oversees our internal audit function, reports directly to our Audit Committee. |
| Board Retirement Policy and Board Refreshment Practices. Our directors are required to retire at age 75. However, our board has grandfathered our Independent Lead Director, William B. Campbell, who has served on our Board since F.N.B. was organized in 1974. In its decision to grandfather Director Campbell, the Board took into account the considerable benefits that Director Campbells Board tenure offers to us, including his indispensable historical perspective, experience and institutional knowledge as a Board member regarding the significant prior U.S. economic and banking crises. Moreover, Director Campbells dedicated commitment and proactive engagement has enabled him to exercise his unique and effective leadership skills which provide him the respect of his Board colleagues, executive management and the necessary gravitas to serve effectively as our Independent Lead Director. We also believe in refreshing the Board. Since 2009, 17 F.N.B. directors will have transitioned off our Board as of our May 15, 2019, Annual Meeting date, while we have added 13 new independent directors during that same time period. |
| Independent Compensation Consultant. Our Compensation Committee retains an independent compensation consultant to provide the Compensation Committee with advice and guidance on our executive and Board compensation and incentive programs. |
| Shareholder Nominations and Proposals. Our Nominating and Corporate Governance Committee will consider director candidates recommended by shareholders. For details regarding our policy with regard to the consideration of director candidates recommended by our shareholders, we refer to Shareholder Proposals and Nominations for 2020 Annual Meeting and Identification and Evaluation of Director-Nominees elsewhere in this proxy statement and our Corporate Governance Guidelines on our corporate website. |
| Conduct Annual Board and Individual Director Self-Assessment Evaluations. The Board and its committees conduct rigorous annual self-evaluations. The self-assessment process is designed to evaluate Board, committee and individual director performance, to promote best-in-class governance practices and to serve as one of the considerations as to whether to renominate a director for election to the Board. The results of the self-evaluations are reported to the Board, as well as to each Board committee. In addition, each director receives his or her own assessment. Moreover, our self-assessment process enables us to identify ways for our Board and management to improve our corporate governance practices and enhance the Board and committee performance. |
| Comprehensive Director Education Program. The F.N.B. director orientation and education program, more fully detailed in our Corporate Governance Guidelines, provides the opportunity for new directors to participate in orientation sessions, including meetings with Board leadership and senior management, director mentorship and orientation arrangements, and to receive associated written materials describing, among other matters, Company policies, fiduciary responsibilities, regulatory requirements and strategic plan objectives. Directors are provided an annual education stipend to encourage them to attend local, regional and national director educational conferences, and each director is required to annually complete a full internal training curriculum designed to educate them on critical regulatory compliance matters. Each F.N.B. director attended at least one outside director education session or conference in 2018 (many F.N.B. directors attended multiple director education sessions), and completed F.N.B.s internal compliance curriculum. Additionally, our directors and committees are routinely provided industry and academic publications for the purpose of staying well-informed of current trends, issues and best practices with respect to corporate governance, risk management, compensation, audit, regulatory, corporate responsibility, |
30 F.N.B. Corporation
Corporate Governance
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financial and accounting and other related topics. Additionally, from time-to-time, F.N.B. senior management leaders make presentations to the Board on current topics and challenges, including employment practices, technology and risk management, legal and regulatory, new products, business operations, cybersecurity, corporate governance and responsibility, and other matters that help the Board to better understand the Companys compliance with applicable laws and standards. Also, senior management provides opportunity for F.N.B. directors to receive specialized one-on-one training on various topics concerning the Companys operations or risk management and compliance processes. |
| Directors Committed to Performance. The average attendance by directors at Board and committee meetings during 2018 was approximately 98%. Our Corporate Governance Guidelines set forth the expectation that directors will attend all shareholder and Board meetings and those committee meetings of which they are a member, and at a minimum, at least 75% of Board and committee meetings in the aggregate. Each of our director-nominees attended our 2018 Annual Meeting and at least 75% of our Board and committee meetings in the aggregate (see Our Board of Directors and its Committees Board Structure and Responsibilities). Our Board met eight times in 2018. We expect all the members of our Board to attend our 2019 Annual Meeting. |
| Corporate Governance Policies Published on Website. The Board has adopted strong and transparent governance policies which are disclosed on the Companys website at www.fnb-online.com/about-us, selecting the Investor Relations and Shareholder Services option and scrolling to the Corporate Governance heading. |
| Provide for Strong Clawback Policy. Our compensation recoupment or clawback policy allows our Board to recoup any excess compensation paid to our NEOs if the Company restates its financial results upon which an award is based due to fraud, intentional misconduct or gross negligence. |
| Accountability. Our Code of Conduct applies to our directors, as well as all our employees, providing a framework for the highest standards of professional conduct and cultivating a culture of honesty, integrity and accountability. |
| Prohibition Against Hedging and Other Derivative Strategies Involving Company Securities. The directors and executive officers of F.N.B. are prohibited from engaging in hedging strategies using puts, calls or other derivative securities based on the value of F.N.B. common stock. For purposes of this policy, executive officers are those persons designated by the F.N.B. Board under Section 16 of the Securities Exchange Act. |
Also, Company directors and executive and senior officers are prohibited from conducting the following activities regarding Company securities: |
| Transactions in any derivative of a Company security, including but not limited to puts, calls and options, which are based on the value of Company stock other than stock options that may be awarded by the Company under its 2007 Incentive Compensation Plan, as amended. |
| Day trading of Company securities (buying and selling the same security during one calendar day). |
| Short-selling Company securities (selling the securities at a specified price and on a specified date without owning the securities on the trade date). |
Directors and Employees consult with the Legal Department if they have any questions pertaining to these restrictions. |
| Independent Lead Director. In view of our combined Chairman/CEO Board structure, the Board recognizes the importance of independent and proactive leadership on the Board, as evidenced by its designation of an Independent Lead Director who is annually selected by the independent directors, and provided with the necessary tools to serve as an effective counterbalance under our Board structure (see description of Unified Board Structure in this proxy statement). Our Independent Lead Director possesses broad powers, including the right to call a special meeting of independent directors, consultation with the Chairman/CEO to create Board meeting agendas, materials and schedules, as well as leading executive sessions. Our Independent Lead Director attends all key Board committee meetings and consults with the committee chairs, including with the Compensation Committee Chair regarding CEO performance and compensation. For more detail regarding our Independent Lead Directors qualifications and responsibilities, we refer you to Biographical |
2019 Proxy Statement 31
Corporate Governance
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Information Concerning Director-Nominees (refer to director William B. Campbells biography) and the Independent Lead Director description under the Our Board of Directors and Its Committees discussion and the description contained in our Corporate Governance Guidelines at our corporate website at www.fnb-online.com/about-us, selecting the Investor Relations and Shareholder Services option and scrolling to the Corporate Governance heading. |
| Maintain Stock Ownership Requirement. Our Board has implemented stock ownership policies for our senior management and Board which are designed to ensure that their interests are meaningfully aligned with shareholders interests, as more fully detailed under the caption, Director Stock Ownership Requirements of this proxy statement and described in our Corporate Governance Guidelines. |
| Board and Committee Access to Outside Advisors. Our Board and its committees may retain their own legal counsel and other professional advisors without management approval and at the Companys expense. |
| Maintain a Declassified Board. The full Board of Directors is elected annually. |
| Properly Align Executive Compensation. As discussed more fully in the CD&A of this proxy statement, we have adopted specific policies and practices to align executive compensation with shareholder interests. These policies and practices are routinely reviewed by the Compensation Committee in conjunction with advice and counsel of a qualified independent consultant. A majority of the incentive compensation opportunities allocated to key executives is not guaranteed since it is tied to Company performance and aligned with shareholder interests. |
| Regular Review of Management and Succession Planning. The Board proactively engages in the review of the Board, CEO, executive, senior and mid-level management succession planning. |
| Continuous Focus on Strategic Planning. The Board and management regularly focus on strategy and planning, including Board oversight of the strategic planning development process and approval of the Strategic Plan. The Board regularly receives updates on the Companys progress under our Strategic Plan. |
| Remain Socially Responsible. As discussed in our 2019 Corporate Responsibility Report, our commitment to the environment, overall community well-being, employee welfare and socially responsible charitable endeavors is an essential part of our culture and corporate values (view our 2019 Corporate Responsibility Report on our website at www.fnb-online.com/about-us/community-involvement. Our Nominating and Corporate Governance Committee has oversight of the Companys corporate ESG strategies. |
| No Adoption of a Poison Pill. There is no shareholder rights plan or poison pill. |
| No Family Relationships Among Directors and Executive Officers. No immediate family relationships exist between any of our directors or executive officers. |
| Active Shareholder Engagement Program. We conduct extensive governance reviews and investor outreach throughout the year. Management provides regular reports to the Board, the Compensation Committee and the Nominating and Corporate Governance Committee to keep them informed of shareholder perspectives on a variety of issues, including performance, compensation practices, environmental, social and governance matters and to consider and address these matters effectively. For additional information regarding our 2018 shareholder engagement efforts, please see Say-on-Pay and Investor Engagement in the Compensation Discussion and Analysis. |
We encourage you to visit our corporate website at www.fnb-online.com/about-us, selecting the Investor Relations and Shareholder Services option and scrolling to the Corporate Governance heading for additional information about our Board, its committees, our Corporate Governance Guidelines, our Code of Ethics, our Code of Conduct and our Audit, Compensation, Credit Risk and CRA, Executive, Nominating and Corporate Governance and Risk Committee Charters. We also include additional information on these topics in other sections of this proxy statement.
Shareholders and interested parties who wish to contact our Board of Directors, any Board member, including the Lead Independent Director, any committee chair, or the independent directors as a group, may mail their correspondence to: F.N.B. Corporation, Attention (name of Board member(s)), c/o Corporate Secretarys Office, One North Shore Center, 12 Federal Street, Suite 503, Pittsburgh, PA 15212, or e-mail the Office of the Secretary at FNBCorporateSecretaryOffice@fnb-corp.com.
32 F.N.B. Corporation
Corporate Governance
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During 2018, our Board reviewed its current unified leadership structure combined Chairman and CEO with a strong Independent Lead Director taking into consideration the Boards composition, the Companys size and complexity of its business operations, the regulatory framework under which the Company operates, the Companys shareholder base, the Companys Peer Group and other relevant factors. Our Board has determined that a combined Chairman and CEO position, coupled with a strongly empowered and effective Independent Lead Director, continues to be the most appropriate Board leadership structure for the Company because it provides for continuity of expertise in both business and corporate governance, promotes a better Board-level understanding of the inherent risks associated with the operation of our business and ensures that the Company has a clear public face for our shareholders, customers and employees.
Unified Perspective and Enhanced Effectiveness |
A combined Chairman/CEO:
Is in the best position to be aware of major issues facing the Company on a day-to-day and long-term basis, and to identify and bring key risks and developments facing the Company to the Boards attention (in coordination with the Independent Lead Director as part of the agenda-setting process);
Eliminates the potential for confusion as to who leads the Company, providing the Company with a single public face in dealing with shareholders, employees, regulators, analysts and other constituencies; and
A substantial majority of our peers also successfully utilize a similar board structure with a combined Chairman and CEO, as well as a lead or presiding independent director.
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2019 Proxy Statement 33
Corporate Governance
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Effective Counterbalances |
As set forth in our Corporate Governance Guidelines, our Independent Lead Director:
In coordination with the Chairman/CEO, reviews and approves agendas for Board meetings, materials, information and meeting schedules.
Has the authority to add items to the agenda for any Board meeting.
Presides at executive sessions of independent directors.
Serves as a non-exclusive liaison between the other independent directors and the Chairman/CEO.
Coordinates the Chairman/CEOs annual performance review.
May call special meetings of the independent directors at his/her discretion and chairs any meeting of the Board or shareholders at which the Chairman is absent.
Serves as a conduit of information and feedback between the Chairman/CEO and other directors between Board meetings.
Meets regularly one-on-one with the CEO.
Is available to meet with major shareholders and regulators.
Attends meetings and consults with the Compensation Committee regarding its consideration of CEO performance and compensation.
