We are pleased to invite you to the 2017 Annual Meeting of Shareholders to be held on Thursday, April 20, 2017, at our Easton Business Service
Center in Columbus, Ohio. We will consider the matters described in the following Notice of Annual Meeting and Proxy Statement and review highlights of the past year. We hope you will attend the meeting.
Last year proved to be an extraordinary time for Huntington in many ways. We celebrated 150 years of service to customers and communities, and completed
the largest acquisition in our history. With that acquisition, we welcomed many new and talented colleagues across the markets where we both operated.
Our team is stronger than ever and committed to delivering the same exceptional customer service that has distinguished Huntington in the past. The hard
work and dedication of our colleagues allowed us to enter 2017 a stronger Huntington. There is still more work to be done with the integration, and we will continue to invest in colleagues and our focus on being a Welcome brand.
We added to the composition of our Board of Directors. The Nominating and Corporate Governance Committee of the Board regularly reviews the composition
of the Board to ensure its members represent the strongest knowledge and experience aligned with the Companys business strategy. Notably, the Board appointed Chris Inglis, a renowned cyber-security expert and leader, to serve as a director. We
further welcome the substantial experience and perspectives that four additional new Board members former directors of FirstMerit Corporation have brought to the Board.
These new directors are Lizabeth Ardisana, Owner and Founder of a technical and communication services firm, ASG Renaissance; Robert S. Cubbin, retired
President and Chief Executive Officer of Meadowbrook Insurance Group; Gina D. France, President and Chief Executive Officer of France Strategic Partners LLC, a strategy and transactional advisory firm; and J. Michael Hochschwender, President and
Chief Executive Officer of The Smithers Group, a private group of companies that provide technology-based services to a global clientele in a broad range of industries. We are delighted to welcome our new members of the Board. The Board extends
enormous gratitude to John B. (Jay) Gerlach, Jr. who will be stepping down from the Board after 18 years of extraordinary service as a Director, as well as the long-term chair of our Compensation Committee.
The Board of Directors recognizes the importance of risk management and has set a strong tone at the top. The Board monitors the Companys adherence
to the Boards established aggregate
moderate-to-low
risk appetite chiefly through its committee structure. In addition, the Board continually evaluates our
corporate governance as best practices evolve and appreciates the perspectives of our shareholders. The Proxy Statement provides additional detail on our corporate governance, including on the composition of our Board of Directors, the role of the
Board committees, and the Boards role in risk oversight.
We are focused on growing the organization and improving performance, enhancing our
customer and colleagues experience and proactively managing risk, all with a view of long-term consistent performance.
Your vote is important to us.
Whether or not you plan to attend the annual meeting, we encourage you to read the Proxy Statement carefully. Please vote via internet, telephone or mail to ensure that your shares are represented.
Stephen D. Steinour
Our Business Service Center,
7 Easton Oval, is located on the east side of Columbus near I-270 and Easton Way.
There will be ample parking available as well as assistance (shuttle service and wheel chairs) in transportation from the parking lot
to the building entrance.
Report of the Compensation Committee
(1)
The Compensation Committee has reviewed and discussed with management
the Compensation Discussion and Analysis contained in this proxy statement. Based on this review and discussion, the Compensation Committee recommended to the board of directors that the Compensation Discussion and Analysis be included in
Huntingtons proxy statement for its 2017 annual meeting of shareholders.
Submitted by the Compensation Committee
John B. Gerlach, Jr., Chair
Peter J. Kight
Kathleen H. Ransier
(1)
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Mr. Cubbin was appointed to serve on the Compensation Committee after the Compensation Committee issued this report.
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Nominating and Corporate Governance
Committee
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Members:
David L. Porteous (Chair)
Ann B. Crane
John B. Gerlach, Jr.
Chris Inglis
Meetings Held in 2016
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8
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The Nominating and Corporate Governance Committees primary
responsibilities are to annually: review the composition of the board of directors to assure that the appropriate knowledge, skills, and experience are represented, in the Committees judgment, and to assure that the composition of the board of
directors complies with applicable laws and regulations; review the qualifications of persons recommended for board of directors membership, including persons recommended by shareholders; discuss with the board of directors standards to be applied
in making determinations as to the independence of directors; and review the effectiveness of the board of directors, including but not limited to, considering the size and desired skills of the board of directors and the performance of individual
directors as well as collective performance of the board of directors.
The Nominating and
Corporate Governance Committee oversees the companys commitment to environmental, social and governance (ESG) issues, including the development of a formalized ESG business strategy that launched in 2017. The companys ESG strategy will
provide annual reporting on
ESG-related
key performance indicators and capitalizes on the companys long-held commitment to corporate social responsibility and community impact.
The Committee reviews and approves related party transactions. Additionally the Committee oversees
the companys efforts to effectively communicate with shareholders, including shareholder outreach, matters relating to the companys proxy filing, and other governance issues and efforts throughout the year. Other responsibilities of the
Nominating and Corporate Governance Committee include reviewing and making appropriate changes to the Corporate Governance Guidelines and the Code of Business Conduct and Ethics for Huntingtons directors, officers and employees.
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Community Development Committee
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Members:
Kathleen H. Ransier (Chair)
Ann B. Crane
J. Michael Hochschwender
Eddie R. Munson
Meetings Held in 2016
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4
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The purpose of the Community Development Committee is to promote
Huntingtons mission of local involvement and leadership in the communities where Huntington is located and where its employees work. The Committee will consider matters relating to community development and involvement, philanthropy,
government affairs, fair and responsible lending and inclusion.
The Committees duties and
responsibilities are to:
provide
primary oversight of the companys commitments to the Community Reinvestment Act (CRA), including review of CRA plan, internal and external examination reports and related internal reports provided by management;
provide primary oversight of the
companys commitment to diversity and inclusion, including review of the companys employee-related programs such as the affinity networks and other broad-based employee development programs that could affect the Corporations
reputation for social responsibility;
review of the companys relationships with external constituencies concerning community activities,
including investors, regulators, elected officials,
non-profits
and community leaders;
review the companys compliance with fair lending and Unfair, Deceptive, or Abusive Acts and Practices
(UDAAP) standards, including monitoring procedures and programs; and
review shareholder proposals involving issues within the purview of the Committees duties and
responsibilities.
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Executive Committee
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Members:
David L. Porteous (Chair)
Ann B. Crane
Steven G. Elliott
Michael J. Endres
Jonathan A. Levy
Richard W. Neu
Stephen D. Steniour
Meetings Held in 2016
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The Executive Committees purpose is to provide an efficient means of
considering matters that arise between regularly scheduled meetings of the full board of directors. Matters that might be considered by the Executive Committee are such that either require prompt attention or are deemed appropriate by the Executive
Committee to consider on behalf of the full board of directors. Meetings of this Committee may be called by the chief executive officer (who is a member of the Committee) or the Committee chairperson. The Executive Committee shall have and may
exercise all of the powers and authority of the board of directors as may be permitted by law, and the charter and bylaws of the company. All actions of and powers conferred by the Executive Committee are deemed to be done and conferred under the
authority of the board of directors.
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Risk Oversight Committee
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Members:
Steven G. Elliott (Chair)
Lizabeth Ardisana
Jonathan A. Levy
David L. Porteous
Meetings Held in 2016
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(includes 5 held jointly with the Audit Committee)
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The Risk Oversight Committee assists the board of directors in overseeing
management of material risks, and the approval and monitoring of the companys capital position and plan supporting our overall aggregate
moderate-to-low
risk
profile; the risk governance structure; compliance with applicable laws and regulations; and determining adherence to the boards stated risk appetite. The Committee has oversight responsibility with respect to the full range of inherent risks:
market, credit, liquidity, legal, compliance/regulatory, operational, strategic and reputational. This Committee also oversees our capital management and planning process, and ensures that the amount and quality of capital are adequate in relation
to expected and unexpected risks and that our capital levels exceed well-capitalized requirements.
The Risk Oversight Committee periodically meets in joint session with the Audit Committee to cover matters relevant to both, such as the capital plan and the construct and appropriateness of the allowance for
credit losses, which is reviewed quarterly.
Additional detail about the role and
responsibilities of this Committee is set forth under The Boards Role in Risk Oversight below.
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Technology Committee
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Members:
Peter J. Kight (Chair)
Lizabeth Ardisana
Michael J. Endres
Chris Inglis
Meetings Held in 2016
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4
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The purpose of the Technology Committee is to assist the board of
directors in fulfilling its oversight responsibilities with respect to all technology, cyber security and third party risk management strategies and plans. The Committee is charged with evaluating Huntingtons capability to properly perform all
technology functions necessary for its business plan, including projected growth, technology capacity, planning, operational execution, product development, new technologies and management capacity. The Committee provides oversight of the technology
segment investments and plans to drive efficiency as well as to meet defined standards for risk, security, and redundancy. The Committee oversees the allocation of technology costs and ensures that they are understood by the board of directors. The
Technology Committee monitors and evaluates innovation and technology trends that may affect the companys strategic plans, including monitoring of overall industry trends. The Technology Committee reviews and provides oversight of the
companys continuity and disaster recovery planning and preparedness.
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Huntington Investment Company Oversight Committee
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Members:
Michael J. Endres (Chair)
Robert S. Cubbin
Gina D. France
Meetings Held in 2016
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2
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The board of directors established the Huntington Investment Company (HIC)
Oversight Committee in 2016 to assist the board of directors in fulfilling its oversight responsibilities with respect to retail and institutional broker-dealer and investment advisory strategies and plans developed by the HIC Board and management.
Additionally, the Committee will provide oversight related to the overall risk management process for HIC.
The Committees duties and responsibilities include to:
provide oversight regarding HICs business strategy, including projected revenue growth,
business planning, market strategies, product and service offerings, technology and computer systems, and operational execution;
ensure that an effective process is in place to manage risks through policies, procedures, and
practices in a manner consistent with HICs strategic goals, organizational objectives, risk appetite and regulatory requirements;
provide oversight regarding the development of strategies to address emerging industry trends, new
rules, and regulations;
evaluate and assess actions taken by HIC in response to auditors, consultants and regulatory
authorities; and
evaluate
and assess service quality regarding customer complaints or comments.
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Integration Oversight Committee (ad hoc)
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Members:
Steven G. Elliott (Chair)
Peter J. Kight
Richard W. Neu
Meetings Held in 2016
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The Integration Oversight Committee is an ad hoc committee established to
assist the Board in the oversight of the integration of people, systems and processes of FirstMerit Corporation with Huntington through enhanced review and effective challenge of integration plans and processes.
The Committees duties and responsibilities with respect to the FirstMerit acquisition
include review of the:
overall integration and conversion project plan, the timeline and adjustments
thereto;
progress of Huntington in obtaining any necessary regulatory approvals relative to the
acquisition through periodic updates; and
progress of Huntington in integrating systems and personnel in a timely and professional
manner.
In conjunction with the Risk Oversight Committee, the Committee shall
receive and review risks, including operational, market, liquidity and credit, posed by the integration and the effective mitigation of those risks to ensure that the residual risk is within Huntingtons risk appetite. The Committee shall
receive and review reports that assess Huntingtons financial performance against its goals, including capturing synergies and opportunities from its acquisition. In addition, the Committee shall oversee Huntingtons conformance to
regulatory and contractual commitments made in connection with the acquisition.
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Communication with the Board of Directors
Shareholders who wish to send communications to the board of directors may do so by following the procedure set forth on the Investor Relations
pages of Huntingtons website at
www.huntington.com.
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Director Nomination and Board Evaluation
Our board of directors is committed to maintaining a well-rounded and effective board aligned with the companys business strategy. At least
annually the Nominating and Corporate Governance Committee reviews the composition of the board to assure that the appropriate knowledge, skills and experience are represented, in the Committees judgment, and in order to comply with applicable
laws and regulations.
The full board of directors performs a self-evaluation each year, overseen by the Nominating and Corporate
Governance Committee. The lead director, as chair of the Nominating and Corporate Governance Committee, solicits comments and recommendations from the directors through a series of questions which provide a frame-work for discussion. Although
the specific questions may vary from
year-to-year,
the topics generally include the substance and efficiency of board and committee meetings and materials, utilization
of skills and committee appointments, skills and experience needed for the board, and board engagement and interaction, and have an emphasis on the boards responsibility for oversight of risk management. The lead director provides a
report to the board in executive session summarizing the feedback. Each committee of the board also performs an annual self-evaluation and reports the findings to the full board of directors.
Skills, Knowledge, Experience and Perspectives
Our directors embody a well-rounded variety of skills, knowledge, and experience, as demonstrated in the chart below. The board also benefits from directors having a range of tenures as this provides continuity as
well as fresh perspective.