Consults with the Chairman/CEO, Chair of the Nominating and Corporate Governance Committee and Chair of the Compensation Committee regarding CEO succession planning and facilitates updates to the Board.
In conjunction with the Chair of the Compensation Committee, discusses with the Chairman/CEO the Boards annual evaluation of his/her performance as CEO.
Consults with the Chair of the Nominating and Corporate Governance Committee on the Boards annual performance evaluation.
For purposes of promoting independent candidates for nomination or re-nomination for election to our Board, our Independent Lead Director is a member of the Nominating and Corporate Governance Committee.
Coordinates with the Chairman/CEO and Chair of the Nominating and Corporate Governance Committee Board succession planning.
When necessary, acts as a liaison to facilitate communications among the Chairman/CEO, management and directors for the purpose of ensuring a proper and free and full information flow among the parties with the goals of optimizing the effectiveness of Board and committee meetings.
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34 F.N.B. Corporation
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Our principal Board committees serve as joint committees for both the Corporation and FNBPA and consist of the Audit Committee, Compensation Committee, Nominating and Corporate Governance Committee and Risk Committee (collectively, the Standing Committees). The Board has determined that all directors who served as members of the Standing Committees (including their Chairs) during 2018 are independent under the applicable NYSE standards and SEC rules and otherwise meet the specific eligibility requirements for these committees. The Corporation also has an Executive Committee. Each member of the Executive Committee has been determined by our Board to be independent except for Mr. Gurgovits (former CEO) and Mr. Delie (current CEO). FNBPA has a Credit Risk and CRA Committee. Each member of FNBPAs Credit Risk and CRA Committee has been determined by our Board to be independent except for Mr. Gurgovits (former CEO). The composition of the Credit Risk and CRA Committee is consistent with federal bank regulatory standards. Board Chairman Delie is an ex officio member of the Credit Risk and CRA Committee. We identify the current members and chairs of our Board and FNBPA committees in the table, Current Directors and Nominees for Election at Our Annual Meeting in this proxy statement.
Executive Committee
The Executive Committee, consistent with Pennsylvania law, our bylaws and the committee charter, assists the Board by offering an efficient means of considering matters and issues during intervals between regular meetings of our Board or considering specific responsibilities which may be delegated to it from time-to-time by the Board. The Executive Committee met two times in 2018.
Audit Committee
In accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, the Audit Committee is responsible primarily for selecting and overseeing the services performed by our independent registered public accounting firm and internal audit department, evaluating our accounting policies and system of internal controls and reviewing significant financial transactions and compliance matters. In addition, the Audit Committee approves all audit services and permitted nonaudit services, as well as all engagement fees and terms related thereto. The Audit Committee met 13 times during 2018. The Board has determined that each member of the Audit Committee, Directors Bena, Malone, Mencini, Nicholas and Stanik, qualify as being financially literate, and each of these Audit Committee members also qualifies as an audit committee financial expert as defined by the SEC. The determination that each of the Audit Committee members qualifies as an audit committee financial expert included an evaluation of each persons qualifications and other relevant experience under applicable SEC rules and definitions, including consideration of each persons work, financial, business and professional experience. (For more detail regarding the work, financial, business and professional experience of Directors Bena, Malone, Mencini, Nicholas and Stanik considered by the Board in determining financial literacy and expertise, see the section titled Biographical Information Concerning Director-Nominees.) Each Audit Committee member also meets the additional criteria for independence of audit committee members set forth under the SEC rules, NYSE listing standards, F.N.B. categorical independence standards, and the applicable federal bank regulatory requirements. We refer you to the Report of the Audit Committee in this proxy statement.
Compensation Committee
The Compensation Committee (also referred to as the Committee in the Executive Compensation and Other Proxy Disclosure discussion of this proxy statement) is responsible primarily for reviewing the compensation arrangements for our executive officers, including the CEO, administering our equity compensation plans and reviewing the compensation of the Board. For a description of the Compensation Committees processes and procedures, including the roles of our executive officers and independent compensation consultants in the Compensation Committees decision-making process, we refer you to Executive Compensation and Other Proxy Disclosure elsewhere in this proxy statement. The Compensation Committee met nine times in 2018. The F.N.B. Board has affirmatively determined that each member of the Compensation Committee, Directors Hormell, Malone, Motley, Stanik and Strimbu, qualifies under the NYSE, F.N.B. categorical, and Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act) compensation committee independence rules and as outside directors for purposes of Section 162(m) of the Internal Revenue Code of 1986 (Code).
2019 Proxy Statement 35
Corporate Governance
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Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee assists in the development of standards concerning the qualifications and composition of our Board and conducts succession planning for our Board. In addition, the Nominating and Corporate Governance Committee recommends director candidates to stand for election to our Board and seeks to promote the best interests of the Company and its shareholders through implementation of prudent and sound corporate governance principles and practices, including oversight of the Companys corporate responsibility strategies. We refer you to the discussions under Identification and Evaluation of Director Candidates located elsewhere in this proxy statement. The Nominating and Corporate Governance Committee met six times in 2018.
Risk Committee
The Risk Committees principal responsibility is to assist the Board with review and oversight attendant to Company management of its enterprise-wide risk program (see discussion under Risk Oversight later in this proxy statement), including establishing, in consultation with the Chief Risk Officer and senior management, acceptable risk tolerance levels for the Company and reporting this information to the Board. The Risk Committee met seven times in 2018.
Credit Risk and CRA Committee
The purpose of the Credit Risk and CRA Committee is to oversee the credit and lending strategies and objectives of FNBPA, including: (i) oversight of credit risk management and strategies, including approval of internal credit policies and establishment of loan portfolio concentration limits; (ii) review of the quality and performance of the Banks loan portfolio; (iii) approval of intercompany loans subject to Regulation W and loans to Bank insiders (as defined under Regulation O) in accordance with applicable regulatory requirements; and (iv) oversight of the Banks Community Reinvestment Act (CRA) responsibilities, including the monitoring of FNBPAs community lending and investment activities relative to CRA laws and regulations, our CRA Policy, and our community development activities and collaborations with national, regional and local community development organizations. In addition, the Credit Risk and CRA Committee receives reports on our affirmative credit programs and fair lending matters. The Credit Risk and CRA Committee met eight times in 2018.
The Audit Committee, Compensation Committee, Credit Risk and CRA Committee, Executive Committee, Nominating and Corporate Governance Committee and Risk Committee each operate under written charters adopted by the Board. You may review these charters on our website at www.fnb-online.com/about-us, selecting the Investor Relations and Shareholder Services option and scrolling to the Corporate Governance heading. The principal responsibilities of the Standing Committees described above are qualified by reference to the charters of these committees and relevant sections of our bylaws.
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Succession planning is a priority for the Board and our senior management, with the goal of ensuring a strong pipeline of leaders for the future. The CEO, in collaboration with his executive management team, regularly reviews the management succession plan for our Chairman/CEO and for key executives and senior management positions on a regular basis and annually consults with the Compensation Committee and the Board, including formal presentations to both regarding the management succession plan. This plan identifies a readiness level for internal candidates, leadership capabilities and ranking for internal candidates and incorporates the flexibility to define an external hire as a succession option, particularly for positions where, for example, capability gaps are identified. Our succession planning efforts are a dynamic process which entails regular updates, ongoing evaluations and strategic considerations.
36 F.N.B. Corporation
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Our Boards succession planning is continuously focused on the composition of the Board and its committees, upcoming retirements under our director retirement policy, individual director contributions and performance, committee composition and leadership, as well as diversity considerations and recruiting strategies for adding new directors. In its succession planning, the Board and the Nominating and Corporate Governance Committee consider the annual self-assessment results of the Board, committees and individual directors, as well as other appropriate information, including the types of skills and experience desirable for future Board members, and the needs of the Board and its committees at the time, in light of the Companys strategy, business plans, operations and risk profile.
Our Nominating and Corporate Governance Committee is responsible for leading, in collaboration with our Independent Lead Director and Board Chair, our Board succession and refreshment processes. Our Boards succession plan and refreshment practices are the culmination of a thoughtful and methodical process which is informed by our Companys engagement with shareholders and other stakeholders, identification of a diverse pool of candidates using multiple sources, the results of our annual self-evaluation and director nomination processes and the identification of gaps in the Board composition relative to the Companys business operations and risk profile. We believe these actions also maintained an appropriate balance of new perspectives and experience on the Board. Most recently, our Board succession planning and refreshment processes resulted in the addition of two new women to the Board in 2018, including the elevation of one of our female directors to a Board leadership position as Chair of our Risk Committee in 2018.
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The Company has a Code of Conduct that applies to each of the Companys Directors and employees, including its principal executive officer, principal financial officer and principal accounting officer, and a Code of Ethics that applies to the Companys senior officers and employees. The Company annually requires all directors and employees to certify that they understand their responsibilities under the Code of Conduct. Also, the Companys directors and employees are required to participate in annual training relative to the standards set forth in the Code of Conduct and Code of Ethics. You may view copies of our Code of Conduct and Code of Ethics on our website at www.fnb-online.com/about-us, selecting the Investor Relations and Shareholder Services option and scrolling to the Corporate Governance heading. In addition, the Company will provide copies of its Code of Conduct and Code of Ethics, without charge, to any person upon written request sent to our Corporate Secretary at F.N.B. Corporation, One North Shore Center, 12 Federal Street, Pittsburgh, Pennsylvania 15212. The Company will disclose any changes in or waivers from its Code of Conduct or Code of Ethics by posting the revised Code(s) or other related information on its website or by filing a Form 8-K.
2019 Proxy Statement 37
Corporate Governance
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Our Board recognizes that effective management of our Company requires understanding, identification and management of risk. Our Board oversees risk management through multiple layers of defense and receives reports regarding F.N.B.s risk management processes and issues from our Audit and Risk Committees, executive management and our Chief Risk Officer.
Entity | Primary Responsibilities for Risk Management | |
Risk Committee consisting entirely of independent directors |
✓ Review and approval of the enterprise-wide risk management practices of the Company and report to the Board.
✓ Review and approval of the Companys Statement of Risk Appetite on an annual basis, and approval of any material amendment to the risk appetite statement.
✓ Review of significant financial, legal, regulatory and other potential risk exposures and the steps management has taken to monitor, control and report such exposures and risk mitigation strategies to the Board.
✓ Evaluate risk exposure and tolerance, approve Board-level limits or exceptions and report results and exceptions to the Board.
✓ Review, evaluate and approve the Companys policies and practices with respect to risk assessment and risk management, and report any changes to the Board.
✓ Review, with respect to risk management and compliance, (1) reports and significant findings of the Companys Risk Management and Compliance Department (Risk Division) and the Internal Audit Department (Internal Audit); (2) significant reports from regulatory agencies and managements responses; and (3) the Risk Divisions scope of work and its planned activities and report such matters to the Board.
✓ Report updates to the Statement of Risk Appetite to the Board.
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Audit Committee consisting entirely of independent directors and who qualify under the requirements of the SEC, NYSE and FDIC |
✓ Oversight responsibility with respect to regulatory, compliance and loan review, risk assessment and risk management, and report to the Board.
✓ Review and discussion of policies with respect to regulatory, compliance and loan review, risk assessment and risk management, and report to the Board.
✓ Review of quarterly risk appetite metric dashboard.
✓ Review of quarterly reports regarding corporate-wide compliance with laws and regulations, credit quality, and identified internal control risk gaps and associated remediation plans and report to the Board.
✓ Review of any risk related items identified by the Senior Management Disclosure Committee or the independent registered public accountant that have potential significant financial statement impact or require significant financial statement/regulatory disclosures and report to the Board.
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38 F.N.B. Corporation
Corporate Governance
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Senior Management |
✓ Chief Risk Officer: Principally responsible for implementation and monitoring of an effective risk management framework and daily oversight of risk and collaboration with the Board and Risk Committee regarding the appropriate information to enable both to effectively establish F.N.B.s risk tolerance limits and oversee the Companys enterprise-wide risk management policies, strategies and tactics.
✓ Internal Audit: Provide reliable and timely information to our Board, Audit Committee and management regarding our Companys effectiveness in identifying and appropriately controlling risks.
✓ Risk Management Council: Composed of senior-level officers to identify, quantify, assess, monitor, evaluate and recommend policies and solutions to deal with the F.N.B. enterprise-wide risks and risk control framework, emerging risks within our industry, risks attendant to new business initiatives, the adequacy of any risk remediation plans in our Companys businesses, as well as identify and implement risk management best practices. Also, this committee reviews and evaluates the Companys risk management policies and practices, relative to credit, liquidity, regulatory, legal, operational, technology, cybersecurity, compliance and fiduciary matters.
✓ Compliance Department: Led by our Chief Compliance Officer, this department reports to our Chief Risk Officer and is responsible for oversight of our Companys regulatory and other compliance matters. Each of our key department and operational areas are responsible for self-monitoring their compliance responsibilities and these self-monitoring processes are overseen by our Compliance Department.
✓ Company-Wide Risk Management Processes: Reporting up through the Risk Management Council are a number of other risk management committees focused on a variety of risk disciplines throughout the Company, including: Asset and Liability Risk Committee (ALCO), Operational Risk Committee, Information and Cybersecurity Committee, Fraud Risk Committee, Model Risk Committee, Regulatory and Compliance Risk Committee, Business Continuity Planning Committee and the Project Approval Committee. Also, we have established various risk management sub-committees aligned throughout our business and support areas and each of these sub-committees reports to the Risk Management Council.
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We also encourage active engagement among the different areas within the Company responsible for our risk management oversight. Since certain of the risk management issues and processes are considered by both our Audit and Risk Committees, our governance structure ensures that appropriate information and knowledge is disseminated between these two committees by having certain interlocking members of both committees, and providing these committees authority to conduct joint sessions to hear reports and discuss key risk management and audit matters affecting our Company.
2019 Proxy Statement 39
Corporate Governance
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Each of our business areas is required to ensure that decisions relative to new business initiatives, products and services or material changes to our business model or operations conform to the Companys Statement of Risk Appetite approved by our Boards Risk Committee. Moreover, each of our various lines of business and operations and support areas include appropriate governance processes in considering the limits incorporated into our Risk Appetite Statement, including, but not limited to, policy, risk tolerance limits, key risk indicators, risk and control self-assessments, model valuation, capital planning and stress testing and strategic planning.
We believe our comprehensive internal risk framework facilitates an appropriate level of risk oversight by our Risk Committee, including such critical features as:
| Providing that risks are identified, monitored and reported properly; |
| Defining and measuring the type and amount of risk the Company is willing to take; |
| Communicating the type and amount of risk taken to the appropriate management level; |
| Maintaining a risk management organization that is independent of risk-taking activities. We incorporate both front-line risk-monitoring at the business level, and a second-line of defense consisting of monitoring oversight by our risk and compliance functions (which are independent of our business operations). In addition, we have an independent check of both of our first and second-risk management processes through our internal and external audit function; and |
| Promoting a strong risk management culture that encourages a focus on risk-adjusted performance. |
Our primary risk exposures, as well as our risk management framework and methodologies, are discussed in further detail on pages 74 and 75 in our 2018 Annual Report on Form 10-K. Also see How We Address Risk and Control within the CD&A for a discussion of risk assessment as it relates to our compensation program.
The Board believes that the Companys enterprise-wide risk management process is effective since it includes the following material components: (i) enables the Board, Risk Committee, Chief Risk Officer and senior management to properly assess the quality of the information it receives; (ii) enables the Board, the Audit and Risk Committees and senior management to monitor the businesses, investments and financial, technology, cybersecurity, accounting, legal, regulatory and strategic considerations of F.N.B. and its subsidiaries and the risks that they face; (iii) enables the Board and the Audit and Risk Committees to oversee and assess how senior management evaluates risk; and (iv) provides the Board and its Audit and Risk Committees appropriate oversight perspective to assess the quality of the Companys enterprise-wide risk management process.
40 F.N.B. Corporation
Corporate Governance
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F.N.B. Commitment to Corporate, Social and Environmental Responsibility |
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For a detailed discussion of F.N.B.s corporate values, including environmental, social, governance, employee welfare, community involvement and charitable endeavors, please refer to our 2019 Corporate Responsibility Report which summarizes these important F.N.B. commitments and achievements. The 2019 Corporate Responsibility Report may be found on our website at www.fnb-online.com/about-us/community-involvement. Our management level Corporate Responsibility Committee is subject to Board oversight through our Nominating and Corporate Governance Committee.
Director Independence | ||||
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F.N.B. Director Independence Determinations. Our Board has affirmatively determined that 11 of our 12 director-nominees are independent. Our independent director-nominees are current Board members Bena, Campbell, Chiafullo, Dively, Hormell, Malone, Mencini, Motley, Nicholas, Stanik, and Strimbu. In accordance with applicable NYSE bright-line independence standards, our CEO, Vincent J. Delie, Jr., is not independent. Stephen J. Gurgovits, who is retiring in accordance with our Board retirement policy, was not independent due to his prior service as our CEO.
Applicable Standards for Determining Director Independence. As a Company that has securities listed on the NYSE, a majority of the members of our Board must be independent. Under the NYSEs corporate governance standards, no director qualifies as independent unless our Board affirmatively determines that the director has no material relationship with F.N.B. The fact that a director or member of a directors immediate family may have a material relationship with F.N.B. directly, or as a partner, owner, shareholder, or officer of an organization that has a relationship with F.N.B., will not necessarily preclude such director from being nominated for election to our Board. In assessing director independence, the Board must consider all relevant facts and circumstances in determining whether a material relationship exists. In making an affirmative determination as to whether an F.N.B. director qualifies as independent, our Board, with the assistance of our Nominating and Corporate Governance Committee, examines any material relationship which such director has with F.N.B. under the NYSE independence standards and the categorical independence standards that our Board adopted to guide it in evaluating director independence. Generally, the types of material relationships that the Board may consider under the NYSE and F.N.B. independence standards include commercial, legal, industrial, banking, business, consulting, accounting, charitable and family relationships.
For a director to be considered independent, our Board must determine that the director does not have any direct or indirect material relationship with us. In addition to the applicable NYSE and SEC independence standards, our Board has established standards (which are also included in our Corporate Governance Guidelines found on our website at www.fnb-online.com/about-us, selecting Investor Relations and Shareholder Services option and scrolling to the Corporate Governance heading) based on the specified categories and types of transactions, which conform to, or, in part, are more rigorous than, the independence requirements of the NYSE.
Our Board will also determine that a director is not independent if it finds that the director has material business arrangements with us that could affect that directors judgment. In making this determination, our Board reviews business arrangements between the Company and the director and between any other company for which the director serves as an officer or general partner, or of which the director directly or indirectly owns 2% or more of the equity. Our Board has determined that these arrangements will not be considered material if:
| They are of a type that we usually and customarily offer to customers or vendors. |
| They are on terms substantially similar to those for comparable transactions with other customers or vendors under similar circumstances. |
| In the event that the arrangements had not been made or were terminated in the normal course of business, it is not reasonably likely that there would be a material adverse effect on the financial condition, results of operations or business of the recipient. |
| In the case of personal loans, the loans are subject to and in compliance with Regulation O of the Board of Governors of the Federal Reserve System. |
2019 Proxy Statement 41
Corporate Governance
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Our Board may also consider other factors as it may deem necessary to arrive at sound determinations as to the independence of each director, and such factors may override the conclusion of independence or non-independence that would be reached simply by reference to the factors listed above.
In determining that each of the directors, other than Directors Delie and Gurgovits, is independent, our Board reviewed these standards, the corporate governance rules of the NYSE and the SEC, and the individual circumstances of each director.
The categories or types of transactions, relationships and arrangements discussed below were considered by the Board in determining that a director is independent. None of these transactions, relationships and arrangements rose to the level that would require disclosure under our Related Persons Transactions Policy section, and none of the transactions described below were in an amount that exceeded the greater of $1 million or 2% of the other entitys consolidated gross revenues, which is one of our standards for director independence.
Our Board determined that none of the transactions, relationships and arrangements constituted a material relationship between our independent director-nominees and our Company or its subsidiaries for the purpose of the corporate governance rules of the NYSE or SEC and our Corporate Governance Guidelines. As such, our Board determined that these transactions, relationships and arrangements did not affect the independence of such director and did not impair such directors ability to act in the shareholders best interests.
The following chart reflects business relationships between F.N.B and each independent director, such as a directors spouse and immediate family members (Personal or Family Relationships), and related interests, including a company or charitable organization of which such director or the directors spouse is, or was, during 2018, a partner, officer, director, employee, or in which the director or the directors spouse holds a significant ownership position (Affiliated Entity Relationships). All of these transactions meet our Board guidance on independence (i.e., made in the ordinary course of business, not preferential and fair market value, and involving normal risk of collectability).
Personal, Family and Affiliated Entity Relationships of F.N.B. Director-Nominees
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Personal or Family Relationships |
Deposit, Wealth Management, and Similar Banking Products(1) |
x | x | x | x | x | x | x | x | x | x | x | ||||||||||||
Credit Relationships(2) |
x | x | x | x | x | x | x | x | x | x | ||||||||||||||
Charitable Contributions(3) |
x | x | x | x | x | x | ||||||||||||||||||
Affiliated Entity Relationships |
Deposit, Wealth Management, and Similar Banking Products(1) |
x | x | x | x | x(4) | x | |||||||||||||||||
Credit Relationships or Commercial Banking Products(2) |
x | x | x | x(4) | x |
(1) | Includes deposit accounts, trust accounts, certificates of deposit, safe deposit boxes, workplace banking or wealth management products. |
(2) | Includes extensions of credit, including mortgages, commercial loans, home equity loans, credit cards, or similar products, as well as credit and credit-related products, and other commercial banking products, including treasury management, foreign exchange and global trading services. |
(3) | Includes charitable contributions made to entities affiliated with directors. |
(4) | Director Stanik served as CEO and on the Board of Directors at Ampco-Pittsburgh until his retirement date on June 30, 2018. |
42 F.N.B. Corporation
Corporate Governance
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Customer Relationships. We provide financial services to most of our directors. We also provide financial services to some of their immediate family members and affiliated entities. We offer these services in the ordinary course of our business. We provide the services on substantially the same terms and conditions, including price, as we provide to other similarly situated customers.
Credit Relationships. We also extend credit to some of our directors and their immediate family members and affiliated entities. Federal Banking law (Regulation O) governs these extensions of credit. We have incorporated the Regulation O requirements as part of the F.N.B. categorical independence standards.
Business/Law Firm Relationships. We may also have other business relationships or professional services arrangements with entities affiliated with our directors or their immediate family members. These relationships are in the ordinary course of business. During 2018, the law firm with which Director Chiafullo is associated, provided legal services to F.N.B. or FNBPA and received aggregate legal fees of less than $2,000. Director Chiafullo is not personally involved in providing such legal services. Additionally, Director Chiafullos law firm frequently represents borrowers in lending transactions and, from time to time, represents borrowers in transactions where FNBPA is a lender. FNBPA Director Chiafullo is not personally involved in providing legal services to these clients and any associated legal fees are paid out of the borrowers loan proceeds, as is customary practice. Under his law firms procedures, Mr. Chiafullo is restricted from access to information regarding the borrowers transaction with FNBPA and he does not receive any compensation related to such transactions. The Board determined that such relationships are not material.
Also during 2018, Heeter, a commercial printing Company where Director Bena serves as Vice President of Finance, provided printing services to subsidiaries of F.N.B. and received fees of approximately $560,325, or less than 2% of Heeters gross revenues for 2018 (0.05% of net revenue). FNBPA has an outstanding aggregate loan relationship of approximately $5.2 million and these loans are performing in accordance with their terms. Heeter is one of five printing vendors employed by F.N.B.s subsidiaries across their markets and has served as a printing vendor since 2010, pre-dating Director Benas assumption of her position at Heeter in April 2017. Director Bena does not receive special compensation from Heeter related to the business relationship between F.N.B. and Heeter and was not identified as a potential director-nominee through such business relationship.