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Experience / Background
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Number of Directors
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Audit Internal or External Experience
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6
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Consumer products experience
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7
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Cybersecurity
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1
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Enhances the diversity of the Board (e.g. gender, race, ethnicity and culture)
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5
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Experience in leading alignment of compensation with organizational strategy and performance
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8
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Expertise in financial institution and regulatory matters
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9
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Financial expertise
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6
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Governmental experience;
non-profit
or
non-financial
regulatory expertise
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5
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Leadership in enterprise risk management function
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5
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Legal experience
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3
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Merger, acquisition and/or joint venture expertise
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15
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Private equity management experience
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6
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Senior executive experience (e.g. CEO, COO, CFO) at a publicly traded company
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6
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Strategic technology leadership at a large, complex, organization
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6
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Tenure
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05 years
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7
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610 years
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5
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1115 years
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3
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1618 years
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1
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Age
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5660
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7
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6165
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5
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6670
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4
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The board believes that one of its most important responsibilities is identifying, evaluating and selecting
candidates for the board. Board members are encouraged to identify prospective directors and recommend them to the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee reviews the qualifications of
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potential director candidates and makes recommendations to the full board. The factors considered by the Committee and the board in their review of potential candidates include whether the
candidate:
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has exhibited behavior that indicates he or she is committed to the highest ethical standards;
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has special skills, expertise and background that would complement the attributes of the existing directors, taking into consideration the diverse communities
and geographies in which the company operates;
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has achieved prominence in his or her business, governmental or professional activities, and has built a reputation that demonstrates the ability to make the
kind of important and sensitive judgments that the board is called upon to make;
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possesses a willingness to challenge management while working constructively as part of a team in an environment of trust; and
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will be able to devote sufficient time and energy to the performance of his or her duties as a director.
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The board also believes that board membership should reflect the diversity of the markets in which we do business. From time to time the Nominating
and Corporate Governance Committee will identify additional selection criteria for board membership, taking into consideration the companys business strategy, the business environment and current board composition. At this time, there are no
other specific additional criteria.
Recommendations for Director Candidates
Shareholders may recommend director candidates for consideration by the Nominating and Corporate Governance Committee by sending a written notice to
the Secretary at Huntington Bancshares Incorporated, Huntington Center, 41 South High Street, Columbus, Ohio 43287. The notice should indicate the name, age, and address of the person recommended, the persons principal occupation or employment
for the last five years, other public company boards on which the person serves, whether the person would qualify as independent as the term is defined under the Marketplace Rules of the Nasdaq Stock Market, and the class and number of shares of
Huntington securities owned by the person. The Nominating and Corporate Governance Committee may require additional information to determine the qualifications of the person recommended. The notice should also state the name and address of, and the
class and number of shares of our securities owned by, the person or persons making the recommendation. There have been no material changes to the shareholder recommendation process since we last disclosed this item.
Independence of Directors
Our board of directors and the Nominating and Corporate Governance Committee have reviewed and evaluated transactions and relationships with board members to determine the independence of each of the members. The
board of directors does not believe that any of its
non-employee
members has relationships with us that would interfere with the exercise of independent judgment in carrying out his or her responsibilities as
director. Further, the board and the Nominating and Corporate Governance Committee have determined that a majority of the boards members are independent directors as the term is defined in the Nasdaq Stock Market Marketplace Rules.
The directors determined to be independent under this definition are: Lizabeth Ardisana, Ann B. Crane, Robert S. Cubbin, Steven G. Elliott, Gina D. France, John B. Gerlach, Jr., J. Michael Hochschwender, Chris Inglis, Peter J. Kight, Jonathan A.
Levy, Eddie R. Munson, Richard W. Neu, David L. Porteous, and Kathleen H. Ransier. The board of directors has determined that each member of the Audit, Compensation, and Nominating and Corporate Governance Committees is independent under such
definition and that the members of the Audit Committee are independent under the additional, more stringent requirements of the Nasdaq Stock Market applicable to audit committee members.
In making the independence determinations for each of the directors, the board took into consideration the transactions disclosed in this proxy
statement under Review, Approval or Ratification of Transactions with Related Persons below. In addition, the board of directors considered that the directors and their family members are customers of our affiliated financial and lending
institutions. Many of the directors have one or more transactions, relationships or arrangements where Huntingtons affiliated financial and lending institutions, in the ordinary course of business, act as depository of funds, lender or
trustee, or provide similar services. Directors may also be affiliated with entities which are customers of our affiliated financial and lending institutions and which enter into transactions with such affiliates in the ordinary course of business.
The board also considered charitable donations to organizations in which directors have an interest, and the following relationships and transactions, and determined them to be immaterial: routine transactions and relationships entered into in the
ordinary course of business between the Bank and business organizations with which Mr. Gerlach and Ms. Ransier, respectively, have an interest.
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The Boards Leadership Structure
Our chief executive officer, Stephen D. Steinour, serves as chairman of the board. Director David L. Porteous has served as independent lead
director since the board created the position in November 2007. The board believes that having a combined chief executive officer and chairman along with a strong independent lead director provides an efficient and effective leadership structure.
The specific responsibilities of the lead director are set forth in our Corporate Governance Guidelines, which include:
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serving as liaison between the chairman of the board and the outside directors;
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consulting with the chairman of the board on information sent to the board;
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reviewing and providing input to the chairman of the board on board meeting agendas;
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consulting with the chairman of the board on meeting schedules to assure that there is sufficient time for discussion of all agenda items;
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presiding at all meetings of the board at which the chairman is not present, including executive sessions of the outside directors;
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having the authority to call meetings of the outside directors; and
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ensuring that he or she is available for consultation and direct communication with key stakeholders, if requested by the chief executive officer.
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Mr. Porteous performs these duties and provides leadership in numerous additional ways. He is available to the
chief executive officer as a sounding board for a variety of matters. He meets regularly with Huntingtons regulators. He promotes good governance and fosters dialogue among the directors and between the board and management. Mr. Porteous
also takes an active role in outreach efforts with various constituents, including Huntington employees. He regularly engages with the employees and acts as a liaison between employees and the board.
The board believes that having an independent lead director performing these duties effectively complements and counterbalances the role of the
combined chairman / chief executive officer. The interaction of the roles of the chairman / chief executive officer and the lead director is reflected in the table below.
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Areas of Responsibility
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Chair/CEO Role
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Lead Director Role
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Full Board Meetings
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Has the authority to call meetings of the board of directors
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Participates in board meetings like every other director
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Chairs meetings of the board of directors and the annual meeting of shareholders
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Acts as intermediary at times, the chair may refer to the lead
director for guidance or to have something taken up in executive session
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Provides leadership to the board of directors if circumstances arise in which the
role of the chair may be, or may be perceived to be, in conflict with the board of directors
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Suggests calling full board meetings to the chair when appropriate
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Executive Sessions
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Receives feedback from the executive sessions
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Has the authority to call meetings of the outside directors
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Sets the agenda for and leads executive sessions of the outside directors
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Briefs the CEO on issues arising out of the
executive sessions
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Board Agendas
and Information
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Takes primary responsibility for shaping board agendas, consulting with the lead director to ensure that
board agendas and information provide the board with what is needed to fulfill its primary responsibilities
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Collaborates with the chair to shape the board agenda and board information so that
adequate time is provided for discussion of issues and so that appropriate information is made available to directors
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Solicits agenda items from members of the
board
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Board Communications
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Communicates with the directors on key issues and concerns outside of board
meetings
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Facilitates discussion among the outside directors on
issues and concerns outside of board meetings
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Takes responsibility for new director orientation and continuing education for the board of
directors
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Serves as a
non-exclusive
conduit to the
chair of views, concerns, and issues of the outside directors
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Coordinates with the chair on director orientation and continuing education
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Committee Meetings
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Member of the Executive Committee and attends such other committee meetings (excluding executive sessions)
as the chair shall so choose
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Participates on such committees (including executive sessions) to which he is elected
and is
ex-officio
member of all other committees
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Chairs the Nominating and Corporate Governance Committee which recommends the membership of
various board committees as well as selection of committee chairs
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External and Other
Stakeholders
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Represents the organization to, and interacts with, external stakeholders, including investors, customers,
employees and others
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Available at the request of the chair to participate in meetings with key
institutional investors
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Makes periodic independent visits to business regions, meeting with employees and
customers
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Regularly meets independently with regulators
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Has authority to engage advisors and consultants who report directly to the board of directors on
board issues
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In addition to having an engaged lead director, additional factors contribute to the boards comfort with
Mr. Steinour serving in the combined roles of chairman and chief executive officer. These factors include our strong corporate governance practices, our boards independence, and the accountability of the chief executive officer to the
board. Executive sessions, excluding the chairman and chief executive officer, are held in conjunction with each regularly scheduled board meeting to ensure open dialogue with the lead director. Moreover, there is regular reporting by senior
management to the board of directors as further described under The Boards Role in Risk Oversight below. The board has also considered our leadership structure in light of the companys size, the nature of its business, the
regulatory framework in which it operates, and its peers and determined that the boards leadership structure is appropriate for our company at this time.
The Boards Role in Risk Oversight
The board of
directors has defined our risk appetite as aggregate
moderate-to-low
and has established a comprehensive and coordinated risk oversight structure. While the board has
three board committees that primarily oversee implementation of this desired risk appetite and the monitoring of our risk profile the Risk Oversight Committee, Audit Committee and the Technology Committee the full
board is engaged in discussing all risks. The board of directors receives regular reports from every board committee. Noteworthy issues from each committee agenda are called to the attention of the full board in advance. In addition, all directors
have access to information provided to each committee, and all scheduled committee meetings are open to all directors. The directors regularly communicate directly with members of senior management as well as among the board and board committees.
Board Committees
The Risk Oversight Committee assists the board of directors in overseeing management of material risks, and the approval and monitoring of the
companys capital position and plan supporting our overall aggregate
moderate-to-low
risk profile; the risk governance structure; compliance with applicable laws
and regulations; and determining adherence to the boards stated risk appetite. The Committee has oversight responsibility with respect to the full range of inherent risks: market, credit, liquidity, legal, compliance/regulatory, operational,
strategic and reputational. This Committee also oversees our capital management and planning process, and ensures that the amount and quality of capital are adequate in relation to expected and unexpected risks and that our capital levels exceed
well-capitalized requirements. The Risk Oversight Committee receives reports directly from the chief risk office at least quarterly.
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The Audit Committee oversees the integrity of the consolidated financial statements, including policies,
procedures, and practices regarding the preparation of financial statements, the financial reporting process, disclosures, and internal control over financial reporting. The Audit Committee also provides assistance to the board in overseeing the
internal audit division and the independent registered public accounting firms qualifications and independence; compliance with our Financial Code of Ethics for the chief executive officer and senior financial officers; and compliance with
corporate securities trading policies. The chief internal auditor reports directly to the Audit Committee.
The Risk Oversight and Audit Committees
routinely hold executive sessions with our key officers engaged in accounting and risk management. On a regular basis, the two committees meet in joint session to cover matters relevant to both.
The Technology Committee assists the board of directors in fulfilling its oversight responsibilities with respect to all technology, cyber security and
third party risk management strategies and plans. The committee is charged with evaluating Huntingtons capability to properly perform all technology functions necessary for its business plan, including projected growth, technology capacity,
planning, operational execution, product development, and management capacity. The committee provides oversight of the technology segment investments and plans to drive efficiency as well as to meet defined standards for risk, security, and
redundancy. The Committee oversees the allocation of technology costs and ensures that they are understood by the board of directors. The Technology Committee monitors and evaluates innovation and technology trends that may affect the Companys
strategic plans, including monitoring of overall industry trends. The Technology Committee reviews and provides oversight of the companys continuity and disaster recovery planning and preparedness. The chief technology officer and the chief
information officer regularly attend meetings of the Technology Committee.
Further, through its Compensation Committee, the board of directors seeks
to ensure its system of rewards is risk-sensitive and aligns the interests of management, creditors, and shareholders. The Compensation Committee reviews and evaluates the companys compensation policies and practices and the relationship among
risk, risk management and compensation to ensure that incentive compensation practices appropriately balance risk and financial results, incentives do not expose the company to imprudent risks, the incentive programs are compatible with effective
controls and risk management, are supported by strong corporate governance and the compensation policies are not likely to have a material adverse effect on the company. The Compensation Committee meets regularly with members of senior management,
including the chief risk officer and the chief financial officer.
Through the Community Development Committee, the board oversees the companys
compliance with fair lending obligations and Unfair, Deceptive or Abusive Acts and Practices (UDAAP) standards. The Community Development Committee has primary oversight of the companys commitments to the Community Reinvestment Act and the
companys commitment to create and maintain a culture of inclusion that leverages diversity effectively. Senior compliance officers and the chief diversity and inclusion officer regularly participate in meetings of the Community Development
Committee.
The role of each of the board committees is further described above.
Company Strategy and Leadership
The full
board of directors focuses direct oversight on risks related to company strategy and leadership. The board holds an
off-site
session each year devoted to review of strategic priorities. In addition, the CEO
reserves time at the beginning of each board meeting to discuss priorities. Periodically, special board sessions are held to discuss and analyze specific possible risk scenarios, such as cybersecurity incidents.
The full board of directors oversees succession planning for the positions of the CEO and other members of the executive leadership team. As selecting
and appointing qualified executive leadership for the company is a priority for the board of directors, succession planning is discussed frequently. At least annually, the CEO and the chief human resources officer review with the board the
succession plans in place for executive leadership. Management also maintains succession plans for the positions reporting to the executive leadership team, and their direct reports.
Continual Director Education
Huntington has
established a formal training program for the board of directors to assist the board in its risk oversight function. The training program, which is overseen by the chief risk officer, covers:
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Bank Secrecy Act (BSA)/Anti-Money Laundering (AML) issues;
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|
Fair lending responsibilities;
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|
Avoidance of UDAAP (Unfair, Deceptive, or Abusive Acts or Practices);
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|
Cyber risks and breaches; and
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|
Legal, regulatory and supervisory requirements and trends applicable to Huntington.