Certain Charitable Contributions. We make contributions to charitable organizations where our directors serve as directors or trustees or have other affiliations with the charity. Such contributions, donations and grants are in accordance with our applicable policies and practices. In 2018, Director Malone served on the Executive Committee of United Way. F.N.B. donated approximately $600,000 to United Way in 2018. F.N.B.s 2018 donation to the United Way constitutes less than 2% of United Ways consolidated gross receipts for 2018. Also, it should be noted that F.N.B. encourages its employees to donate to United Way and, collectively, F.N.B. employees donated $243,439 to the local United Ways and their partner agencies in 2018. Director Malone did not participate in either F.N.B.s decision to donate to United Way or otherwise participate in F.N.B.s campaign to encourage F.N.B. employees to participate in United Way.
Additional transactions, relationships and arrangements that were considered by the Board are disclosed under Related Person Transactions.
2019 Proxy Statement 43
Corporate Governance
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Our Board conducted six executive sessions in 2018, two of which were attended by all directors and the CEO, two of which were attended exclusively by independent directors, and two of which were attended exclusively by non-management directors. William B. Campbell, our Independent Lead Director, presided at all executive sessions.
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Our Board believes that each directors equity ownership in the Corporation should be aligned with the Corporations shareholders. Accordingly, our Corporate Governance Guidelines require each of our directors to have beneficial ownership of the lesser of 40,000 shares of Corporation common stock (or common stock equivalent) or $400,000 in value of the Corporations common stock (or common stock equivalent). The Corporations director stock ownership requirement is progressively phased in over a six-year period. As of March 6, 2019, each F.N.B. director is in compliance with the stock ownership requirement.
Shareholders or other interested parties may send communications to our Board, the independent directors as a group, the Board Chairman, any committee chair, and/or any individual director, including our Independent Lead Director, by addressing such communications to the Board, c/o Corporate Secretary, F.N.B. Corporation, One North Shore Center, 12 Federal Street, Pittsburgh, Pennsylvania 15212. Our Corporate Secretary is authorized to open and review any mail that is addressed to the Board or individual director(s) unless the envelope is marked Confidential or Personal. If so marked, it will be delivered, unopened, to the Independent Lead Director (addressed to the Board) or to the individual director addressee. If the Corporate Secretary opens an unmarked envelope which contains a magazine, solicitation or advertisement, the contents may be discarded.
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Section 16(a) of the Securities Exchange Act of 1934 (Exchange Act) requires our executive officers and directors, as well as certain persons who beneficially own 10% or more of our common stock, to file reports of their ownership of our securities, as well as statements of changes in such ownership, with the SEC. To our knowledge, based solely on written representations received from our executive officers and directors and copies of the statements of ownership changes furnished to us by our executive officers and directors during 2018, we believe that all such filings required during 2018 were made on a timely basis except for a late filing by Director Bena due to an administrative oversight of her broker, and a late filing by Director Mencini due to an inadvertent administrative oversight of by the administrative person responsible for filing his Form 4. We do not have any shareholders who own 10% or more of our common stock who are required to file reports under Section 16(a) of the Exchange Act.
44 F.N.B. Corporation
Communications with Our Board
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We are not aware of any shareholder who was the beneficial owner of more than 5% of our outstanding common stock as of December 31, 2018, except for the entities identified in the table below:
Name and Address | Amount and Nature of Beneficial Ownership(1) |
Percent of Outstanding Common Stock | ||
BlackRock, Inc. 55 East 52nd Street New York, NY 10055 |
36,804,150(3) | 11.3% | ||
The Vanguard Group 100 Vanguard Boulevard Malvern, PA 19355 |
30,894,432(4) | 9.5% |
(1) | Under the regulations of the SEC, a person who has or shares voting or investment power with respect to a security is considered a beneficial owner of the security. Voting power is the power to vote or direct the voting of shares, and investment power is the power to dispose of or direct the disposition of shares. |
(2) | Based on 324,314,529 shares of Corporation common stock outstanding as of December 31, 2018. |
(3) | According to Schedule 13G filed under the Exchange Act on January 28, 2019, by BlackRock, Inc. The Schedule 13G states that BlackRock, Inc. has sole voting power as to 35,441,659 shares and sole dispositive power as to 36,804,150 shares. |
(4) | According to Schedule 13G filed under the Exchange Act on February 11, 2019, by The Vanguard Group. The Schedule 13G states that The Vanguard Group has sole voting power over 153,682 shares, shared voting power over 52,055 shares, sole dispositive power over 30,719,219 shares, and shared dispositive power over 175,213 shares. |
2019 Proxy Statement 45
Related Person Transactions
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We have adopted a written policy formalizing the manner in which we review a proposed transaction involving the Company and any of our directors, any director-nominees, any executive officers, any 5% or greater shareholder or any immediate family member of the foregoing (related persons) because of the possibility of a conflict of interest. A copy of this Policy with Respect to Related Person Transactions is posted on our website at www.fnb-online.com/about-us, selecting the Investor Relations and Shareholder Services option and scrolling to the Corporate Governance heading. Under our policy, all proposed related person transactions except for (i) transactions generally available to all employees or shareholders of the Company, and (ii) compensatory transactions consistent with the plans, policies and decisions approved by the Companys Board of Directors or Compensation Committee, must receive the prior approval of the Nominating and Corporate Governance Committee of our Board before we can take part in the transaction, and if such transaction continues for more than one year, the Nominating and Corporate Governance Committee and Board must annually approve the transaction. For purposes of this policy, a related person transaction is a transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships, in which the Company or any of its subsidiaries was, is or will be a participant, and the amount involved exceeds $120,000, and a related person had, has or will have a direct or indirect material interest. The category of related persons generally consists of the Companys Directors, director-nominees and executive officers, holders of 5% or more of the Companys common stock, immediate family members of the foregoing persons and any entity owned or controlled by the foregoing persons.
Mr. Gurgovits son is the former employee and managing director of F.N.B. Capital Corporation, LLC (F.N.B. Capital), a merchant banking subsidiary of the Corporation. Due to the uncertainty as to whether the F.N.B. Capital investment activities would continue to be permissible under the final Dodd-Frank Volcker rules, Mr. Gurgovits son, along with the other F.N.B. Capital principals, resigned from F.N.B. Capital effective July 31, 2013. Mr. Gurgovits son and his fellow principals established a new Company called Tecum Capital Partners, as a Small Business Investment Company licensed by the U.S. Small Business Administration (SBIC Fund) in 2013. Mr. Gurgovits son and the other principals are the sole owners of Tecum Capital Management (Tecum), the general partner of the SBIC Fund. In view of the detailed knowledge and experience that the Tecum principals had with respect to the F.N.B. Capital investment portfolio, F.N.B. Capital entered into an asset management agreement whereby Tecum manages the F.N.B. Capital investment portfolio for a quarterly fee based on the amount of assets under management. The economics and terms of the asset management arrangement were agreed to pursuant to an arms-length negotiation between F.N.B. Capital and Tecum. In 2018, F.N.B. Capital made total payments to Tecum of approximately $15,000 in fees pursuant to terms of the asset management advisory arrangement.
In addition, as of December 31, 2018, as anchor investor, F.N.B. committed to invest an aggregate amount of $14,700,000 (representing a 21.5% equity interest) in the SBIC Fund, subject to the same material terms and conditions as those of other co-investors in the SBIC Fund. The SBIC Fund has 61 co-investors, including six non-affiliated bank investors. The total commitment of all investors in the SBIC Fund is $66.9 million. Director Gurgovits has a 0.75% equity investment commitment (equivalent to $500,000) in the SBIC Fund. Director Gurgovits is on the SBIC Fund Board of Advisors and is on its Investment Committee. F.N.B. had a net book value in the fund as of December 31, 2018, of $17,741,912 after investing $12,191,054 into the SBIC Fund (leaving a remaining unfunded capital call commitment of $2,508,946).
Director Gurgovits and members of his immediate family also have co-invested an aggregate of $140,000 in a portfolio Company of F.N.B. Capital on the same terms negotiated by F.N.B. Capital.
Also during 2018, Heeter, the commercial printing Company where Director Bena serves as Vice President of Finance, provided printing services to subsidiaries of F.N.B. and received fees of approximately $560,325 or less than 2% of Heeters gross revenues for 2018. Also, as described in the table titled, Personal, Family and Affiliated Entity Relationships of F.N.B. Director-Nominees set forth in the Director Independence discussion in this proxy statement, FNBPA has an outstanding credit relationship with Heeter.
In the ordinary course of our business, we have engaged and expect to continue engaging in ordinary banking transactions with our directors, executive officers, their immediate family members and entities in which they hold a position or ownership interest, including loans to such persons. Any loan to those persons or entities was made, in a material respect, on substantially the same terms, including interest rates and collateral, as those prevailing at the time such loan was made as loans made to persons who were not related to us. These loans do not involve more than the normal credit collection risk and do not present any other unfavorable features.
46 F.N.B. Corporation
Executive Compensation and Other Proxy Disclosure
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EXECUTIVE COMPENSATION AND OTHER PROXY DISCLOSURE
Compensation Committee Interlocks and Insider Participation |
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The members of the Compensation Committee (Committee) during 2018 were Directors Hormell, Malone, Motley, Stanik and Strimbu. Mr. Strimbu joined the Committee in May 2018. Neither we nor FNBPA have ever employed any member of the Committee. No such member has, during our last fiscal year, any relationship with us requiring disclosure under Item 404 of Regulation S-K or under the Compensation Committee Interlocks disclosure requirements of Item 407(e)(4) of Regulation S-K. We have determined that the Committee members are independent under the NYSE corporate governance standards and are non-employees under the meaning of Rule 16b-3 under the Exchange Act. Our Board has delegated to the Committee the responsibility of setting the compensation of our directors, CEO, Chief Financial Officer (CFO) and Section 16 officers. The Committee met nine times in 2018.
Authority and Responsibilities
The Committee administers our executive compensation programs, including the oversight of executive compensation policies and decisions, administration of our equity incentive plan and the annual cash incentive award plan applicable to Section 16 officers. The Committee administers and interprets our qualified and non-qualified benefit plans, establishes guidelines, approves participants in the non-qualified plans, approves grants and awards, and exercises other power and authority required and permitted under the plans and its Charter. The Committee also reviews and approves executive officer, including CEO, compensation, including, as applicable, salary, short-term incentive and long-term incentive compensation levels, perquisites and equity compensation. The Committee Charter reflects its responsibilities and the Committee reviews the Charter annually and recommends any proposed changes to the Board. A copy of the Committee Charter is available at our website, at www.fnb-online.com/about-us, selecting the Investor Relations and Shareholder Services option and scrolling to the Corporate Governance heading.
Delegation
From time to time, and subject to statutory and regulatory limitations, the Committee may delegate authority to fulfill various functions of administering the Companys plans to our employees. Currently, it delegates administration of our qualified plans to the Pension Committee, a committee of our senior officers who have the appropriate expertise, experience and background in handling defined benefit and defined contribution plans.
Independent Compensation Consultant
The Committee engaged an independent compensation consultant, McLagan, an Aon company, to assist with evaluating our compensation practices and to provide ongoing advice and recommendations regarding CEO, NEO and director compensation that are consistent with our business goals and pay philosophy. The Committee selected the Consultant for, among other reasons, its reputation for providing comprehensive solutions to complex compensation challenges facing companies and specific expertise in the financial services industry. In addition to McLagan, another Aon company, Radford, provided accounting services to us related to our LTIP. The Committee has reviewed all services provided by McLagan in 2018 and has determined that they are independent with respect to NYSE and SEC standards.
McLagan reported directly to the Chairman of the Committee, and interacted with our CEO, CFO, Executive Vice President, Human Resources and other employees in performance of its duties. Additionally, the CEO regularly attended Committee meetings and discussed with McLagan and the Committee members, both during meetings and outside meetings, the appropriate base salary and short-term and long-term compensation for the other Section 16 officers. The CFO regularly attended meetings of the Committee to discuss Company performance relative to the short-term and long-term plans versus peers. In addition, McLagan communicated with, took direction from and regularly interacted with the Chairman of the Committee and other members of the Committee in addition to attending Committee meetings on an as-needed basis.