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13
Additional topics may be included as appropriate, related to complex products, services or lines of
business that have the potential to significantly impact the company and other topics as identified by the board of directors or executive management from time to time.
In addition, all board members are encouraged to participate in relevant external director education opportunities. Insights gained from these programs
are shared with the full board of directors. In 2016, 6 directors attended conferences or seminars totaling approximately 125 hours of instruction.
Risk Assessment of Incentive Compensation
The Compensation Committee oversees the companys compensation policies and practices and the relationship among risk, risk management and
compensation. The Compensation Committees oversight is supported by the Incentive Compensation Oversight Committee (the Oversight Committee), an executive level management committee. The Oversight Committee consists of senior
management from Human Resources, Finance, Legal, Credit Administration, and Risk Management, and is
co-chaired
by the chief risk officer and the chief human resources officer. The Oversight Committee reports
directly to the Compensation Committee.
Under the direction of the Oversight Committee, Huntington performs an annual risk assessment of each
incentive plan. The review includes economic analysis as well as evaluation of plan design features, risk balancing mechanisms, and governance policies and practices. A key tool for managing incentive compensation risk is an annual
enterprise-level significant risk events review process overseen by the chief risk officer and the chief credit officer. This
year-end
significant risk events review typically results in a number of incentive
payment adjustments, including several with respect to 2016 incentives.
Huntington uses a variety of plan design features to balance risk and
rewards. Governance policies and practices also play an important role in managing incentive plan risk. We regularly monitor our incentive compensation arrangements for employees at all levels and strive to enhance our risk review in light of
developing best practices and regulatory guidance.
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Key broad-based incentive plan design features & controls include:
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|
Other features and controls used in various plans include:
|
Recoupment / clawback provisions
|
|
Multiple performance
criteria
|
Management discretion to reduce or
eliminate awards
|
|
Risk-related performance
criteria
|
Annual risk-based review of plans
and awards
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|
Payment caps
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Hold-until-retirement or other termination provisions for equity grants
|
For executive officers, our compensation philosophy balances risk and reward with a mix of base pay, short-term
incentives and long-term incentives, with greater emphasis on long-term incentives. We maintain stock ownership guidelines for executives and impose a hold until retirement requirement of up to 50% of the net shares. See
Compensation of Executive Officers below for detail about our executive compensation philosophy and programs.
Review, Approval or Ratification of Transactions with Related Persons
The Nominating and Corporate Governance Committee of the board of
directors oversees our Related Party Transactions Review and Approval Policy, referred to as the Policy. This written Policy covers related party transactions, including any financial transaction, arrangement or relationship or any
series of similar transactions, arrangements or relationships, either currently proposed or since the beginning of the last fiscal year in which we were or will be a participant, involving an amount exceeding $120,000 and in which a director,
nominee for director, executive officer or his or her immediate family member has or will have a direct or indirect material interest. The Policy requires our senior management and directors to notify the general counsel of any existing or potential
related party transactions. Our general counsel reviews each reported transaction, arrangement or relationship that constitutes a related party transaction with the Nominating and Corporate Governance Committee. The
Nominating and Corporate Governance Committee determines whether or not related party transactions are fair and reasonable for us. The Nominating and Corporate Governance Committee also determines whether any related party
transaction in which a director has an interest impairs the directors independence. Approved related party transactions are subject to
on-going
review by our management on at least an
annual basis. Loans to directors and executive officers and their related interests made and approved pursuant to the terms of Federal Reserve Board Regulation O are deemed to be approved under this Policy. Any of these loans that become subject to
specific disclosure in our annual proxy statement are reviewed by the Nominating
14
and Corporate Governance Committee at that time. The Nominating and Corporate Governance Committee would also consider and review any transactions with a shareholder having beneficial ownership
of more than 5% of Huntingtons voting securities in accordance with the Policy.
Indebtedness of Management.
Many of
our directors and executive officers and their immediate family members are customers of our affiliated financial and lending institutions in the ordinary course of business. In addition, our directors and executive officers also may be affiliated
with entities which are customers of our affiliated financial and lending institutions in the ordinary course of business. Loan transactions with directors, executive officers and their immediate family members and affiliates have been made on
substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other customers otherwise not affiliated with us. Such loans also have not involved more than the normal risk of
collectability or presented other unfavorable features.
Certain Other Transactions.
One of our subsidiaries, Huntington
Mezzanine Opportunities Inc., established in 2002 a private corporate mezzanine investment fund to provide financing in transaction amounts of up to $10 million to assist middle market companies primarily in the Midwest with growth or
acquisition strategies. The investment fund was dissolved in 2014. Stonehenge Mezzanine Partners LLC, as its sole purpose, served as the asset manager of the fund through May 2014. After June 1, 2014 Stonehenge Mezzanine Partners LLC was
entitled to receive 19.315% of amounts collected from any
earn-out
payments, escrow payments or other similar contingent payments related to other previous investments that had been held by the fund. During
2016, Stonehenge Mezzanine Partners LLC received $19,098 from
earn-out/escrow
payments/contingent payments. Our director Michael J. Endres has a 12.6% equity interest in Stonehenge Mezzanine Partners LLC.
The Huntington National Bank has a $7.85 million commitment (reduced from $10 million) for an equity investment in the Stonehenge
Opportunity Fund II, LP, a $150 million investment fund, which was organized in 2004. This funds origination period ended in 2010. As of December 31, 2016, $6.36 million of the $7.85 million commitment has been funded. The
remaining $1.49 million commitment is limited to fund
follow-on
investments in existing portfolio companies and fund expenses. The Huntington National Bank also has a $10 million commitment for an
equity investment in the Stonehenge Opportunity Fund III, LP, a $250 million investment fund, which was organized in 2010, and a $15 million commitment for an equity investment in the Stonehenge Opportunity Fund IV, LP, a $250 million
investment fund, which was organized in 2016. As of December 31, 2016, $7.2 million of the $10 million commitment to Stonehenge Opportunity Fund III, LP and $1 million of the $15 million commitment to Stonehenge Opportunity
Fund IV, LP have been funded.
The Stonehenge Opportunity Fund II, LP, the Stonehenge Opportunity Fund III, LP, and the Stonehenge
Opportunity Fund IV, LP each operate as a Small Business Investment Company licensed by the Small Business Administration. Each of these funds seeks to generate long-term capital appreciation by investing in equity and, in certain cases,
mezzanine securities of a diverse portfolio of companies across a variety of industries. Our management determined that the investment would provide a cost effective means to participate in financing small businesses, provide a means of obtaining
lending or investment credits under the Community Reinvestment Act and generally be favorable to us. Each of the funds is managed by Stonehenge Partners Corp., an investment firm of which Michael J. Endres is a principal and holds a 9.8% equity
interest. These funds pay to Stonehenge Partners Corp. management fees not to exceed on an annual basis 2.00% of the aggregate of private capital commitments and Small Business Administration debentures of the respective fund. In addition,
Stonehenge Partners Corp. is the controlling entity of Stonehenge Equity Partners, LLC, which serves as managing member of each of the funds.
Paul McMahon has been employed by The Huntington National Bank since 2006 and currently serves as a Portfolio Manager Team Lead in the Commercial Banking Department. Mr. McMahon is the
son-in-law
of director David L. Porteous. Mr. McMahon serves in a
non-executive
capacity four reporting levels below the
Commercial Banking Director, is one of approximately 16,500 employees, and is compensated in accordance with the employment compensation practices and policies applicable to all employees with equivalent qualifications and responsibilities in
similar positions. For 2016, Mr. McMahon received compensation of approximately $156,000 including base salary and incentive compensation, as well as benefits generally available to all employees.
Compensation of Outside Directors
Our compensation philosophy for the board of directors is to provide a compensation arrangement to outside directors that reflects the significant time commitment and substantial contributions the directors are
expected to make to the value creation and governance of Huntington. Our compensation level and structure are designed to enable us to attract and retain high caliber talent at a national level, and also to align the directors interests with
those of the shareholders. Our compensation program for
non-employee
directors is a combination of cash and equity. Directors who are also employees of Huntington do not receive compensation for their services
as directors.
15
Fees Payable in Cash.
Each
non-employee
director
earns an annual retainer of $35,000. We pay an additional annual retainer of $65,000 to the lead director, and $20,000 to the chairs of all standing board committees. We pay meeting fees at the standard rate of $2,000 for each board of directors or
committee meeting the director attends and $1,000 for each teleconference board of directors or committee meeting in which the director participates. In addition, we pay directors fees of $2,000 per day in the event Huntington requests a director to
attend or participate in an event or meeting, in person, in his capacity as a director. All fees are payable quarterly. Retainer fees are payable in four equal quarterly installments. A director may defer all or a portion of the cash compensation
payable to the director if he or she elects to participate in the Deferred Compensation Plan and Trust for Huntington Bancshares Incorporated Directors, referred to as the Directors Deferred Plan. The trustee of the plan has typically invested the
trust fund primarily in shares of our common stock. The Directors Deferred Plan is described below.
Equity Compensation.
To align the interests of directors with shareholders, a meaningful portion of director compensation is paid in equity that is subject to holding requirements. The Compensation Committee considers equity grants for
non-employee
directors on an annual basis, and the form and amounts of any equity grants for directors are determined at the discretion of the Compensation Committee. Since 2006, the equity grants for
directors have been in the form of deferred stock units which are vested upon grant but not released to the director until six months following separation of service. Based on the market data and peer review facilitated by the independent
compensation consultant, the Compensation Committee granted each
non-employee
director a deferred stock award having a value of $105,000, effective May 1, 2016. Divided by the stock price of $10.06 on the
last trading day preceding the date of grant, each director was awarded 10,437 deferred stock units, rounded down to the nearest whole share. The Compensation Committee awarded an additional $20,000 grant value to the chairpersons of the Audit,
Compensation and Risk Oversight Committees which converted to an additional 1,988 deferred stock units.
In addition to the mandated
holding of shares imposed by the deferred stock units, the Compensation Committee has established a minimum ownership level guideline for directors based on five times the annual retainer fee (excluding committee chairmanship retainers). Based on
the retainer fee and the fair market value of our common stock on the date the guidelines were established, the guideline for directors was set at 40,603 shares. Directors have five years to meet the minimum guidelines, from the date the guidelines
were established, or if later, the date of joining the board. Each of the directors who has served at least two years has met the guidelines.
Director Compensation 2016
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|
Name(1)
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|
Fees
Earned or
Paid
in
Cash (2)
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Stock
Awards (3)(4)
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|
Option
Awards
|
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|
Non-Equity
Incentive
Plan
Compen
sation
|
|
|
Change in
Pension Value
and
Non-
qualified
Deferred
Compensation
Earnings
|
|
|
All Other
Compensation
|
|
|
Total
|
|
Lizabeth Ardisana
|
|
$
|
25,583
|
|
|
$
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
25,583
|
|
Ann B. Crane
|
|
|
106,000
|
|
|
|
104,996
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
210,996
|
|
Robert S. Cubbin
|
|
|
31,583
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31,583
|
|
Steven G. Elliott
|
|
|
163,000
|
|
|
|
124,995
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
287,995
|
|
Michael J. Endres
|
|
|
80,000
|
|
|
|
104,996
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
184,996
|
|
Gina D. France
|
|
|
30,583
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,583
|
|
John B. Gerlach, Jr.
|
|
|
114,000
|
|
|
|
124,995
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
238,995
|
|
J. Michael Hochschwender
|
|
|
27,583
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,583
|
|
Chris Inglis
|
|
|
40,333
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
40,333
|
|
Peter J. Kight
|
|
|
122,000
|
|
|
|
104,996
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
226,996
|
|
Jonathan A. Levy
|
|
|
94,000
|
|
|
|
104,996
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
198,996
|
|
Eddie R. Munson
|
|
|
94,000
|
|
|
|
104,996
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
198,996
|
|
Richard W. Neu
|
|
|
132,000
|
|
|
|
124,995
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
256,995
|
|
David L. Porteous
|
|
|
260,000
|
|
|
|
104,996
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
364,996
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|
Kathleen H. Ransier
|
|
|
108,000
|
|
|
|
104,996
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
212,996
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|
(1)
|
Ms. Ardisana, Mr. Cubbin, Ms. France and Mr. Hochschwender joined the board in August 2016. Mr. Inglis joined the board in May 2016.
|
16
(2)
|
Amounts earned include fees deferred by participating directors under the Directors Deferred Plan.
|
(3)
|
On May 1, 2016, grants of 12,425 deferred stock units were made to the chairpersons of the Audit, Compensation and Risk Oversight Committees and grants of 10,437 deferred
stock units were made to each other director under the 2015 Long-Term Incentive Plan. These awards were vested upon grant and are payable six months following separation from service. This column reflects the grant date fair value in accordance with
FASB Topic 718 and is equal to the number of units times the fair market value (the closing price) on the last trading date preceding the date of grant ($10.06). These deferred stock unit awards will be credited with an additional number of deferred
stock units to reflect reinvested dividend equivalents with respect to the period of time between the date of grant and the delivery of shares.
|
(4)
|
The Compensation Committee has granted deferred stock awards to
non-employee
directors each year since 2006. The directors deferred
stock unit awards outstanding as of December 31, 2016 are set forth in the table below.
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Name
|
|
Deferred Stock Awards
Outstanding
|
|
Ann B. Crane
|
|
|
61,411
|
|
Steven G. Elliott
|
|
|
67,567
|
|
Michael J. Endres
|
|
|
78,042
|
|
John B. Gerlach, Jr.
|
|
|
84,198
|
|
Peter J. Kight
|
|
|
42,583
|
|
Jonathan A. Levy
|
|
|
76,042
|
|
Eddie R. Munson
|
|
|
20,751
|
|
Richard W. Neu
|
|
|
74,698
|
|
David L. Porteous
|
|
|
78,042
|
|
Kathleen H. Ransier
|
|
|
78,042
|
|
Directors Deferred Plan
.
The Directors Deferred Plan allows the members of the board to elect
to defer receipt of all or a portion of the compensation payable to them in the future for services as directors. We transfer cash equal to the compensation deferred pursuant to the plan to a trust fund where it is allocated to the accounts of the
participating directors. The trustee of the plan has broad investment discretion over the trust fund and is authorized to invest in many forms of securities and other instruments, including our common stock. During 2016, the trustee invested
primarily in shares of our common stock.
A directors account will be distributed either in a lump sum or in equal annual
installments over a period of not more than ten years, as elected by each director. Distribution will commence upon the earlier of 30 days after the attainment of an age specified by the director at the time the deferral election was made, or within
30 days of the directors termination as a director. All of the assets of the plan including the assets of the trust fund are subject to the claims of our creditors. The rights of a director or his or her beneficiaries to any of the assets of
the plan are no greater than the rights of our unsecured general creditors. Since directors who are also our employees do not receive compensation as directors, they are not eligible to participate in this plan.
As of December 31, 2016, the participating directors accounts were substantially comprised of Huntington common stock and had the values
set forth in the table below.
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|
Name
|
|
Account Balance at
December 31, 2016
|
|
Ann B. Crane
|
|
$
|
872,671
|
|
Steven G. Elliott
|
|
|
80,170
|
|
Michael J. Endres
|
|
|
1,119,657
|
|
John B. Gerlach, Jr.
|
|
|
2,245,481
|
|
Peter J. Kight
|
|
|
126,147
|
|
Richard W. Neu
|
|
|
1,295,343
|
|
David L. Porteous
|
|
|
2,642,023
|
|
Kathleen H. Ransier
|
|
|
493,352
|
|
17
Ownership of Voting Stock
The table below sets forth the beneficial ownership of Huntington common stock by each of our directors, nominees for director, executive officers named
in the Summary Compensation Table, and the directors and all executive officers as a group, as of January 31, 2017. Beneficial ownership is determined in accordance with the rules of the SEC. Generally, the rules attribute beneficial ownership
of securities to persons who possess sole or shared voting power and/or investment power with respect to those securities, including shares which could be acquired within 60 days. The table also sets forth additional share interests not reportable
as beneficially owned.
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|
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|
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|
|
|
|
|
Beneficial Ownership
|
|
|
|
|
|
|
|
Name of Beneficial Owner
|
|
Shares of
Common Stock
Beneficially
Owned
(1)(2)(3)(4)
|
|
|
Percent of
Class
|
|
|
Additional
Share Interests
(5)(6)
|
|
|
Total Share
Interests
|
|
Lizabeth Ardisana
|
|
|
31,802
|
|
|
|
*
|
|
|
|
0
|
|
|
|
31,802
|
|
Ann B. Crane
|
|
|
81,577
|
|
|
|
*
|
|
|
|
61,411
|
|
|
|
142,988
|
|
Robert S. Cubbin
|
|
|
55,261
|
|
|
|
*
|
|
|
|
0
|
|
|
|
55,261
|
|
Steven G. Elliott
|
|
|
6,067
|
|
|
|
*
|
|
|
|
67,567
|
|
|
|
73,634
|
|
Michael J. Endres
|
|
|
326,642
|
|
|
|
*
|
|
|
|
78,042
|
|
|
|
404,684
|
|
Gina D. France
|
|
|
68,000
|
|
|
|
*
|
|
|
|
0
|
|
|
|
68,000
|
|
John B. Gerlach, Jr.
|
|
|
1,762,372
|
|
|
|
*
|
|
|
|
84,198
|
|
|
|
1,846,570
|
|
Paul G. Heller
|
|
|
363,207
|
|
|
|
*
|
|
|
|
0
|
|
|
|
363,207
|
|
J. Michael Hochschwender
|
|
|
123,749
|
|
|
|
*
|
|
|
|
0
|
|
|
|
123,749
|
|
Helga S. Houston
|
|
|
337,987
|
|
|
|
*
|
|
|
|
36,272
|
|
|
|
374,259
|
|
Chris Inglis
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
0
|
|
Peter J. Kight
|
|
|
223,831
|
|
|
|
*
|
|
|
|
42,583
|
|
|
|
266,414
|
|
Jonathan A. Levy
|
|
|
130,213
|
|
|
|
*
|
|
|
|
76,042
|
|
|
|
206,255
|
|
Howell D. McCullough III
|
|
|
327,771
|
|
|
|
*
|
|
|
|
9,186
|
|
|
|
336,957
|
|
Eddie R. Munson
|
|
|
10,000
|
|
|
|
*
|
|
|
|
20,751
|
|
|
|
30,751
|
|
Richard W. Neu
|
|
|
197,921
|
|
|
|
*
|
|
|
|
74,698
|
|
|
|
272,619
|
|
Sandra E. Pierce
|
|
|
173,388
|
|
|
|
*
|
|
|
|
0
|
|
|
|
173,388
|
|
David L. Porteous
|
|
|
687,591
|
|
|
|
*
|
|
|
|
78,042
|
|
|
|
765,633
|
|
Kathleen H. Ransier
|
|
|
65,430
|
|
|
|
*
|
|
|
|
78,042
|
|
|
|
143,472
|
|
Stephen D. Steinour
|
|
|
6,001,700
|
|
|
|
*
|
|
|
|
704,349
|
|
|
|
6,706,049
|
|
Directors and All Executive Officers as a Group (27 in the
group)
|
|
|
14,171,862
|
|
|
|
1.30
|
|
|
|
1,778,808
|
|
|
|
15,950,670
|
|
*
|
Indicates less than 1% of outstanding shares.
|
(1)
|
This column consists of shares for which the directors and executives, directly or indirectly, have the power to vote or to dispose, or to direct the voting or disposition thereof, and also includes shares for which the
person has the right to acquire beneficial ownership within 60 days. Except as otherwise noted, none of the named individuals shares with another person either voting or investment power as to the shares reported. None of the shares reported are
pledged as security.
|
(2)
|
Figures include the number of shares of common stock which could have been acquired within 60 days of January 31, 2017, under stock options awarded under our employee and director equity plans as set forth below.
|
|
|
|
|
|
Mr. Heller
|
|
|
170,252
|
|
Ms. Houston
|
|
|
193,721
|
|
Mr. McCullough
|
|
|
196,471
|
|
Mr. Steinour
|
|
|
3,274,503
|
|
Directors and Executive Officers as a Group (27 in the
group)
|
|
|
5,694,159
|
|
18
The figure for Mr. Endres includes 41,834 shares of common stock that could be acquired upon conversion
at any time of our 8.50% Series A
non-voting
perpetual convertible preferred stock (Series A Preferred Stock). Mr. Endres owns 500 shares of Series A Preferred Stock, each of which is
convertible into 83.668 shares of common stock. Mr. Endres holds less than 1% of the Series A Preferred Stock outstanding.
(3)
|
Figures include 1,098,085 shares, 13,180 shares, 1,772 shares and 174,117 shares of common stock owned by members of the immediate families or family trusts of Messrs. Gerlach and Levy, Ms. Ransier and
Mr. Steinour, respectively; 416,228 shares and 1,762 shares owned by various corporations and partnerships attributable to Messrs. Gerlach, and Levy, respectively; and 11,341 shares owned jointly by Ms. Crane and her spouse, 303,360 shares
owned jointly by Mr. Porteous and his spouse, 1,500 shares owned jointly by Ms. Ransier and her spouse, and 291,149 shares owned jointly by Mr. Steinour and his spouse.
|
(4)
|
Figures also include the following shares of common stock held as of December 31, 2016, in Huntingtons deferred compensation plans for directors: 66,036 shares for Ms. Crane, 6,067 shares for
Mr. Elliott, 84,726 shares for Mr. Endres, 169,940 shares for Mr. Gerlach, 9,546 shares for Mr. Kight, 98,021 shares for Mr. Neu, 199,926 shares for Mr. Porteous, and 37,333 shares for Ms. Ransier. Prior to the
distribution from the deferred compensation plans to the participants, voting and dispositive power for the shares allocated to the accounts of participants is held by The Huntington National Bank, as trustee of the plans.
|
(5)
|
This column includes shares in benefit plans in which the executive officers have vested ownership interests but do not have the power to vote or dispose of the shares, or the right to acquire such shares within 60
days. Figures include the following shares of common stock held as of December 31, 2016 in Huntingtons Supplemental Stock Purchase and Tax Savings Plan: 8,520 shares for Ms. Houston, 9,186 shares for Mr. McCullough, 53,517
shares for Mr. Steinour, and 263,605 shares for executive officers as a group (12 in the group). Prior to the distribution from this plan to the participants, voting and dispositive power for the shares allocated to the accounts of participants
is held by The Huntington National Bank, as trustee of the plan. Figures include the following shares of common stock held as of December 31, 2016 in Huntingtons Executive Deferred Compensation Plan: 27,752 shares for Ms. Houston,
650,832 shares for Mr. Steinour and 853,827 shares for executive officers as a group (12 in the group). Prior to the distribution from this plan to the participants, voting for the shares allocated to the accounts of participants is directed by
the company.
|
(6)
|
Figures in this column for the directors consist of deferred stock awards that will be issued in shares of common stock six months following separation from service. These amounts are also set forth in footnote 3 to the
Director Compensation 2016 Table above.
|
As of December 31, 2016, we knew of no person who was the beneficial owner of more than
5% of our outstanding shares of common stock, except as follows:
|
|
|
|
|
|
|
|
|
Name and Address
of Beneficial Owner
|
|
Shares of
Common Stock
Beneficially Owned
|
|
|
Percent of
Class
|
|
The Vanguard Group, Inc. (1)
100 Vanguard Boulevard
Malvern, PA 19355
|
|
|
103,493,792
|
|
|
|
9.540
|
%
|
FMR LLC (2)
245 Summer Street
Boston, MA 02210
|
|
|
80,742,436
|
|
|
|
7.443
|
%
|
BlackRock, Inc. (3)
55 East 52nd Street
New York, NY 10055
|
|
|
67,008,555
|
|
|
|
6.200
|
%
|
State Street Corporation (4)
State Street Financial Center
One Lincoln Street
Boston, MA 02211
|
|
|
63,936,554
|
|
|
|
5.890
|
%
|
(1)
|
This information is based on an amendment to Schedule
13-G
filed by The Vanguard Group, Inc. on February 13, 2017. The Vanguard Group, Inc. has sole voting power for
1,684,371 of the shares, shared voting power for 208,190 of the shares, sole dispositive power for 101,607,385 of the shares, and shared dispositive power for 1,886,407 of the shares. The Vanguard Group, Inc. acquired the shares in the ordinary
course of business.
|
(2)
|
This information is based on an amendment to Schedule
13-G
filed by FMR LLC on February 14, 2017. FMR LLC has sole voting power for 5,143,638 of the shares and sole
dispositive power over all of the shares. FMR LLC acquired the shares in the ordinary course of business.
|
(3)
|
This information is based on an amendment to Schedule
13-G
filed by BlackRock Inc. on January 24, 2017. BlackRock Inc. has sole voting power for 57,591,806 of the shares and
sole dispositive power for all of the shares. These shares were acquired and are held by BlackRock, Inc. in the ordinary course of business.
|
19
(4)
|
This information is based on a Schedule
13-G
filed by State Street Corporation on February 7, 2017. State Street Corporation has shared voting power and shared dispositive
power for all of the shares. These shares were acquired and are held by State Street Corporation in the ordinary course of business.
|
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our officers, directors, and persons who are beneficial owners of more than
ten percent of Huntington common stock to file reports of ownership and changes in ownership with the SEC. Reporting persons are required by SEC regulations to furnish us with copies of all Section 16(a) forms filed by them. To the best of our
knowledge, and following a review of the copies of Section 16(a) forms received, we believe that during 2016 all filing requirements applicable for reporting persons were met, with the exception of one transaction by Ms. Crane that was reported
late.
Compensation of Executive Officers
Compensation Discussion & Analysis
This Compensation Discussion & Analysis describes Huntingtons executive compensation program for 2016 for our named executive officers
(NEOs) whose compensation is detailed in the Summary Compensation Table which follows. The Compensation Committee of our board of directors provides independent oversight of our executive compensation and has engaged an independent compensation
consultant, Pearl Meyer & Partners LLC, to provide advice with respect to the amount and form of executive compensation.