2019 Proxy Statement 47
Compensation Discussion and Analysis
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COMPENSATION DISCUSSION AND ANALYSIS
The following CD&A describes the philosophy, objectives and structure of our fiscal year 2018 (the year ending December 31, 2018) executive compensation program. This CD&A is intended to be read in conjunction with the tables following this section which provide further historical compensation information for our NEOs as identified below.
Name | Position | |
Vincent J. Delie, Jr. |
Chairman, President and CEO | |
Vincent J. Calabrese, Jr. |
Chief Financial Officer | |
Gary L. Guerrieri |
Chief Credit Officer | |
Robert M. Moorehead |
Chief Wholesale Banking Officer | |
Barry C. Robinson |
Chief Consumer Banking Officer |
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The generation of record earnings of $365 million and return of over $165 million in dividends directly to shareholders are leading indicators of why the F.N.B. Board of Directors has a high degree of trust and confidence in the management team. During the past 10 years, F.N.B. embarked on a strategy that focused on creating long-term shareholder value. This strategy has transformed an $8 billion financial services company serving smaller markets with a limited product and service offerings into a $33 billion financial enterprise operating in dynamic and diverse growth metropolitan markets in seven states and the District of Columbia, which offer products and services that are as diverse and competitive as those offered by the largest financial institutions in the U.S. During the second half of 2018, we created additional operating leverage through disciplined expense management while also investing in technology, infrastructure, and our people, all of which positions the Company for a successful 2019 and beyond. Our commitment to driving organic growth, focusing on improving efficiency, and building a strong and differentiated brand, creates incremental, sustainable value for all of our constituencies, including our shareholders.
The financial results in 2018 are a clear result of a multi-year business strategy that is supported by the Board of Directors. The Board acknowledges that management has executed on the business strategy which is best seen through 2018 results. As an example, and as shown below, ROATCE is in the top quartile of the Companys peers on either a reported or operating basis for 2018. This reflects the positive financial returns that F.N.B. has produced by implementing its long-term strategic plan.
48 F.N.B. Corporation
Compensation Discussion and Analysis
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It is important to note that while management has executed on the business strategy in a challenging economic, regulatory and political environment, we acknowledge that the TSR has not been at the level we desire. While management has successfully executed our business plan as demonstrated by top quartile ROATCE results and strong results in other financial metrics, the NEOs and other senior management long-term incentive awards have failed to vest or are not on track to vest as a result of lower than expected shareholder returns. The values reported in the Summary Compensation Table compared to what has actually been realized by management show an appropriate and ongoing pay for performance approach that is fully aligned with shareholder interests. Based on a desire to improve our TSR and respond to investor feedback on our long-term incentive design, we have added ROATA as the primary long-term incentive metric, and retained TSR as a modifying metric to align with shareholder interests. Return on tangible asset measures are foundational to banking and are one of the metrics of financial performance correlated with long-term success of a firm. Over time, we will continue to review the performance metrics we use and we expect our use of them to evolve as appropriate.
We have designed our compensation programs to align our corporate performance and strategic goals with our executives total compensation opportunities. In doing so, we seek to ensure that we are being competitive in attracting and retaining the appropriate executive talent, while maintaining good corporate governance practices and aligning management interests with those of our shareholders.
Say-on-Pay Support and Investor Engagement
At our 2018 Annual Meeting of Shareholders, our say-on-pay proposal received approximately 72% support from our shareholders. After receiving such strong support in the prior year (over 96%), our Committee was disappointed in the 2018 outcome, but it was determined to better understand the factors that drove these results by soliciting input and feedback in connection with our annual shareholder and proxy advisory firm outreach process. In 2018, we reached out to 26 of our top investors, which represented approximately 56% of our shares owned at that time, as well as a leading proxy advisory firm, to discuss executive compensation and governance matters.
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These discussions are summarized in the table below, along with the corresponding explanations as to how we addressed these matters:
What We Heard from Shareholders | What We Did in Response | |
Consider using more than one metric to measure long-term performance |
For 2018, added ROATA as an additional metric to our LTIP, utilizing ROATA as the primary metric and TSR as a modifier to better convey the alignment of shareholder value with execution of the business strategy. Both of these metrics measure our performance relative to peers.
The Committee continues to consider other appropriate long-term performance measures for best aligning executive compensation, shareholder interests and strategic direction. | |
Demonstrate how pay and performance are aligned over time |
Added target pay graphs to demonstrate what the Committee intends to pay executives when performance is strong.
Provided disclosure of how vesting of our Performance-Based awards granted in 2016, 2017 and 2018 is currently tracking. | |
CD&A is informative but difficult to navigate and read efficiently |
Reorganized our CD&A, with a particular emphasis on the Executive Summary section to articulate our performance, the highlights of our compensation program, and the thoughtful pay-setting process undertaken by the Committee. | |
ESG issues are of increased importance and additional disclosure on these issues would be appreciated |
Increased our proxy disclosure regarding our policies and practices related to ESG issues.
Producing our first Corporate Responsibility Report in 2019.
Focusing on sustainability factors and how these link to our corporate strategy. | |
Consider expanding disclosure of the board evaluation and refreshment process |
Please see our board evaluations disclosure and our refreshment process in our discussion under caption Board Succession and Refreshment. |
Summary of 2018 Executive Compensation Actions
Consistent with our philosophy of tying pay to performance, we highlight the following key compensation actions for 2018:
Salaries
| Increases: In 2018, base salaries for each of our named executive officers increased approximately 2.5% over the prior year to position salaries closer to the median of our Peer Group. |
EIC Plan
| Target Incentive Opportunity - For each NEO, target short-term incentive opportunity remained the same as 2017. |
| Performance Metrics: Incentive payouts for 2018 performance were based on Operating EPS vs. budget, operating ROATCE vs. peers, and operating Efficiency Ratio vs. peers. We believe these measures closely align our annual performance goals and shareholder interests, support our long-term expectations and properly reward management. |
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| Performance Results Relative to Peers: The following chart shows how our 2018 performance for ROATCE and Efficiency Ratio compared to peers. Operating EPS is not included in the chart as it is an absolute measure which is compared to the annual operating budget set by the Board. |
For 2018, it is important to note that ROATCE and the Efficiency Ratio are both above the 75th percentile of peers and that we delivered better than plan performance relative to Operating EPS growth.
| Payout: Based on our performance, we paid executives short-term cash incentives under the plan at 151.87% of target. |
| Target Incentive Opportunity: For each NEO, target long-term incentive opportunity remained the same as 2017. |
| Plan Structure: We granted our executives equity based on a predefined matrix defining grant values as a percentage of salary. We delivered a majority of the executives target long-term incentive (LTI) value in performance-based RSUs (67%) and the remainder in time-based RSUs (33%). |
| Performance Metric: TSR as a long-term incentive measure provides a peer comparison that aligns executives with the shareholders. However, after shareholder outreach sessions and an analysis of peer practices, the 2018 awards incorporated a new metric, making performance-based equity subject to both ROATA and TSR. This change is discussed in more detail in the Long-Term Awards section below. We believe, as long-term measures, ROATA and TSR provide for a good peer comparison that balances both financial return as well as delivering shareholder value. |
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| Performance Results Relative to Peers: The following chart shows how our 2018 performance for ROATA and TSR compared to peers. |
This is the first year of a three-year performance cycle for the 2018 LTI award. Accordingly, approximately one third into the performance cycle, ROATA is slightly below peer median and TSR is in the second quartile.
The Committee believes that a significant portion of compensation should be contingent on our performance. We also believe that a large portion of compensation should be long-term in nature and align the management team with shareholders. For this reason, Mr. Delies target direct compensation is made up of 60% performance-based compensation and 58% long-term compensation.
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Key Compensation Governance Highlights
COMPENSATION DETERMINATION PROCESS
Role of the Compensation Committee
We believe strongly that compensation should be rooted in pay-for-performance philosophy. It is the goal of the Committee to reward long-term results that are aligned with shareholder interests by regularly evaluating our NEO compensation programs for both reasonableness and competitiveness to market and to ensure we attract and retain top talent. In addition, the Committee evaluates Board of Director compensation with assistance from its independent compensation consultant as highlighted below. The Committee also reviews the Companys LTIP, risk factors for the Companys performance plans and other factors as highlighted in the Compensation Committees Charter.
Role of Independent Consultant
The Committee selected McLagan to provide advisory assistance during 2018. During the course of 2018, the Compensation Committee directed McLagan to assist with benchmarking its board of director and executive officer compensation. In addition, McLagan assisted with the review of the LTIP, proxy development and other requests as directed by the Committee.
The Compensation Committee annually evaluates the compensation consultants independence and performance under the applicable NYSE listing standards. The Committee believes that working with an independent compensation consultant furthers the Companys objectives to recruit and retain qualified executives, align their interests with those of shareholders and ensure that their compensation packages will appropriately motivate and reward ongoing achievement of business goals. In 2018, the Committee determined that McLagan continued to be independent under applicable NYSE listing standards and retained them to advise the Committee with respect to compensation of the CEO and other executive officers.
Use of Market-Based Comparisons
We desire our compensation programs to be competitive in the marketplace. With the assistance of McLagan, we identified 19 comparable U.S. commercial banks with assets ranging from $21 billion to $80 billion (as of the time of Peer Group selection in mid-2017 for 2018 compensation decision making).
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The following companies constituted our 2018 Peer Group (dollars in thousands):
Company Name | Ticker | Total Assets 12/31/2018 |
Total Assets 12/31/2017 |
|||||||||
1 | First Republic Bank | FRC | 99,205,204 | 87,780,507 | ||||||||
2 | Comerica Inc. | CMA | 70,818,000 | 71,567,000 | ||||||||
3 | Zions Bancorp. NA | ZION | 68,746,000 | 66,288,000 | ||||||||
4 | New York Community Bancorp | NYCB | 51,899,376 | 49,124,195 | ||||||||
5 | Peoples United Financial Inc. | PBCT | 47,877,300 | 44,453,400 | ||||||||
6 | East West Bancorp Inc. | EWBC | 41,042,356 | 37,150,249 | ||||||||
7 | First Horizon National Corp. | FHN | 40,833,117 | 41,423,388 | ||||||||
8 | Associated Banc-Corp | ASB | 33,647,859 | 30,483,594 | ||||||||
9 | Synovus Financial Corp. | SNV | 32,669,192 | 31,221,837 | ||||||||
10 | Cullen/Frost Bankers Inc. | CFR | 32,292,966 | 31,747,880 | ||||||||
11 | Valley National Bancorp | VLY | 31,863,088 | 24,002,306 | ||||||||
12 | Wintrust Financial Corp. | WTFC | 31,241,521 | 27,915,970 | ||||||||
13 | Hancock Whitney Corp. | HWC | 28,235,907 | 27,336,086 | ||||||||
14 | Webster Financial Corp. | WBS | 27,610,315 | 26,487,645 | ||||||||
15 | Umpqua Holdings Corp. | UMPQ | 26,939,781 | 25,680,447 | ||||||||
16 | Investors Bancorp Inc | ISBC | 26,229,008 | 25,129,244 | ||||||||
17 | Commerce Bancshares Inc. | CBSH | 25,463,842 | 24,833,415 | ||||||||
18 | TCF Financial Corp. | TCF | 23,699,612 | 23,002,159 | ||||||||
19 | Prosperity Bancshares Inc. | PB | 22,693,402 | 22,587,292 | ||||||||
25th Percentile | 27,275,048 | 25,404,846 | ||||||||||
50th Percentile | 32,292,966 | 30,483,594 | ||||||||||
75th Percentile | 44,459,828 | 42,938,394 | ||||||||||
F.N.B. Corporation | FNB | 33,101,840 | 31,417,635 | |||||||||
Percent Rank | 58% | 58% |
We compete for talent with the institutions in our Peer Group, as well as large financial institutions in our geographic markets. As we continue to grow, we continue to add talent from large financial institutions with which we compete in many metropolitan markets. We believe the Peer Group is diverse and provides the necessary depth to be meaningful in setting salary and incentive goals and is an appropriate group from which to benchmark our compensation.
The Committee uses competitive compensation data from the annual total compensation study of peer companies to support its decisions about overall compensation opportunities and specific compensation elements. Additionally, the Committee uses multiple reference points when establishing targeted compensation levels. The Committee does not benchmark specific compensation elements or total compensation to any specific percentile relative to the peer companies or the broader U.S. market. Instead, the Committee applies judgment and discretion in establishing targeted pay levels, taking into account not only competitive market data, but also factors such as Company, business and individual performance, scope of responsibility, critical needs and skill sets, leadership potential and succession planning.
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|
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During 2018, the Compensation Committee reviewed and determined it was appropriate to continue the formal executive compensation philosophy it adopted in 2015 to guide future compensation decisions. The overall goal of our compensation program is to pay within a reasonable range of the median for relative peer median performance, below median pay for below relative peer median performance and above median pay for above relative peer median performance, all while considering the skills and experience of each of our NEOs. We believe it is important to continually monitor our peers compensation practices and plan designs, and all aspects of our performance metrics, paying particular attention to financial measures and strategic objectives, including successful transactions and other capital actions.
The following table shows why we pay each component and how we intend to position our compensation relative to our Peer Group.
Component | Why We Pay this Component | |
Salary |
We provide base salary to all salaried employees, including the NEOs, in order to provide each employee with a degree of financial certainty. Competitive base salaries further our compensation program objectives by allowing us to attract and retain talented employees by providing a fixed portion of compensation upon which all employees can rely. | |
Annual EIC Plan |
We believe that a significant amount of our NEOs compensation should be contingent on our performance. Our annual incentive plan focuses on our Operating EPS, ROATCE and Efficiency Ratio. We believe a focus on those metrics will increase our TSR. By paying a portion of the NEOs total compensation in variable incentive pay, we expect to drive our annual performance while increasing long-term shareholder value. | |
Long-Term Incentive Plan |
We believe providing performance-based (2/3 of total equity) and time-based (1/3 of total equity) RSUs is an effective means of promoting long-term stock ownership by NEOs and rewards management for creating long-term shareholder value. We also believe that placing a significant portion of an executives compensation in stock, through RSUs, causes executives to focus on long-term performance resulting in risk mitigation and clearly aligns management and shareholder interests. | |
Direct Compensation |
Includes salary, annual incentive plan payouts, and LTIP payouts. To maintain a strong link between pay and performance, we place more weight on performance-based incentives. | |
Other Benefits and Perquisites |
We do not have an active supplemental executive retirement plan (SERP) or pension, and instead promote performance-based compensation. Other perquisites are intended to be in line with market practice, including health and welfare benefits on the same basis as our general employee population. |
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|
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The various components of the NEOs total compensation are detailed below.
Base Salary
Each year the Committee reviews salaries and determines adjustments to each NEOs base salary based upon an assessment of the performance of the NEOs job responsibilities, including the impact of such performance and contributions on our financial results. In certain cases, the Committee increases base salary to raise the NEOs annual salary to reflect more closely the annual salaries of comparably performing Peer Group executives. Typically, we preliminarily review the compensation levels of the CEO and other NEOs in the last quarter of the year to evaluate compensation for the upcoming year, including potential salary adjustments. Accordingly, the Committee increased each of the NEOs salaries to remain within a reasonable range of the median of the Peer Group and set their 2018 salaries as noted in the table below.
Name | 2017 Salary | 2018 Salary | % Increase | |||
Vincent J. Delie, Jr. |
$1,050,000 | $1,076,000 | 2.5% | |||
Vincent J. Calabrese, Jr. |
$480,000 | $492,000 | 2.5% | |||
Gary L. Guerrieri |
$440,000 | $451,000 | 2.5% | |||
Robert M. Moorehead |
$425,000 | $436,000 | 2.6% | |||
Barry C. Robinson |
$375,000 | $384,000 | 2.4% |
Annual Incentive Awards
We intend our EIC Plan to provide additional compensation to our NEOs in the form of performance-based awards that are based on our achievement of certain annual financial objectives. We target short-term, annual incentive compensation of the CEO and the other NEOs such that their compensation is tied directly to the Companys performance. We measure our annual performance against three weighted target goals set by the Committee:
| Operating EPS 70%; |
| ROATCE 20%; |
| Efficiency Ratio 10%. |
We believe these performance goals are critical to F.N.B.s growth and profitability, as well as contributors to the long-term creation and preservation of shareholder value. In evaluating performance, the Committee considers in the calculation items not in the normal course of annual operations and their resulting effect on our performance (i.e. significant merger and acquisition transactions, investment gains or losses, corporate and balance sheet restructuring, significant asset sales and other items it deems appropriate in measuring our performance against the target goal). We set the target incentive award level for each NEO based upon market-competitive incentive opportunities as provided by McLagan for executives performing similar duties, and the Committee has the sole discretion to determine all annual bonuses for the CEO and other NEOs.
2018 Performance Goals
Our 2018 performance goals are reflected in the table below.
Key Performance Measurement (Non-GAAP) | Weight | Threshold | Target | Maximum | ||||
Operating EPS vs. Operating Budget |
70% | $1.004 (90% Budget) |
$1.115 (100% Budget) |
$1.227 (110% Budget) | ||||
ROATCE vs. Peer Group |
20% | 25th Percentile | 50th Percentile | 75th Percentile | ||||
Efficiency Ratio vs. Peer Group |
10% | 25th Percentile | 50th Percentile | 75th Percentile |
We calculate performance for each specific key performance measurement independently to determine the payout for that key performance measurement. The sum of the awards for each key performance measurement determines the total incentive award.
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2018 Incentive Opportunities
The CEO and other NEOs have an incentive opportunity expressed as a percentage of each of their base salaries.
The potential incentive opportunities established for each NEO in 2018 were the same as 2017 as follows:
Name | Below Threshold |
Threshold (50%) |
Target (100%) |
Maximum (200%) |
||||||||||||
Vincent J. Delie, Jr. |
0% | 50% | 100% | 200% | ||||||||||||
Vincent J. Calabrese, Jr. |
0% | 40% | 80% | 160% | ||||||||||||
Gary L. Guerrieri |
0% | 30% | 60% | 120% | ||||||||||||
Robert M. Moorehead |
0% | 30% | 60% | 120% | ||||||||||||
Barry C. Robinson |
0% | 30% | 60% | 120% |
2018 Performance and Earned Incentive Awards
The chart below reflects the Companys 2018 performance for purposes of our EIC Plan:
Key Performance Indicator (Non-GAAP) |
Weight | Target 100% |
Actual Results | Actual (% of Target |
Payout Percent | |||||||||||
Operating EPS vs. Operating Budget |
70 | % | $1.115 | $1.150(2) | 131.2 | % | 91.87 | % | ||||||||
ROATCE vs. Peer Group (Percentile) |
20 | % | 50th percentile | 91st percentile | 200.0 | % | 40.00 | % | ||||||||
Efficiency Ratio vs. Peer Group (Percentile) |
10 | % | 50th percentile | 79th percentile | 200.0 | % | 20.00 | % | ||||||||
Total |
100 | % | 151.87 | % |
(1) | Performance results between target and maximum is interpolated between levels. |
(2) | A reconciliation of reported EPS to adjusted Operating EPS amounts is as follows (the amount represents the after-tax amount): |
EPS | After Tax Adjustments | Amount | ||||
As reported (GAAP) |
$ | 1.120 | ||||
Branch Consolidation Costs | $ | 0.016 | ||||
High Dollar Medical Claim | $ | 0.006 | ||||
Other Adjustments(a) | $ | 0.008 | ||||
As adjusted Operating EPS (Non-GAAP) |
$ | 1.150 |
(a) Other adjustments include $0.9 million for the discretionary 401(k) contributions following tax reform, $1 million related to a computation error by the Pennsylvania Department of Revenue regarding a prior year unemployment tax assessment and an expense for unrealized performance-based awards of $1.1 million. |
Long-Term Awards
F.N.B. believes a large portion of an executives pay package should align executive interests with those of shareholders. As such, we have annually granted our executives a mix of time-based and performance-based RSUs. These grants reward NEOs based on the Companys achievement of certain financial objectives, in the case of performance-based awards, and assist with the retention of key executives.
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In 2018, long-term incentive awards were divided into two components:
| 67% performance-based awards (Performance-Based Awards) and |
| 33% time-based awards (Time-Based Awards). |
We believe this allocation of equity awards is appropriate to reward NEOs for loyalty to the Company, encourage stock ownership, provide increased ownership and retain our key executives. The Performance-Based Awards help drive our performance, while creating shareholder value by linking the shareholders interests and the NEOs interests in long-term success. The NEO will forfeit both types of awards if the NEO terminates employment before the cliff vesting date, other than as a result of retirement, death or disability.
Our Compensation Committee establishes a target award level for each NEO based upon the executive officers level of responsibility and sets the levels such that the award amount increases as the officers level of responsibility in the organization increases. At the time of granting the awards, the Committee sets the award amount for each participant level in a manner designed to provide competitive long-term compensation based on data provided by McLagan as market-competitive incentive opportunities for executives performing similar duties. The targets for 2018 were the same as 2017 and are as set forth below:
Name | LTI Plan Opportunity (% of Salary) |
|||
Vincent J. Delie, Jr. |
270% | |||
Vincent J. Calabrese, Jr. |
175% | |||
Gary L. Guerrieri |
75% | |||
Robert M. Moorehead |
75% | |||
Barry C. Robinson |
75% |
The following table shows the target value of the 2018 grants for each of the NEOs. These awards will not vest until 2021 and the Performance-Based Awards only vest if our performance meets the requirements set forth in the awards.
Name | Performance- Based ($) |
Time- Based ($) |
||||||
Vincent J. Delie, Jr. |
1,973,133 | 958,727 | ||||||
Vincent J. Calabrese, Jr. |
584,774 | 284,132 | ||||||
Gary L. Guerrieri |
229,743 | 111,630 | ||||||
Robert M. Moorehead |
222,091 | 107,922 | ||||||
Barry C. Robinson |
195,604 | 95,048 |
In setting target levels, we also believe it is appropriate to understand the ownership levels of our NEOs that resulted from prior award grants and the ultimate vested amount of stock, including our NEOs ownership levels as compared to peers. We periodically conduct a review of the ownership levels of our NEOs compared to peers and their overall ownership levels. Our most recent analysis indicates that our NEOs as a group, and our CEO and CFO individually, are in the bottom quartile of stock ownership compared to our peers despite our continued strong growth in total revenue, net income, earnings per share and tangible book value per common share.
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Operating Earnings Per Diluted Common Share
15% CAGR
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Performance-Based Awards
Our 2018 Performance-Based Awards are designed to align managements long-term incentive compensation with our financial performance as measured through ROATA over a three-year performance period. These awards will not vest and the NEOs will not receive any shares or payment if the minimum relative ROATA performance is not achieved. If the ROATA performance criteria discussed below is achieved, the number of Performance-Based Awards that vest is adjusted to reflect the degree of achievement upon relative TSR compared to a group of peer financial institutions. The combination of these two metrics provides for a balanced set of goals which measure and reward using both a financial measure (ROATA) and a shareholder measure (TSR) over a three-year performance period.
First, the Companys financial performance goals are based on our relative ROATA during a three-year performance period versus our Peer Group, and set forth below:
Performance Level | Percent Rank | Vesting Percentage | ||
Threshold |
25th Percentile | 25% of Target | ||
Target |
50th Percentile | 100% of Target | ||
Maximum |
75th Percentile | 175% of Target |
Second, after determining the award level based on ROATA, the award may be adjusted plus or minus 25% based on our TSR performance versus peers. TSR performance at peer median results in no adjustment to the award. If our performance is at or below the 25th percentile, the award is adjusted downward 25%. If performance is at or above the 75th percentile, the award is adjusted upward 25%. For both ROATA and TSR, there is interpolation between all performance levels.