Our compensation
philosophy is to pay for performance that creates long-term shareholder value. The Compensation Committee has developed a balanced compensation program for executives that incorporates many key compensation and governance practices.
|
|
|
Key
Compensation & Governance Practices
|
✓
|
|
Significant stock ownership and hold until retirement policies that reinforce alignment between shareholders and executive officers
|
✓
|
|
Significant emphasis on performance-based compensation, with majority of compensation dependent upon long-term performance
|
✓
|
|
Balanced portfolio of metrics that drive annual and long-term goals in a risk appropriate manner
|
✓
|
|
Annual cash incentive awards for executive officers cash is capped at 100% of target; any award above target is paid in RSUs with a 3 year ratable vesting
period
|
✓
|
|
All incentive compensation subject to Recoupment and Clawback Policy
|
✓
|
|
Performance Share Units comprise 50% of total annual LTI grant value
|
✓
|
|
Hedging by executives is prohibited and pledging by executives and directors is restricted and discouraged; no shares are currently pledged
|
✓
|
|
Independent compensation consultant advising the Compensation Committee
|
Doing the Right Thing
. The Compensation Committee also oversees the companys broader
compensation policies and practices and the relationship among risk takers, risk management and compensation. Huntington regularly monitors its incentive arrangements for employees at all levels and strives to enhance incentive risk management in
light of developing best practices and regulatory guidance. Risk assessment of incentive compensation is discussed in greater detail above under The Boards Role in Risk Oversight.
For years we have worked hard to build a culture of doing the right thing for our customers. Our fair play banking philosophy starts with
doing the right thing with products and services that are simple, clear, and fair. We also look to deepen existing customer relationships by working to understand and serve our customers needs. We have a proud legacy of strong customer service
and we require that all of our colleagues follow both the letter and intent of our code of business conduct and ethics. We take action when we find violations of our code of conduct, and violations are reported to the audit committee of the board of
directors.
Moreover, Huntington maintains a robust Recoupment and Clawback Policy which is a tool for recoupment or clawback of incentive
compensation in appropriate situations. Employees at all levels in the organization are subject to this
20
policy. Incentive compensation subject to possible clawback or recoupment includes any cash incentive or equity compensation, vested or unvested. In general, situations that trigger a review
under this policy involve behaviors or actions outside the bounds of the companys overall risk appetite and governance structure. The Compensation Committee would make any incentive recoupment or clawback determination with respect to
executive officers. Additional detail about the Recoupment and Clawback Policy can be found later in this discussion.
The Importance of Stock
Ownership
. A critical foundation of our executive compensation philosophy is the requirement to own Huntington common stock, which aligns managements interests with those of shareholders. Mr. Steinours commitment to this
principle and to the company is evidenced by his significant personal investment in Huntington. Since joining Huntington in January 2009, Mr. Steinour has purchased over 1.5 million shares of Huntington common stock in open market
transactions. As of December 31, 2016, Mr. Steinour directly and indirectly owned shares of Huntington common stock equal to approximately 41X his salary, significantly exceeding our best practice 6X salary ownership guideline. Each
executive officer generally has 5 years to comply with his or her requirements. In addition, executive officers are subject to a holding requirement equal to 50% of net shares received upon the exercises of a stock option or upon the release of full
value awards. This amount of shares must be held until retirement or other departure from the company. See additional detail under Stock Ownership & Holding Requirements later in this discussion.
Consideration of
Say-on-Pay
/ Shareholder Outreach
.
More than 95% of the votes cast for our
say-on-pay
advisory vote at the 2016 annual meeting were in favor of our executive compensation programs. We strive
to continually strengthen our compensation practices based on our philosophy, market best practices and feedback received from shareholders. During 2016, we continued our shareholder outreach and held conversations with investors holding
approximately 25% of our outstanding common stock. The Board and management have gained valuable insight from these interactions and will continue to seek shareholder input. Based on the
say-on-pay
vote and other feedback, the Compensation Committee has determined to maintain the essential design of our compensation program. We will continue to monitor emerging trends and best
practices and seek ways to improve our compensation programs and ensure continued alignment between our pay and performance.
This Compensation
Discussion & Analysis is divided into four sections:
|
|
|
Determination of Compensation
|
|
|
|
2016 Compensation Decisions
|
|
|
|
Other Policies and Practices
|
Overview
Our Business Strategy, Goals and Accomplishments
In 2009, Huntington developed a strategic plan for its core businesses, the primary objective of which was to increase market share and share of wallet
in the markets we serve, while recognizing the need to create a balanced executional focus on four key constituencies: Customers, Colleagues, Communities and Shareholders. Execution of the strategy has positioned Huntington as an industry leader in
growth of households and share of wallet, with further opportunities to grow market share and share of wallet.
While the financial services
industry is currently being significantly impacted by the substantial effect that regulation and economic conditions have on profitability and competitive position, Huntingtons 2016 performance was strong. In 2016 we demonstrated continued
progress toward achieving our long-term financial goals. We delivered positive operating leverage for the fourth consecutive year. Total revenue increased 18% over the prior year, materially aided by the acquisition of FirstMerit Corporation in
August 2016. Net charge-offs remained below our long-term goal for the third consecutive year. We also executed our balance sheet optimization strategy, in which we chose to shrink the balance sheet in order to replenish our capital ratios more
quickly.
2016 was a historic, and in many ways transformational, year for Huntington. We celebrated the 150th anniversary of The Huntington
National Bank, proudly serving our local communities for generations. We completed the largest acquisition in our companys history, FirstMerit Corporation. We also eclipsed two meaningful financial milestones for the first time as total assets
exceeded $100 billion, and quarterly revenue exceeded $1 billion. And, we added extraordinary talent and new growth opportunities with new products.
21
|
|
|
2016 Highlights
✓
Closing of the acquisition of FirstMerit Corporation, which
added approximately $26.8 billion of total assets, $15.5 billion of total loans and leases, and $21.2 billion of total deposits
✓
Revenue growth was 18% over 2015, materially aided by the
FirstMerit acquisition
✓
We achieved positive operating leverage on an adjusted basis for the fourth consecutive year
✓
Net income was up 3% over the prior year
✓
Increased cash dividends for sixth consecutive year;
end-of-year
dividend yield of 2.4%
✓
Return on average assets was 0.86%
✓
Return on average tangible common equity was 10.7%
✓
Efficiency ratio of 66.8%
✓
Net interest margin of 3.16%, an increase of 1 basis
point
✓
Net charge offs of 0.19% of average loans and leases.
|
|
|
2016 Compensation Highlights
Four of the five NEOs served in their roles for the entire year and participated in our standard executive compensation program for 2016. Sandra E.
Pierce joined Huntington in August 2016 following the acquisition of FirstMerit Corporation. Ms. Pierces compensation was determined separately and is discussed under 2016 Compensation Decisions below.
|
|
|
Named Executive Officers
|
Stephen D. Steinour
|
|
Chairman, President and Chief Executive Officer
|
Howell D. McCullough III
|
|
Chief Financial Officer
|
Sandra E. Pierce
|
|
Private Client Group Director
|
Paul G. Heller
|
|
Chief Technology and Operations Officer
|
Helga S. Houston
|
|
Chief Risk Officer
|
22
Consistent with Huntingtons pay for performance philosophy, the Compensation
Committees 2016 compensation program for executive officers emphasized performance-based compensation. Huntingtons 2016 performance against the Management Incentive Plan (MIP) metrics was 180% of target. The named executive officers
participating in MIP earned annual incentive awards ranging from 181% to 196% of target. Executive officers also received long-term incentive awards in 2016 comprised of performance stock units (PSUs), restricted stock units
(RSUs) and stock options, and merit-based salary increases.
|
|
|
|
2016
Key Compensation Elements
|
Base Salaries
|
|
Merit-based increases
|
|
|
|
Management Incentive Plan
|
|
Overall performance at 180% of target on:
Earnings per
share
Return
on Average Tangible Common Equity
Operating Leverage
|
|
|
|
Long-term Incentive Plan
|
|
Awarded long-term incentive grants comprised
of:
PSUs
(50%)
RSUs
(35%)
Stock
Options (15%)
|
The targeted direct compensation mix, below, illustrates the emphasis on variable, incentive-based compensation.
Fixed compensation consists of base salaries. Variable, performance-based compensation includes our annual incentive payouts in cash and RSUs, the target value of PSUs, and the grant date fair value of stock options and RSUs.
Determination of Compensation
Philosophy and Decision-Making Process
The Compensation Committee develops and approves our executive compensation with input from our management and the independent compensation consultant. Our management provides information and may make
recommendations to the Compensation Committee with respect to the amount and form of executive compensation. In addition, our CEO and CFO make recommendations to the Compensation Committee when it sets specific financial measures and goals for
determining incentive compensation. Our CEO provides input and makes recommendations to the Compensation Committee regarding the performance and compensation of his direct reports, which include the NEOs. The CEO does not
23
make recommendations to the Compensation Committee regarding his own compensation, other than requests in prior years that the Compensation Committee defer consideration of a base salary increase
for him. From time to time, the Compensation Committee consults with other committees of the board and may obtain the approval of the full board of directors with respect to certain executive and director compensation matters. For additional detail,
see Procedures for Determining Executive and Director Compensation; Compensation Consultant in the Corporate Governance section above.
We provide a balanced total compensation package, which includes both fixed and variable, performance-based elements. The use of both short-term and long-term incentives ensures that the ultimate compensation
delivered is dependent upon achievement of our annual business goals, as well as delivering long-term shareholder value. Our performance and evaluation process considers company, business segment and individual performance, as well as performance
relative to industry peers. Our target pay levels are designed to be competitive with market practice. Since a majority of our pay is variable and based on performance, our actual pay positioning will vary appropriately to reflect our performance.
While overall compensation policies generally apply to all executives, we recognize the need to differentiate compensation by
individual, reflecting on his or her role, experience, performance, and expected contributions. Base salaries and incentive targets are the primary means for differentiating compensation opportunities to reflect executive role and scope of
responsibility. For example, Mr. Steinour has a higher base salary and higher potential award opportunities due to his responsibilities as CEO. He is also held to a higher stock ownership guideline, reflecting his increased stake in our
performance.
|
|
|
|
Guiding
Principles
|
Focus on long-term shareholder alignment
|
|
A significant portion of compensation is stock-based and long-term in focus
|
Approach compensation in a balanced and holistic fashion
|
|
Our program includes fixed and performance-based elements, short-term and long-term performance
incentives, and considers corporate, business segment, individual, and relative performance
|
Vary pay based on performance
|
|
Total compensation is expected to vary each year and may evolve over the long-term to reflect our
performance and key objectives
|
Maintain an aggregate
moderate-to-low
risk profile
|
|
We monitor our programs, controls and governance
practices for consistency with our aggregate
moderate-to-low
risk profile
See Risk Assessment of Incentive Plans above
|
Assure appropriate positioning in the market
|
|
Our target pay levels are designed to be competitive with market practice.
|
Reflect internal equity
|
|
We differentiate compensation by individual, reflecting his or her role, experience, performance and
expected contributions
|
Market Referencing
The Compensation Committee regularly reviews peer and industry information in regard to levels of compensation and performance as a competitive frame of reference. The Compensation Committee uses this information
and analysis as a benchmarking reference for setting pay opportunities and making pay decisions, such as changes to base salaries, annual incentive awards and long-term incentive grants. A key source of information is a peer group of regional banks
similar to Huntington in terms of size and business model. The peer banks are chosen using an objective process recommended by the independent compensation consultant and approved by the Compensation Committee. For fiscal year 2016 and in
anticipation of the FirstMerit acquisition, the Compensation Committee approved two groups of peer banks. The first peer group has a frame of reference for understanding compensation levels and program design before the acquisition of FirstMerit and
the second peer group was used for the same purposes following the acquisition of FirstMerit.
We
re-evaluated
and updated the peer group in 2016 for ongoing relevance, as we do each year. The process began with the selection of U.S. based publicly traded commercial banks considering asset size as of
December 31, 2015. A
24
number of banks within the relevant
pre-acquisition
asset size were eliminated due to a business model which included one or more of: international process
or focus, a focus on different services, a high level of inside ownership, and
off-shore
headquarters. Two banks that were present in the 2015 peer group have been removed due to acquisitions: FirstMerit
Corporation was acquired by Huntington in August of 2016 and First Niagara Financial Group, Inc. was acquired by KeyCorp in July of 2016. The resulting group consisted of fourteen bank holding companies; eight larger and six smaller, positioning
Huntington at approximately the 50th percentile for
pre-acquisition
asset size. The Compensation Committee used the fourteen peers to represent the most appropriate market comparators for Huntington in terms
of industry and size in the
pre-acquisition
landscape. The table below lists the peer banks approved by the Compensation Committee for 2016 prior to the acquisition of FirstMerit Corporation.
|
|
|
Pre-Acquisition
Peer Banks for 2016
|
|
|
Associated Banc-Corp.
|
|
First Horizon National Corporation
|
BB&T Corporation
|
|
KeyCorp
|
Citizens Financial Group, Inc.
|
|
M&T Bank Corporation
|
Comerica Incorporated
|
|
Regions Financial Corporation
|
Commerce Bancshares Inc.
|
|
SunTrust Banks, Inc.
|
Cullen/Frost Bankers, Inc.
|
|
Synovus Financial Corp.
|
Fifth Third Bancorp
|
|
Zions Bancorporation
|
Upon Huntingtons acquisition of FirstMerit Corporation in August of 2016, the independent compensation
consultant recommended that Huntington adjust its peer frame of reference to represent our post-acquisition asset size. The selection process was similar to the one developed for the
pre-acquisition
peer
group, beginning with the selection of U.S. based publically traded commercial banks considering asset size as of August 16, 2016. A number of banks with relevant post-acquisition asset size were eliminated due to a business model which
included one or more of: international process of focus, a focus on different services, a high level of inside ownership, and
off-shore
headquarters. Five banks that were present in the 2016
pre-acquisition
peer group have been removed: Cullen/Frost Bankers, Inc., Synovus Financial Corporation, Associated Banc-Corporation, First Horizon National Corporation, and Commerce Bancshares, Inc. have been
removed due to having assets below $50 billion. One bank holding company was added to the post-acquisition peer group: CIT Group Inc. The resulting group consisted of ten bank holding companies; five larger and five smaller, positioning
Huntington at approximately the 50th percentile for post-acquisition asset size. The Compensation Committee used the ten peers to represent the most appropriate market comparators for Huntington in terms of industry and size in the post-acquisition
landscape. The table below lists the peer banks approved by the Compensation Committee for 2016, effective upon the acquisition of FirstMerit Corporation.
|
|
|
Post-Acquisition Peer Banks for 2016
|
|
|
BB&T Corporation
|
|
KeyCorp
|
CIT Group Inc.
|
|
M&T Bank Corporation
|
Citizens Financial Group, Inc.
|
|
Regions Financial Corporation
|
Comerica Incorporated
|
|
SunTrust Banks, Inc.
|
Fifth Third Bancorp
|
|
Zions Bancorporation
|
The independent compensation consultant also provided the Compensation Committee with industry surveys as
appropriate to supplement the peer group data. When using survey data, the information was reflective of Huntingtons size and industry. This included utilizing size adjusted comparisons representing data from companies that fell closest to our
asset size. The Compensation Committee also relied on the independent compensation consultant to provide a broader industry perspective of emerging trends and best practices.