We believe the size of the Peer Group (19) is large enough to reduce potential volatility that may result when peer financial institutions are acquired during the three-year performance period and, therefore, are unavailable for measurement comparison purposes. We expect the Peer Group to provide a meaningful comparison based upon our current asset size and anticipated growth over the award performance period.
Performance of our Past Performance-Based Awards
Over the last several award cycles (2014-2017), executives received performance-based awards based exclusively on our relative TSR performance versus our peers. Since our TSR underperformed our peers over these performance periods, our Performance-Based Awards have not vested, including the 2015 grants whose performance period ended in 2018. We believe that examining our awards through this lens is one way to see our pay-for-performance philosophy in action.
The reported pay values that are described pursuant to the rules governing disclosures in this proxy statement as set forth in the Summary Compensation Table and the Grants of Plan-Based Awards tables that follow the CD&A herewith are significantly different (higher) than what our executives actually received or are currently on track to receive in the future. As an example of this, the following table shows the Performance-Based Award grants made to our CEO in the past three performance periods. These are Performance-Based shares with a cumulative
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grant date value of $3,860,294 reported in the tables that the CEO did not earn, or that are likely not to be earned, due to the TSR being below the threshold for payment during these performance periods, thus reducing the actual compensation realized from what is disclosed in those tables.
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Management Stock Ownership Policy
We maintain a Management Stock Ownership Policy that requires the CEO, the other NEOs and certain senior management who participate in the LTIP, the 2007 Plan, and any successor plan to have varying levels of stock ownership based upon the officers participation level in the plan. The policy requires participants to hold the lesser of a specific share amount or a number of shares equal to a specific dollar threshold that is a multiple of the participants salary. We believe that this policy aligns management and shareholder interests and acts as a risk mitigant because our NEOs have a significant long-term stake in our success. Under our policy, acceptable forms of stock ownership include:
| shares owned individually and by immediate family |
| long-term stock awards, including all restricted stock and unit awards |
| shares held in the 401(k) Plan |
Specific ownership guidelines for the NEOs are as follows:
Named Executive Officer | Share Value |
Number of Shares |
Compliance | |||||||
Vincent J. Delie, Jr. |
5 x salary | 250,000 | met | |||||||
Vincent J. Calabrese, Jr. |
3 x salary | 100,000 | met | |||||||
Gary L. Guerrieri |
3 x salary | 100,000 | met | |||||||
Robert M. Moorehead |
3 x salary | 100,000 | met | |||||||
Barry C. Robinson |
3 x salary | 100,000 | met |
We annually review progress toward achieving the ownership guidelines. Our NEOs are required to reach the stock ownership guidelines within five years after the later of any of the following events: commencement of participation in the long-term incentive portion of the 2007 Plan; promotion to a higher participation level; or, we increase a participants ownership requirement. If an NEO does not hold the required share amount after the five-year period, the NEO will receive any future incentive awards as stock, in lieu of cash, that the participant must hold until he or she reaches the applicable required ownership level. All of our NEOs currently meet the required stock ownership levels based on prior policies and are within the time period allotted to achieve the level required under our current stock ownership guidelines.
Retirement and Other Post-Employment Benefits
All employees are eligible to participate in a 401(k) Plan. All salaried employees hired before January 1, 2008, except employees of First National Insurance Agency, LLC (FNIA), participated in our defined benefit pension plan, the Retirement Income Plan (RIP), through December 31, 2010. At that time, we froze each participants accrued benefit amount and ceased future accruals.
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In general, we have designed our retirement plans to provide NEOs and other employees with financial security after retirement. We provide matching contributions and a performance-based contribution under the 401(k) Plan for all employees, including the NEOs. Previously, we offered a defined benefit pension plan, the RIP. We detail its benefits to employees more particularly in the narrative accompanying the 2018 Pension Benefits table. Additionally, due to Code limits on the amount of compensation that may be recognized for tax-qualified retirement plans, certain NEOs were unable to make the full amount of contributions to the 401(k) Plan and the amount of their total pay that is included in the calculation of their pension benefit is limited. Therefore, we offered the F.N.B. Corporation ERISA Excess Retirement Plan (Excess Plan) and continue to offer the F.N.B. Corporation ERISA Excess Lost Match Plan to allow any affected employee, including the NEOs, to receive the full benefit intended by the qualified retirement plans. In 2010, we amended the Excess Plan consistent with the amendments to the RIP.
In addition to those plans, we previously provided to some senior executives, including Mr. Guerrieri, a supplemental executive retirement plan, called the Basic Retirement Plan (BRP), which is designed to supplement the benefits provided by the RIP and the Excess Plan. The purpose of the BRP was to ensure a minimum level of retirement income for the NEOs and other senior officers who participated in the plan. We closed the BRP to new participants and ceased future accruals for all participants, effective December 31, 2008.
Post-Employment and Change in Control Payments
We believe post-retirement compensation is necessary to attract and retain talented executives and that our post-retirement benefits are competitive in the industry and provide NEOs with appropriate retirement benefits.
We provide severance and change in control payments through employment contracts that provide additional security for our NEOs. We determined that the continued retention of the services of our NEOs on a long-term basis fosters stability of senior management through retention of well-qualified officers. The 2018 Potential Payments Upon Termination or Change in Control tables and accompanying narrative detail the NEOs employment contracts.
The RIP benefit is determined by a precise formula set forth in the plan document and explained in the narrative accompanying the 2018 Pension Benefits table. The ERISA Excess Lost Match Plan and Excess Plan benefit formulas are based upon the specific opportunity or the amounts lost by the participant due to Code limits and are more fully detailed in the 2018 Non-Qualified Deferred Compensation and 2018 Pension Benefits tables and narratives. The benefit under the BRP is a monthly benefit equal to a target benefit percentage based on years of service at retirement and a designated tier as determined by the Committee and detailed in the narrative accompanying the 2018 Pension Benefits table. We do not grant extra years of credited service under any of our qualified or non-qualified plans. The termination and change in control benefits for NEOs were set by contract and are described more fully in the 2018 Potential Payments Upon Termination or Change in Control tables and in the narrative accompanying the 2018 Summary Compensation Table.
Other Benefits and Perquisites
The NEOs participate in a wide array of benefit plans that are generally available to all employees of the Company, including the RIP* and the 401(k) Plan. Benefits primarily consist of participation in the Companys defined benefit, defined contribution and health and welfare benefit plans. In addition, some of the NEOs receive perquisites in the form of club membership dues, a company car and other perquisites detailed as part of the 2018 Summary Compensation Table and accompanying narrative. We provide club membership dues to certain NEOs in order to provide them with the ability to engage in business development activities, including entertaining customers, potential customers and various business, community and political contacts, which is an integral part of our industry. Similarly, we provide certain NEOs a company car for purposes of appropriate transportation for entertainment of customers, vendors and business contacts and traveling between our facilities. It is the Committees policy that it will not include tax gross-ups in any new or amended employment agreements.
* | As noted in the Retirement and Other Post-Employment Benefits section, we closed the RIP to employees hired after December 31, 2007, and froze all benefits for all participants effective December 31, 2010. |
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Tax and Accounting Treatment of Compensation
On December 22, 2017, President Trump signed into law the Tax Cuts and Jobs Act (Tax Act) which included significant changes to the executive compensation deduction rules in Section 162(m) of the Code. The Tax Act changed the scope of the employees covered by Section 162(m) of the Code and limits the deductibility of compensation in excess of one million dollars paid to the CEO, CFO and the other three most highly compensated executive officers. The Tax Act eliminated the performance-based compensation exception under Section 162(m) effective January 1, 2018, subject to a special rule that grandfathers certain awards or arrangements that were in effect on or before November 2, 2017. We intended for Performance-Based Awards of RSUs and annual incentive compensation granted under our 2007 Plan granted prior to the effective date of the Tax Act, to meet the performance-based compensation exception to the annual million dollar limitation. However, there can be no assurance that any amounts paid will be deductible under Section 162(m). While we are cognizant of the tax deduction limitations applicable to our compensation program for NEOs, we may set compensation levels or structure arrangements outside the deduction limitations if we deem the amount of compensation appropriate. The Committee has the discretion to establish the compensation paid, or intended to be paid or awarded to the NEOs, as the Committee may determine is in our and our shareholders best interests. This is an important feature of our compensation practices because it provides the Committee with sufficient flexibility to respond to specific situations we encounter.
In addition, Section 409A of the Code provides for an additional tax on executives with respect to various features of deferred compensation arrangements. We have made the appropriate changes to our non-qualified retirement plans and employment agreements to help to ensure compliance with Code Section 409A and to attempt to avoid adverse impacts on F.N.B. or its executive officers as a result of Section 409A. We do not expect these changes to have a material tax or financial effect on us.
As discussed above, we have calculated and discussed with the Committee the tax impact to us and the executives of each of our cash and equity compensation awards and agreements. We also calculate and monitor the accounting expense related to equity-based compensation using the guidance of Accounting Standards Codification (ASC) Topic 718, Compensation Stock Compensation.
The Compensation Committee of the Board has reviewed and discussed the Compensation Discussion and Analysis of this proxy statement with the Companys management and, based on such review and discussion, we recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement. Portions of this proxy statement, including the Compensation Discussion and Analysis, have been incorporated by reference into the Companys Annual Report on Form 10-K for the Companys fiscal year ended December 31, 2018.
Respectfully submitted,
David J. Malone, Chair
Robert A. Hormell
David L. Motley
John S. Stanik
William J. Strimbu
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2018 Summary Compensation Table | ||||
The following table shows the total compensation paid or earned by the Companys CEO, CFO and the three most highly-paid executive officers other than the CEO and CFO who were employed as of December 31, 2018. Each of the above is referred to as an NEO and together, NEOs. The amounts include services rendered in all capacities to us and our subsidiaries for our year ended December 31, 2018:
Name and Principal Position |
Year | Salary ($) |
Bonus ($) (1) |
Stock ($) (2) |
Option ($) |
Non-Equity ($) (3) |
Change in Value and Non-qualified ($) (4) |
All Other ($) (5) |
Total ($) |
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Vincent J. Delie, Jr. President and CEO |
2018 | 1,075,500 | 0 | 2,986,886 | 0 | 1,634,121 | 0 | 265,182 | 5,961,689 | |||||||||||||||||||||||||||
2017 | 1,029,808 | 0 | 2,716,739 | 0 | 1,334,340 | 20,128 | 248,348 | 5,349,363 | ||||||||||||||||||||||||||||
2016 | 928,008 | 0 | 2,263,817 | 0 | 1,220,516 | 12,295 | 169,132 | 4,593,768 | ||||||||||||||||||||||||||||
Vincent J. Calabrese, Jr. Chief Financial Officer |
2018 | 491,769 | 0 | 868,906 | 0 | 597,760 | 0 | 98,329 | 2,056,764 | |||||||||||||||||||||||||||
2017 | 470,769 | 0 | 787,395 | 0 | 487,987 | 11,104 | 86,825 | 1,844,080 | ||||||||||||||||||||||||||||
2016 | 460,008 | 0 | 740,643 | 0 | 423,502 | 7,228 | 77,435 | 1,708,816 | ||||||||||||||||||||||||||||
Gary L. Guerrieri Chief Credit Officer |
2018 | 450,789 | 0 | 341,373 | 0 | 410,960 | 0 | 71,604 | 1,274,726 | |||||||||||||||||||||||||||
2017 | 431,539 | 0 | 309,348 | 0 | 335,491 | 95,521 | 80,051 | 1,251,950 | ||||||||||||||||||||||||||||
2016 | 390,000 | 0 | 285,439 | 0 | 256,464 | 60,571 | 57,870 | 1,050,344 | ||||||||||||||||||||||||||||
Robert M. Moorehead Chief Wholesale Banking Officer |
2018 | 435,789 | 0 | 330,013 | 0 | 397,292 | 0 | 67,489 | 1,230,583 | |||||||||||||||||||||||||||
2017 | 416,827 | 0 | 298,797 | 0 | 324,054 | 0 | 61,955 | 1,101,633 | ||||||||||||||||||||||||||||
2016 | 375,000 | 0 | 274,450 | 0 | 246,600 | 0 | 55,466 | 951,516 | ||||||||||||||||||||||||||||
Barry C. Robinson Chief Consumer Banking Officer |
2018 | 383,827 | 0 | 290,652 | 0 | 349,908 | 0 | 51,930 | 1,076,317 | |||||||||||||||||||||||||||
2017 | 367,788 | 0 | 263,657 | 0 | 285,930 | 0 | 36,608 | 953,983 | ||||||||||||||||||||||||||||
|
2016
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|
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350,016
|
|
|
0
|
|
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256,160
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|
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0
|
|
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230,171
|
|
|
0
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|
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30,760
|
|
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867,107
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(1) | Payments under the Companys annual incentive plan for 2018 are reported in the Non-Equity Incentive Plan Compensation column instead of in the Bonus column, in accordance with SEC requirements. |
(2) | The restricted stock award amounts shown in this table represent the dollar amount of awards granted during the fiscal year determined pursuant to ASC Topic 718. The actual amount that will vest in future years is uncertain. Assumptions used in the calculation of this amount are included in Note 16 to the Companys audited financial statements for the fiscal year ended December 31, 2018, included in the Companys Annual Report on Form 10-K filed with the SEC on February 26, 2019. The restricted stock awards granted under the 2007 Plan vest either after (i) the NEOs continued employment with the Company or one of its affiliates for three years or (ii) the Companys achievement of performance goals and the NEOs continued employment with the Company or one of its affiliates for three years. We issued Time-Based Awards and Performance-Based Awards in RSUs. The RSUs earn dividend equivalents, which are subject to the same restrictions and vesting schedule as the underlying RSUs. The amounts reflected in the table assume that each NEO will perform the requisite service and we will achieve the required performance goals at target levels. The actual performance cannot be determined for three years and could be zero. For 2018, the grant date fair values of Performance-Based Awards were: Mr. Delie, $1,973,133; Mr. Calabrese, $584,774; Mr. Guerrieri, $229,743; Mr. Moorehead, $222,091; and Mr. Robinson, $195,604. At the maximum level of performance, the performance-based awards would be: Mr. Delie, $4,316,227; Mr. Calabrese, $1,279,187; Mr. Guerrieri, $502,568; Mr. Moorehead, $485,825; and Mr. Robinson, $427,880. The amount for Mr. Delie also includes stock awards valued at $55,026 for service as a director in 2018 that vested immediately upon grant. (See narrative under the Director Compensation discussion of this proxy statement.) |
(3) | Amount earned by the NEO as an annual incentive bonus under our EIC Plan, based upon the Companys performance. The EIC Plan is discussed in further detail in the CD&A under the heading Annual Incentive Awards. |
(4) | The amounts in this column reflect the actuarial change in the present value of the NEOs benefit under all of our pension plans determined using interest rate and mortality rate assumptions consistent with those used in our financial statements and include amounts that the NEO may not currently be entitled to receive because such amounts are not vested. Our pension plans are described in the narrative accompanying the 2018 Pension Benefits table. Note that the change in values for 2018 for Messrs. Delie, Calabrese and Guerrieri was actually a decrease of $15,731, $7,591 and $59,246, respectively. However, based on the SECs interpretive guidance, the amount shown in the 2018 Summary Compensation Table should not be less than $0. Therefore, the amount shown above for Messrs. Delie, Calabrese and Guerrieri is shown as $0. We do not pay or provide above-market interest under Non-Qualified Deferred Compensation Plans. |
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(5) | All other compensation as reported in this column for 2018 is comprised of the following amounts: |
Name | Perquisites and ($)(a) |
401(k) Match and ($) |
Lost Match ($)(b) |
Total All Other ($) |
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Vincent J. Delie, Jr. |
120,592 | 16,500 | 128,090 | 265,182 | ||||||||||||
Vincent J. Calabrese, Jr. |
39,544 | 16,500 | 42,285 | 98,329 | ||||||||||||
Gary L. Guerrieri |
24,427 | 16,500 | 30,677 | 71,604 | ||||||||||||
Robert M. Moorehead |
21,899 | 16,500 | 29,090 | 67,489 | ||||||||||||
Barry C. Robinson |
11,745 | 16,500 | 23,685 | 51,930 |
(a) | The dollar amount of the perquisite or other personal benefits represents the incremental cost to us of providing the benefit. This column includes the costs of social club dues for Messrs. Delie, Calabrese, Guerrieri and Moorehead; personal financial planning for Messrs. Delie and Calabrese; executive physical for Mr. Guerrieri; personal use of company-provided automobiles for Messrs. Delie, Calabrese, Guerrieri and Robinson; parking fees for Messrs. Delie, Calabrese, Guerrieri and Moorehead; and personal use of corporate aircraft for Mr. Delie. The incremental cost of Mr. Delies use of the aircraft in 2018 was $65,308. The valuation of the Company provided automobiles was calculated as our current year depreciation or leasing expense for the automobile plus all costs incurred related to the automobile (including, but not limited to, the cost of insurance, gas, car washes, repairs, registration and inspection fees), less our mileage reimbursement allowance for business miles driven by employees who use their own automobile for business purposes. Because our Compensation Committee has a strong preference for our CEO to take all of his flights on the corporate aircraft (personal and business), our Compensation Committee amended our Aircraft Usage Policy to authorize our CEO to use the aircraft for personal travel during times when it is not being used for business travel. In authorizing such personal usage, our Compensation Committee considered the advantages that personal aircraft usage offers the Company, including mitigating security risks and encouraging reduced travel time, thereby promoting the CEOs availability, efficiency and productivity. Our Aircraft Usage Policy contains procedures to document the principles to be applied in determining the classification of a flight as business or personal and the calculation of the aggregate incremental cost for perquisite purposes, including definitions of personal use and enhanced methodologies for allocating cost between business and personal use in complex travel circumstances. |
In view of our certain operational restrictions and administrative efficiencies, we operate our corporate aircraft under Federal Aviation Administration rules and regulations that limit our ability to accept reimbursement for personal flights on our aircraft. The incremental cost to F.N.B. for personal aircraft use is calculated by multiplying the total number of personal flight hours by the total variable cost and dividing that number by the total passenger miles for 2018. The total variable cost includes costs related to maintenance, crew expenses, pro rata cost of extra fuel due to additional weight, meals, beverages, landing fees and ground transportation services. Since the aircraft is used primarily for business travel, total variable cost does not include the calculation of fixed costs that do not change based on particular usage, such as crew salaries, insurance, aircraft management services, hangar rental, capital improvement costs intended to cover a multi-year period, and other fixed costs not affected by the presence of additional passengers. |
(b) | This amount reflects Company contributions during the year to the ERISA Excess Lost Match Plan as more fully described in the narrative accompanying the 2018 Non-Qualified Deferred Compensation table. |
The foregoing 2018 Summary Compensation Table does not include certain fringe benefits generally made available on a non-discriminatory basis to all of our salaried employees such as group health insurance, dental insurance, vision insurance, life insurance, accidental death and dismemberment insurance and long-term disability insurance, which we consider to be ordinary and incidental business costs and expenses.
In 2010, the Committee made a policy decision not to provide tax gross-ups in any new or amended employment agreements.
Mr. Delie became CEO in 2012 and entered into his employment agreement with us and FNBPA on December 15, 2010. Mr. Delies contract has an initial term of three years and, unless sooner terminated, automatically extends for one year on the anniversary of the commencement date such that, on the anniversary date, the contract has a three-year term. Either party may terminate the automatic renewal provision by providing the other party with 30 days advance written notice of non-renewal prior to the anniversary of the commencement date. Currently, Mr. Delies employment agreement runs through December 2021. Under the terms of the agreement, Mr. Delie is entitled to receive a base salary that may be increased from time to time as determined by the Committee. Additionally, in 2018, Mr. Delie was eligible to participate in our annual incentive compensation plan at a target award level of 100% of his base salary. Thus, he had the possibility of achieving a bonus between 0% and 200% of his base salary. The severance and change in control provisions of Mr. Delies employment agreement are described in the narrative accompanying the 2018 Potential Payments Upon Termination or Change in Control tables.
Mr. Calabrese serves as our CFO and entered into the employment agreement, the amounts for which are detailed in the 2018 Summary Compensation Table, with FNBPA on February 21, 2013. The initial term of the
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agreement was for two years, and automatically extends for a one-year period on each anniversary of its commencement date such that, on the anniversary date, the contract has a 2-year term unless sooner terminated. Either party may terminate the automatic renewal of the agreement by providing the other with 60 days advance written notice of non-renewal. Mr. Calabreses contract runs through February 2021. Under the terms of the agreement, Mr. Calabrese receives a base salary that may be increased from time to time as determined by the Committee. Additionally, Mr. Calabrese is eligible to participate in our annual incentive compensation and bonus plans at the discretion of the Committee with a target award level of 80% of base salary for 2018. Thus, he had the possibility of achieving a bonus between 0% and 160% of his base salary. The severance and change in control provisions of Mr. Calabreses employment agreement are described in the narrative accompanying the 2018 Potential Payments Upon Termination or Change in Control tables.
Mr. Guerrieri serves as our Chief Credit Officer. He entered into an employment contract with FNBPA on January 25, 2002. Mr. Guerrieris contract had an initial term of two years and automatically extends for a one-year period on the anniversary of its commencement date such that, on the anniversary date, the contract has a two-year term, unless either party terminates the contract sooner. Either party may terminate the automatic renewal of the agreement by providing the other 60 days advance written notice of non-renewal. Mr. Guerrieris contract runs through January 2021. Under the terms of the agreement, Mr. Guerrieri receives a base salary, as reflected in the 2018 Summary Compensation Table that may be increased from time to time as determined by the Committee. Mr. Guerrieri is also eligible to participate in our annual incentive compensation and bonus plans at the Committees discretion. Mr. Guerrieris target award level for annual incentive compensation was 60% of his base salary for 2018. Thus, he has the possibility of achieving a bonus between 0% and 120% of his base salary. The severance and change in control provisions of Mr. Guerrieris employment agreement are described in the narrative accompanying the 2018 Potential Payments Upon Termination or Change in Control tables. In December 2008 and December 2012, we amended Mr. Guerrieris contract in order to comply with and clarify certain points related to Code Section 409A.
Mr. Moorehead is our Chief Wholesale Banking Officer and entered into his current employment agreement on September 10, 2015. Mr. Robinson serves as our Chief Consumer Banking Officer and entered into his current employment agreement on November 4, 2015. The agreements are for an initial term of two years and automatically renew such that, on the anniversary date, they have two years remaining. Under the terms of the contracts, Messrs. Moorehead and Robinson receive base salaries as reflected in the 2018 Summary Compensation Table that may be increased from time to time as determined by the Committee. They are eligible to participate in our annual incentive compensation and bonus plans at the Committees discretion. Their target award level for annual incentive compensation in 2018 was 60% of base salary with the possibility of achieving between 0% and 120% of base salary. The severance and change in control provisions of Messrs. Mooreheads and Robinsons employment agreements are described in the narratives accompanying the 2018 Potential Payments Upon Termination or Change in Control tables.
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The following table sets forth grants of plan-based awards to the NEOs for 2018:
Estimated Future Payouts Under Non-Equity Incentive Plan Awards(2) |
Estimated Future Payouts Under Equity
Incentive Plan |
All Other (#)(4) |
All Other (#) |
Exercise or Base Price of Option Awards ($/Sh) |
Grant ($)(5) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name |
Award (1) |
Grant Date |
Threshold ($) |
Target ($) |
Maximum ($) |
Threshold (#) |
Target (#) |
Maximum (#) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Vincent J. Delie, Jr. |
EIC | n/a | 0 | 1,076,000 | 2,152,000 | n/a | n/a | n/a | n/a | n/a | n/a | n/a | ||||||||||||||||||||||||||||||||||||||||||||||||
RSU-TB | 4-2-2018 | n/a | n/a | n/a | n/a | n/a | n/a | 72,907 | n/a | n/a | 958,727 | |||||||||||||||||||||||||||||||||||||||||||||||||
RSU-PB | 4-2-2018 | n/a | n/a | n/a | 27,754 |