Among the peer and industry data considered in 2016 were three-year total shareholder return relative to peers, three-year relative performance in incentive measures, and realizable pay over the prior three years
relative to peers. With the assistance of the independent compensation consultant, the Compensation Committee performed a pay and performance analysis in 2016 for the 2013 2015 period and determined that there was appropriate
alignment between performance and pay. The Compensation Committee performs a pay and performance analysis on an annual basis to review the appropriateness of the companys executive compensation program.
25
Compensation Components
The three primary components of executive compensation are base salary, annual incentive awards and equity-based long-term incentive
awards. Benefits are a much less significant factor. The purpose and features of each component are summarized below.
|
|
|
|
Executive
Compensation
|
|
|
Components
|
|
Purpose and Key Features
|
Base Salary
|
|
Set within a competitive range of market practice to
attract and retain top talent.
Varies depending upon the executives role,
performance, experience and contribution
Foundation from which incentives and other
benefits are determined
|
Annual Incentive
(Management Incentive Plan)
|
|
Motivate and reward for achieving or exceeding
annual financial strategic and operational goals that ultimately support sustained long-term profitable growth and value creation
Reflect company performance on key measures, adjusted for business unit and individual performance, including risk management
Each NEO has a target opportunity expressed as a percentage of base salary reflective of the
NEOs role
Tied directly to
performance in year for which reported
Awards up to target are paid in cash; any
amount of annual incentive earned in excess of target is paid in the form of RSUs which vest incrementally over three years
|
Long-Term Incentive
(Equity Grants)
|
|
Motivate and reward for delivering long-term
sustained performance aligned with shareholder interests
Grants are comprised of
performance share units (PSUs), time-based restricted stock units (RSUs) and stock options
Awards based on multiple factors, including competitive market data, business segment performance, individual performance and historical equity grants
|
Benefits
|
|
Same broad-based benefit programs generally
available to all employees
A limited number of additional benefits are offered
targeted to be within typical market practice and as needed to attract and retain executive talent
|
2016 Compensation Decisions
Timing of Compensation Decisions
In February of each year, the Compensation Committee
approves annual incentive awards which are tied directly to prior year performance. These awards are based on metrics chosen by the Compensation Committee the preceding February. During the second quarter of the year, the Compensation Committee
makes decisions with respect to base salary adjustments and equity-based long-term incentive based on performance and on other factors discussed below. With respect to the incentive compensation amounts reported for 2016 in the Summary Compensation
Table:
|
|
|
Annual incentives determined in February 2017 based on 2016 performance are reported under the
Non-Equity
Incentive
Plan column.
|
26
|
|
|
Long-term incentives granted on May 1, 2016 are based on a multi-faceted approach that includes company and individual performance and contributions, retention value of current equity ownership, historical
long-term incentive compensation awards and the market-based framework the independent consultant developed. These awards are reported under the columns Stock Awards and Option Awards.
|
The following discussion of compensation decisions with respect to base salary adjustments, annual incentive awards under MIP and annual equity grants
below is applicable to each of the NEOs other than Sandra E. Pierce. Ms. Pierce joined Huntington in August 2016 upon Huntingtons acquisition of FirstMerit Corporation, as Private Client Group Director, Regional Banking Director and
Senior Executive Vice President of the Huntington National Bank. Much of Ms. Pierces compensation was paid pursuant to the retention letter negotiated with her in connection with the transaction and Huntingtons decision to retain her,
and is discussed under Compensation Decisions below. A portion of Ms. Pierces compensation was determined by FirstMerit Corporation prior to the acquisition by Huntington.
Base Salary
Each of the NEOs then
serving received a merit-based salary increase effective May 1, 2016. The increase for the CEO was equal to 10% of base salary, and the increases for the other NEOs ranged from 3.8% to 6.1%. The increase for the CEO was the first since his hire
in 2009; for several years after joining the company, the CEO expressed a desire to not be considered for a base salary increase, which was honored by the Compensation Committee. All salary increases were market competitive.
Annual Incentive Award
Huntingtons annual incentive awards under the Management Incentive Plan reflect company performance on key short-term measures, adjusted in the
discretion of the CEO and the Compensation Committee, for business segment and individual performance. The Compensation Committee considers the appropriate corporate performance metrics for each year.
The metrics for 2016 were determined by the Compensation Committee to be earnings per share, return on tangible common equity, and operating leverage,
which were the same metrics selected for 2015. These performance metrics were chosen from among the list of available criteria under MIP and represented key short-term strategic areas of focus intended to support long-term success. The choice of
metrics also reflected a balanced approach to measuring success. The metric of operating leverage ensures that our incentives are aligned with our commitment to shareholders to grow revenue faster than expenses. Return on tangible common equity
(ROTCE) was chosen due to the strong correlation of higher ROTCE to higher market
price-to-tangible
book value (P/TBV) valuations for the common stocks of
publicly-traded bank holding companies.
Each executive has an annual target incentive opportunity expressed as a percentage of his or her base
salary. The specific threshold, target and maximum opportunity for each executive is reflective of the executives role and competitive market practice. For 2016, the CEOs target incentive was equal to 125% of his base salary. For the
other participating NEOs, the 2016 MIP target was equal to 80% of base salary.
Company Performance
. For each metric the Compensation
Committee determined a threshold, target, and maximum level of achievement based on the companys operating plan for 2016. MIP allows for awards to be earned under each plan criterion, independent of the other criteria. We interpolate between
the threshold, target, and maximum goals to ensure sound incentive compensation arrangements and appropriate pay for performance alignment. In determining whether a performance goal has been met, the Committee will include or exclude
extraordinary events or any other objective events or occurrences, in either establishing the performance goal based on the qualifying performance criteria or in determining whether the performance goal has been achieved; provided,
however, that the Committee retains the discretion to reduce or eliminate an award that would otherwise be paid to any participant based on the Committees evaluation of such events or other factors. Awards may be paid only after the
Compensation Committee has certified in writing that the performance goals have been met.
In addition, the 2016 cycle of MIP included an individual
funding mechanism for each of the participating NEOs, excluding the CFO, equal to a maximum of 0.5% of net income for the CEO and a maximum of 0.2% of net income for the other participating NEOs. No awards would have been paid to these select NEOs
if positive net income had not been achieved for 2016.
The companys 2016 performance was reviewed in accordance with the MIP and certified by
the Compensation Committee in February 2017. Excluding significant items, actual performance against the EPS goal was above target, and actual performance against the ROTCE and Operating Leverage goals exceeded the maximum.
27
The table below provides the schedule of metrics and goals that the Compensation Committee approved for
2016, along with the companys performance.
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Metric
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Weight
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Threshold
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Target
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Maximum
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2016
Performance
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Calculated Performance
Factor
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EPS
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30%
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$
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0.78
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$
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0.87
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$
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0.95
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$
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0.910
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133%
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ROTCE
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30%
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11.50
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%
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12.50
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%
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13.50
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%
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13.72
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%
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200%
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Operating Leverage
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40%
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0.1
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%
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0.5
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%
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1.7
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%
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4.65
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%
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200%
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% of
Target
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100%
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180%
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Adjustments for Individual Performance
. The final award for the CEO may be adjusted for his individual performance
at the discretion of the Compensation Committee. Due to limits for deducting compensation expenses under Internal Revenue Code Section 162(m), the award for the CEO could have been adjusted downward or upward within the overall parameters of MIP,
but not increased above the individual funding factor of 0.5% of net income (approximately $3,426,000). Final awards for the other NEOs may be adjusted, at the discretion of the CEO and the Compensation Committee, for business segment and individual
performance. Due to limits for deducting compensation expenses under Internal Revenue Code Section 162(m), awards for Mr. Heller, and Ms. Houston could have been adjusted downward or upward within the overall parameters of MIP, but
not increased above the individual funding factor of 0.2% of net income (approximately $1,370,000). As the position of CFO is not a covered officer under Internal Revenue Code Section 162(m), the award for Mr. McCullough
was not subject to a cap other than the $7,500,000 limit for any award granted under the terms of the plan. The portion of each award that exceeded target was converted and paid in RSUs based on the closing price of a share of common stock on the
grant date. Final awards for the NEOs are discussed below under Compensation of the Named Executive Officers.
Long-Term Incentive
Compensation
Determining LTI Grant Value
. The Compensation Committee engaged the independent compensation consultant to develop
long-term incentive award ranges based on competitive market practice to serve as guidelines for annual grants. In addition to these guidelines, when determining award ranges for individual executive officers, the Compensation Committee considers
the impact on potential total compensation. Award opportunities are within a range defined by a low to high percentage of base salary to allow for awards to vary in order to reflect individual performance. These ranges are exclusive of RSUs paid as
a portion of MIP.
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Value Range
for Potential Equity Grants
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CEO
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162.5% to 650% of base salary
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CFO
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107.5% to 430% of base salary
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Other
Participating NEOs
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80% to 320% of
base salary
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LTI Grant Vehicles
. For the 2016 grants, management proposed, and the Compensation Committee approved the strategy
set forth below. All equity vehicles are subject to our Share Ownership and Share Holding Policy provisions for the executive leadership team: 50% of net shares released upon vesting or exercise are required to be held to retirement or other
departure from the company.
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2016 Long-Term Incentive Program Highlights
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Vehicle
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% of Total LTI Value
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Key Design Features
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Performance Share Units
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50%
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Performance Measurement Period:
3 years
Performance
Measures:
¡
Relative Adjusted Return on Tangible Common Equity (ROTCE,
50% weighting)
¡
Relative Total Shareholder Return (TSR, 50% weighting)
Share Payout
Range:
0 150% of target
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Restricted Stock
Units
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35%
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Vesting:
50% in year 3 and 50% in year 4
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Stock Options
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15%
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Vesting:
4 year annual
pro-rata
Option Term:
10
years
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28
Design of PSUs.
With assistance from the independent consultant, the Compensation Committee selected
the same two metrics for the PSUs granted in 2016 as used in 2015: return on tangible common equity (ROTCE) and TSR. For the 2016 grant, the goals for both metrics are relative to the performance of peers in order to alleviate goal setting
challenges due to the then-pending acquisition of FirstMerit Corporation. The company believes ROTCE and TSR are key factors to long-term value creation. There is a strong correlation of higher ROTCEs to higher market
price-to-tangible
book value (P/TBV) valuations for the common stock of publicly-traded bank holding companies. TSR aligns long-term incentive compensation to value
created for our shareholders.
As reflected in the table below, the Compensation Committee determined a threshold, target and maximum level of
achievement for the three-year performance cycle. In calculating performance to determine whether a performance goal has been achieved, the Compensation Committee will adjust for Extraordinary Events as defined in the 2015 Long-Term Incentive Plan.
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PSU
Metric
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Threshold Percentile
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Target Percentile
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Maximum Percentile
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Relative TSR
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35
th
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50
th
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65th
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Relative
ROTCE
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35
th
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50
th
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65th
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TSR will be measured over the length of the cycle, from January 1, 2016 to December 31, 2018. ROTCE results are
measured annually, adjusted for extraordinary items, and averaged using
year-end
reported amounts. The range of potential payouts, 0% to 150% of the target number of share units, was consistent with the design
of PSUs awarded in the prior year, and determined to be within competitive market practice, and reasonable from an annual share run rate and dilution perspective.
Determination of individual LTI Grants.
The Compensation Committee independently evaluated the CEOs performance for the purpose of
determining a 2016 long-term incentive award and assessed the competitive pay positioning that would result from the awards to be consistent with our
pay-for-performance
philosophy.
In determining award values for the other NEOs, the Compensation Committee considered the CEOs performance assessments for each
NEO, as well as additional input from the CEO, and the market guidelines provided by the consultant. Consistent with the companys philosophy, the chief executive officers evaluation was based on a holistic approach that included
individual performance and contributions, retention value of current equity ownership, historical long-term incentive compensation awards and the market-based framework the independent consultant developed. The key factors included in the evaluation
of each NEO are discussed under Compensation Decisions for each Named Executive Officer below. The Compensation Committee approved awards in 2016 for the NEOs, excluding the chief executive officer, as recommended by the CEO. Ms. Pierce
received an equity retention award granted to her by Huntington pursuant to the retention letter between Ms. Pierce and Huntington.
Compensation Decisions for each Named Executive Officer
When considering base salary increases, adjusting MIP awards for business segment and individual performance, and determining the grant-date value of
long-term incentive compensation awards, the CEO and Compensation Committee considered the performance of each executive under the following common factors:
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Common
Performance
Factors:
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financial and operating results
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strategic planning and implementation
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risk management and key metrics
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organization/colleagues
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continuous improvement
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community/stakeholder relations.
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Further, the Compensation Committee differentiated compensation for the NEOs other than the CEO by taking into
consideration the CEOs evaluation of each executives performance, role and relative contribution to overall company performance. Although there were no predetermined quantifiable goals against which business unit and individual
performance were evaluated independently for purposes of determining compensation, highlights of the specific 2016 individual and business unit performance considered by the Compensation Committee for each NEO are set forth below.
29
Stephen D. Steinour, CEO.
In determining appropriate compensation for the CEO, the Compensation
Committee considered Mr. Steinours outstanding leadership in 2016, including the following significant accomplishments:
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2016 was a historic and transformational year for Huntington
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¡
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|
Completed largest acquisition in company history
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¡
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Exceeded $100 billion in assets for the first time
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¡
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|
Exceeded $1 billion in quarterly revenue for the first time
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¡
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Grew core loan portfolio and deposits
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¡
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Strategically compelling acquisition, significantly improving our scale and providing geographic diversification
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¡
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Financially compelling acquisition, which is expected to accelerate our ability to achieve long-term financial goals
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¡
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Received regulatory approval and closed acquisition ahead of initial expectations
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¡
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Successfully completed required divestiture
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¡
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|
Completed new organizational structure, initial onboarding, and training and retained selected executives and employees of FirstMerit
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¡
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Made significant progress with integration of FirstMerit into Huntington
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Significantly contributed to the financial performance results which were materially aided by the acquisition of FirstMerit Corporation
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¡
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Delivered revenue growth of 18% year-over-year, exceeding our long-term financial goal of 4% 6%
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¡
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Increased average core deposits 18% year-over-year
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¡
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Increased average total loans and leases 18% year-over-year
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¡
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Delivered positive operating leverage (on an adjusted,
non-GAAP
basis) for the fourth consecutive year, consistent with our long-term financial goal of annual positive operating
leverage
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¡
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NCOs of 0.19%, exceeding our long-term financial goal of 0.35% 0.55%
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Successfully completed balance sheet optimization strategy to strengthen the companys capital position following the completion of the acquisition of FirstMerit Corporation
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Stephen D.
Steinour 2016 Compensation Decisions
|
Base Salary Increase
|
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10%
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MIP Award
|
|
$2,400,000, equal to 226% of base
salary
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LTI
|
|
$4,850,000, equal
to 485% of base salary
|
Howell D. Mac McCullough, Chief Financial Officer.
The Compensation Committee, in determining
appropriate compensation for Mr. McCullough, considered the following significant 2016 accomplishments:
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|
|
2016 was a historic and transformational year for Huntington
|
|
¡
|
|
Completed largest acquisition in company history
|
|
¡
|
|
Exceeded $100 billion in assets for the first time
|
|
¡
|
|
Exceeded $1 billion in quarterly revenue for the first time
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|
|
|
Significantly contributed to the successful acquisition and integration of FirstMerit Corporation
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¡
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|
Strategically compelling acquisition, significantly improving our scale and providing geographic diversification
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30
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¡
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Financially compelling acquisition, which is expected to accelerate our ability to achieve long-term financial goals
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¡
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|
Led the acquisition due diligence and financial planning process
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¡
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|
Successfully completed required divestiture
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¡
|
|
As
co-chair
of integration and conversion, made significant progress with integration of FirstMerit into Huntington
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|
Significantly contributed to the financial performance results which were materially aided by the acquisition of FirstMerit Corporation.
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¡
|
|
Delivered revenue growth of 18% year-over-year, exceeding our long-term financial goal of 4% 6%
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|
¡
|
|
Increased average core deposits 18% year-over-year
|
|
¡
|
|
Increased average total loans and leases 18% year-over-year
|
|
¡
|
|
Delivered positive operating leverage (on an adjusted,
non-GAAP
basis) for the fourth consecutive year, consistent with our long-term financial goal of annual positive operating
leverage
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|
Provided strong strategic leadership, with a focus on strategic execution
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|
Provided strong leadership, direction and execution around revenue opportunities
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|
|
Successfully completed balance sheet optimization strategy
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|
Provided strong leadership and direction in the capital planning and CCAR submission
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|
|
Continued to add experience and depth to the Finance Leadership Team
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|
|
|
Howell D.
Mac McCullough 2016 Compensation Decisions
|
Base Salary Increase
|
|
6.1%
|
MIP Award
|
|
$900,000 equal to 151% of base
salary
|
LTI
|
|
$1,200,000, equal
to 208.7% of base salary
|
Sandra E. Pierce, Private Client Group Director.
Ms. Pierce joined Huntington as Private Client Group
Director, Regional Banking Director and Senior Executive Vice President of The Huntington National Bank, effective upon the completion of the acquisition of FirstMerit Corporation in August 2016. Ms. Pierce previously served as Vice Chairman of
FirstMerit Corporation and as Chairman and CEO of FirstMerit Michigan. In connection with Ms. Pierces joining Huntington upon the completion of the merger, the Compensation Committee entered into a retention letter with Ms. Pierce which
provides for a base salary equal to $594,104 subject to adjustment in accordance with the policies as in effect from time to time. In addition, the retention letter approved by the Compensation Committee provides for several payments to compensate
Ms. Pierce for certain payments and benefits to which she would have been entitled under her
change-in-control
agreement with FirstMerit upon a qualifying
termination of employment during the 30 month period following the
change-in-control.
These payments consisted of (i) a cash retention bonus credited or to be credited
to Ms. Pierces account under Huntingtons Executive Deferred Compensation Plan, which is fully vested and will be paid to Ms. Pierce upon any termination of her employment that constitutes a Separation of Service under Section
409A of the tax code and (ii) an equity retention grant, in the form of an RSU award, credited or to be credited to Ms. Pierces account under Huntingtons Executive Deferred Compensation Plan, and (iii) a cash credit to
Ms. Pierces account under the 2008 FirstMerit Corporation Supplemental Executive Retirement Plan.
Prior to the completion of
Huntingtons acquisition of FirstMerit Corporation, Ms. Pierce participated in FirstMerits 2013 Annual Incentive Plan pursuant to which she was eligible to receive a cash bonus based on FirstMerits performance and her individual
performance during 2016. In accordance with the terms of the merger agreement between Huntington and FirstMerit Corporation, immediately prior to the completion of Huntingtons acquisition of FirstMerit, FirstMerit determined Ms. Pierces
annual bonus for 2016 based on performance through the date of the closing, and annualized for the full year, in an amount equal to $805,949. In February 2017, the Compensation Committee awarded Ms. Pierce an additional bonus of $44,051 in respect
of her performance with Huntington following the merger.
31
|
|
|
Sandra E. Pierce 2016 Compensation Decisions
|
|
|
Base Salary
|
|
$594,104
|
Annual Incentive Award
|
|
$850,000
|
Credit to 2008 FirstMerit Corporation Supplemental
Executive Retirement Plan
|
|
$350,013
|
Cash Retention Bonus Credited to Executive Deferred
Compensation Plan
|
|
$1,750,068
|
RSU Retention Bonus
to be Credited to Executive Deferred Compensation Plan upon Vesting (grant date value)
|
|
$1,750,065
|
Paul G. Heller, Chief Technology
& Operations Officer, and executive in charge of Home Lending
and the Phone Bank.
The Compensation Committee in determining appropriate compensation for Mr. Heller considered the following significant 2016 accomplishments:
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|
|
Home Lending improved to $18 million net profit in 2016 vs. $7 million net loss in 2015
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|
|
|
Home lending total revenues increased 8% year-over-year
|
|
|
|
Home lending delivered positive operating leverage
|
|
|
|
As
co-chair
of integration and conversion, provided strong leadership and management to the FirstMerit merger and integration, as well as in the planning and preparation for the
equipment, facilities and systems conversions to occur in the first quarter 2017
|
|
|
|
Successfully completed the Huntington Technology Finance conversion
|
|
|
|
Successfully executed on the accelerated digital delivery plan
|
|
|
|
Implemented increased efforts around cyber-security
|
|
|
|
Paul G.
Heller 2016 Compensation Decisions
|
Base Salary Increase
|
|
4.3%
|
MIP Award
|
|
$875,000, equal to 148% of base
salary
|
LTI
|
|
$1,200,000, equal
to 208.7% of base salary
|
Helga Houston, Chief Risk Officer.
The Compensation Committee, in determining appropriate compensation for
Ms. Houston, considered the following significant 2016 accomplishments:
|
|
|
Provided strong leadership and direction to drive the collective efforts of the organization to ensure adherence to the companys stated risk appetite, including through the acquisition and integration of
FirstMerit Corporation, and to further institutionalize the companys risk culture
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|
Provided strong leadership over the companys capital planning process, including successful filing of the companys annual capital plan
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|
Established enhanced framework to deliver on community lending and investment commitments
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|
Enhanced focus on operational risk controls, including information security enhancements
|
|
|
|
Net charge-offs of 0.19%, exceeding our long-term financial goal of 0.35% 0.55%
|
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|
|
Ensured critical program delivery across all risk pillars, including compliance, market, liquidity and operational risk
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|
|
Named one of the Top 25 Women Most Powerful Women in Banking by American Banker
|
|
|
|
Helga
Houston 2016 Compensation Decisions
|
Base Salary Increase
|
|
3.8%
|
MIP Award
|
|
$850,000, equal to 157% of base
salary
|
LTI
|
|
$1,050,000, equal
to 198.1% of base salary
|
Recently Completed PSU Performance Cycles
2014
2016 Cycle
. December 31, 2016 marked the end of the three-year performance cycle for PSU
awards granted in 2014. The Compensation Committee expects to certify the results and determine the final values for these PSU awards in April 2017. The metrics for this cycle were relative return on assets targeted at the 50
th
percentile performance for the
32
selected peer group, efficiency ratio targeted at 61% for the three years, and absolute revenue growth targeted at 3.0% annualized over the three years, all adjusted for significant items. During
the period January 1, 2014 through December 31, 2016, absolute efficiency ratio was between threshold and target performance and absolute revenue growth was above maximum performance. Our performance against the relative return on assets
metric has not yet been determined.
2013
2015 Cycle
. In April 2016, the Compensation Committee
determined the final award values for the PSU awards granted in 2013, which had a three-year performance cycle that ended on December 31, 2015. These awards were paid in shares of stock reported on a Form 4 report filed for each participating
executive officer. The metrics for this cycle were relative return on assets targeted at the 50th percentile performance for the selected peer group, efficiency ratio targeted at 61.5% for the three years, and absolute revenue growth targeted at
3.0% annualized over the three years, all unadjusted for significant items. During the period January 1, 2013 through December 31, 2015, relative return on assets exceeded target performance, absolute revenue growth was less than target,
and the efficiency ratio was higher (worse) than target. Final awards were equal to 85% of target.
Other Policies & Practices
Benefits
Executive officers
participate in the same broad-based benefit programs generally available to all employees. A limited number of additional benefits are offered to executive officers and certain other officers and are designed to represent a modest portion of total
compensation. Following is a list of the additional benefits and compensation elements offered to executive officers during 2016.
Supplemental
Savings: The NEOs are eligible to participate in a supplemental defined contribution plan. This plan is further discussed following the
Non-Qualified
Deferred Compensation 2016 table below.
Deferred Compensation: Our Executive Deferred Compensation Plan, a
non-qualified
plan, provides a vehicle for
participants to defer receipt of cash or stock to a time when taxes may be at a more personally beneficial rate and / or to save for long-term financial needs. This plan is discussed in more detail following the
Non-Qualified
Deferred Compensation 2016 table below.
Perquisites: A very limited number of perquisites are
utilized at Huntington; they represent a small component of compensation and are not intended to be performance-based. We offer an incurred expense reimbursement allowance for tax and financial planning to our NEOs, up to 2% of base salary per year.
For the chief executive officer, we provide security monitoring of his personal residence, and for efficiency and security, use of our cars and drivers and occasional use of a corporate aircraft to which the company has access. All personal use of
the corporate aircraft is in accordance with Huntingtons Aircraft Usage Policy. We also provide relocation benefits to senior level employees to facilitate transition to their new locations.
Employment Agreement: Only one executive officer, the CEO, has an employment agreement with us, which was renewed effective December 31, 2016. The
employment agreement is described under Mr. Steinours Employment Agreement below.
Severance Arrangements: Huntington has
change-in-control
agreements, referred to as Executive Agreements, with our NEOs. The objectives of the Executive Agreements are to provide severance protections for the NEOs
in the event of a qualifying termination of employment in connection with a
change-in-control
of Huntington and to encourage their continued employment in the event of
any actual or threatened
change-in-control
of Huntington. The Executive Agreements are further described under Potential Payments upon Termination or Change in
Control below.
Frozen Supplemental Pension: NEOs who are participants in the frozen pension plan (frozen on December 31, 2013) are
participants in a supplemental defined benefit plan that was also frozen on the same date. This plan is further discussed under the Pension Benefits 2016 table, below.
Stock Ownership & Holding Requirements
The Compensation Committee first established stock ownership requirements, expressed as a number of shares, for executive officers in 2006. Effective
January 1, 2016, the Compensation Committee adopted a value-based approach pursuant to which executives are required to meet and maintain a dollar value of ownership based on a multiple of current salary rather than a prescribed number of
shares. This will provide a consistent measure for all executives without regard to the date an executive becomes subject to the requirements and reduces the impact of stock price fluctuations. Ownership levels are evaluated annually based on then
current stock prices. The executives current base salary will be multiplied by his or her assigned multiple and compared to current holdings, valued based on a
30-day
average closing stock price. After
becoming subject to the guidelines, executives generally have five years to meet their ownership levels. Thereafter,
33
executives must continue to meet their requirements on an
on-going
basis. Executive officers continue to be subject to a holding requirement equal to 50%
of net shares received upon the exercises of a stock option or upon the release of full value awards. This amount of shares must be held until retirement or other departure from the company. The Compensation Committee may permit a discretionary
hardship exemption from the ownership and / or holding requirements, on a
case-by-case
basis.
The ownership requirement and level of compliance as of December 31, 2016, for each NEO are set forth in the table below.
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|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
Multiple
|
|
|
Compliance Date (1)
|
|
Ownership
Guideline ($)
|
|
|
Shares Owned
as of
December 31,
2016 (#)
|
|
|
Market Value
of Shares
Owned($) (2)
|
|
Steinour
|
|
|
6X
|
|
|
December 31, 2015
|
|
|
6,600,000
|
|
|
|
3,431,546
|
|
|
$
|
45,365,038
|
|
McCullough
|
|
|
3X
|
|
|
April 9, 2019
|
|
|
1,830,000
|
|
|
|
140,486
|
|
|
|
1,857,225
|
|
Pierce
|
|
|
3X
|
|
|
August 16, 2021
|
|
|
1,782,312
|
|
|
|
173,388
|
|
|
|
2,292,189
|
|
Heller
|
|
|
3X
|
|
|
October 29, 2017
|
|
|
1,800,000
|
|
|
|
192,955
|
|
|
|
2,550,865
|
|
Houston
|
|
|
3X
|
|
|
September 6, 2018
|
|
|
1,650,000
|
|
|
|
180,538
|
|
|
|
2,386,712
|
|
(1)
|
Executive officers generally have five years to meet their ownership levels. During 2016, the Compensation Committee increased Ms. Houstons multiple from 2X to 3X and granted her an additional two years to
attain the greater ownership level.
|
(2)
|
Value is based on the closing price of a share of Huntington common stock on December 30, 2016 ($13.22).
|
Hedging & Pledging Policies
The Compensation Committee has a policy prohibiting Huntingtons executive officers from hedging their ownership of Huntington stock, as this would
be inconsistent with the goals of the compensation program. Prohibited hedging activity includes trading in financial instruments designed to hedge or offset any decrease in the market value of Huntington stock. These financial instruments include
prepaid variable forward contracts, equity swaps, collars and exchange funds.
In addition, executive officers and directors are generally
discouraged from pledging their Huntington securities, however they may pledge shares owned in excess of stock ownership guidelines with the consent of the General Counsel. Any such request, along with the General Counsels response, must be
communicated to the Compensation Committee. None of Huntingtons executive officers or directors currently has shares of Huntington stock pledged.
Annual Long-Term Incentive Award Grant Practices
The Compensation Committee may designate a grant date effective following the date of the committee action. This practice is followed in the event the
trading window is closed pursuant to the companys trading policies on the date the committee acts. Since 2012 we have granted our annual long-term incentive awards effective May 1. The exercise price for each stock option award is equal to the
fair market value of a share of common stock on the grant date. Under the companys stock plan, fair market value is generally defined as the closing price on the applicable date. We have never repriced stock options.
Recoupment / Clawback Policies
Our
Recoupment / Clawback Policy is a tool for recoupment or clawback of incentive compensation in appropriate situations to the extent permitted (or required) by law and by the companys plans, policies and agreements. Incentive Compensation
subject to possible clawback or recoupment includes:
(a)
|
any bonus or other cash incentive payment, including commissions, previously paid or payable, and
|
(b)
|
any equity compensation, vested or unvested (including without limitation, performance shares and performance share units, restricted stock and restricted stock units, and stock options), and net proceeds of any
exercised or vested equity awards.
|
In general, situations that trigger a review under this policy involve behaviors or actions outside
the bounds of the companys overall risk appetite and governance structure. In determining whether to require reimbursement or forfeiture of an executive officers incentive compensation, the Compensation Committee shall take into account
such considerations as it deems appropriate, such as the extent to which the employees actions or inactions were in violation of the code of
34
conduct; whether the action or inaction could reasonably be expected to cause financial or reputational harm to the company; the egregiousness of the conduct; the tax consequences to the affected
employee; and other factors as the Committee deems appropriate under the circumstances. For employees who are not executive officers, the decision to recoup or clawback incentive compensation is made by the CEO jointly with the Chief Human Resources
Officer.
Specific provisions apply in the event of a financial restatement. If it is determined by the board of directors that gross negligence,
intentional misconduct or fraud by an employee or former employee caused or partially caused the company to have to restate all or a portion of its financial statements, the board, in its sole discretion, may, to the extent permitted by law and the
companys benefit plans, policies and agreements, and to the extent it determined in its sole judgment that it is in the best interests of the company to do so, require repayment of a portion or all of any Incentive Compensation if (1) the
amount or vesting of the Incentive Compensation was calculated based upon, or contingent on, the achievement of financial or operating results that were the subject of or affected by the restatement; and (2) the amount or vesting of the
Incentive Compensation would have been less had the financial statements been correct.
Further, pursuant to Section 954 of the Dodd-Frank Act,
if the company is required to restate any of its financial statements because of a material financial reporting violation, the company shall recover the amount in excess of the incentive compensation payable under the companys restated
financial statements, or such other amount required under the Dodd-Frank Act or any other applicable law or policy. The company shall recover this amount from any current or former employee who received incentive compensation during the three-year
period preceding the date on which the restatement is required, or from any other individual specified in the Dodd-Frank Act.
In addition, we have
included clawback provisions in incentive plans for executive officers and for all employees. For NEOs our recoupment and clawback policies include the following:
|
|
|
Stock Plans. We also have forfeiture and recoupment provisions in the 2015 Long-Term Incentive Plan specific to awards under these plans. Except following a change in control event, should the Compensation Committee
determine that a participant has committed a serious breach of conduct or has solicited or taken away customers or potential customers with whom the participant had contact during the participants employment with us, the Compensation Committee
may terminate any outstanding award, in whole or in part, whether or not yet vested. If such conduct or activity occurs within three years following the exercise or payment of an award, the Compensation Committee may require the participant or
former participant to repay to us any gain realized or payment received upon exercise or payment of such award. A serious breach of conduct includes, without limitation, any conduct prejudicial to or in conflict with Huntington or any securities law
violations including any violations under the Sarbanes-Oxley Act of 2002. In addition, awards may be forfeited upon termination of employment for cause.
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|
|
|
Annual Incentive Plan. The Management Incentive Plan provides that if Huntington is required to restate any of its financial statements because of a material financial reporting violation, Huntington will recover the
amount in excess of the award payable under Huntingtons restated financial statements, or such other amount required under the Dodd-Frank Act. In addition, if the Compensation Committee determines that a participant took unnecessary or
excessive risk, manipulated earnings, or engaged in any misconduct described in our Recoupment Policy, the Committee may terminate the participants participation in the plan and require repayment of any amount previously paid in accordance
with the Recoupment Policy, any other applicable policies and any other applicable laws and regulations.
|
Section 954 of
Dodd-Frank requires new listing standards related to recovery of executive compensation. The board of directors will review its recoupment policies in light of these new standards when they are adopted by NASDAQ, and as other rules and best
practices develop.
Tax & Accounting Considerations
We have worked to balance our compensation philosophy with the goal of achieving maximum deductibility under Internal Revenue Code Section 162(m). Our
Management Incentive Plan and our 2015 Long-Term Incentive Plan have been structured so that awards under these plans for covered officers may qualify as performance-based compensation deductible for federal income tax purposes under
Internal Revenue Code Section 162(m). The Compensation Committee has also reserved the right, however, with respect to any award or awards, to determine that compliance with Code Section 162(m) is not desired after consideration of the goals of
Huntingtons executive compensation philosophy and whether it is in the best interests of Huntington to have such award so qualified. Huntington also takes into consideration Internal Revenue Code Section 409A with respect to
non-qualified
deferred compensation programs, and ASC 718, Compensation Stock Compensation in administering its equity compensation program.
35
Compensation Tables
The following table sets forth the compensation paid by us and by our subsidiaries for each of the last three fiscal years ended December 31, 2016,
to our principal executive officer, principal financial officer, and the three other most highly compensated executive officers serving at the end of 2016.
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Summary Compensation 2016
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Name and
Principal Position (1)
|
|
Year
|
|
|
Salary
|
|
|
Bonus (2)
|
|
|
Stock
Awards (3)
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|
Option
Awards (4)
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Non-Equity
Incentive Plan
Compensation (5)
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|
Change in
Pension Value
and
Non-Qualified
Deferred
Compensation
Earnings (6)
|
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All Other
Compen-
sation (7)
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Total (8)
|
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Stephen D. Steinour
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Chairman, President and CEO
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2016
|
|
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1,061,538
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|
|
|
|
|
|
|
4,122,487
|
|
|
|
726,124
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|
|
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2,400,000
|
|
|
|
54,953
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|
|
|
566,510
|
|
|
|
8,931,612
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|
|
|
2015
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|
|
|
1,000,000
|
|
|
|
|
|
|
|
4,037,478
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|
|
|
712,499
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|
|
|
1,650,000
|
|
|
|
|
|
|
|
430,325
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|
|
|
7,830,302
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|
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2014
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|
|
|
1,000,000
|
|
|
|
|
|
|
|
3,824,996
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|
|
|
675,014
|
|
|
|
1,444,300
|
|
|
|
236,865
|
|
|
|
317,434
|
|
|
|
7,498,609
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|
Howell D. McCullough III
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|
Chief Financial Officer and Senior Executive
Vice President
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|
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2016
|
|
|
|
596,538
|
|
|
|
|
|
|
|
1,019,993
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|
|
|
179,659
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|
|
|
900,000
|
|
|
|
|
|
|
|
55,326
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|
|
|
2,751,516
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|
|
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2015
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|
|
|
565,385
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|
|
|
200,000
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|
|
|
934,994
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|
|
|
164,999
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|
|
|
675,000
|
|
|
|
|
|
|
|
71,032
|
|
|
|
2,611,410
|
|
|
|
2014
|
|
|
|
389,423
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|
|
|
300,000
|
|
|
|
2,222,488
|
|
|
|
870,573
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|
|
|
600,000
|
|
|
|
|
|
|
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17,749
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|
|
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4,400,233
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Sandra E. Pierce
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Private Client Group Director
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2016
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|
|
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222,789
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|
|
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850,000
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|
|
|
1,750,065
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|
|
|
|
|
|
|
|
|
|
|
|
|
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2,112,954
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|
|
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4,935,808
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Paul G. Heller
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Chief Technology & Operations Officer, Senior Executive
Vice President
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2016
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|
|
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590,385
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|
|
|
|
|
|
|
1,019,993
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|
|
|
179,659
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|
|
|
875,000
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|
|
|
|
|
|
|
76,272
|
|
|
|
2,741,309
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|
|
|
2015
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|
|
|
565,385
|
|
|
|
|
|
|
|
934,994
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|
|
|
164,999
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|
|
|
630,000
|
|
|
|
|
|
|
|
85,252
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|
|
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2,380,630
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2014
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|
|
|
525,000
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|
|
|
|
|
|
|
934,986
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|
|
|
165,003
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|
|
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570,000
|
|
|
|
|
|
|
|
24,323
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|
|
|
2,219,312
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Helga S. Houston
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Chief Risk Officer and Senior Executive
Vice President
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2016
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|
|
|
542,308
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|
|
|
|
|
|
|
892,483
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|
|
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157,201
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850,000
|
|
|
|
|
|
|
|
79,861
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|
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2,521,853
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2015
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|
|
|
518,462
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|
|
|
|
|
|
|
849,986
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|
|
|
149,998
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|
|
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575,000
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|
|
|
|
|
|
|
60,005
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|
|
|
2,153,451
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|
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2014
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|
|
|
488,333
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|
|
|
|
|
|
|
807,484
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|
|
|
142,503
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|
|
|
535,000
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|
|
|
|
|
|
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30,626
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|
|
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2,003,946
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(1)
|
Mr. Steinour also serves as Chairman, President and Chief Executive Officer of The Huntington National Bank. Ms. Pierce joined Huntington as Private Client Group Director and Senior Executive Vice President of
The Huntington National Bank, effective upon the acquisition of FirstMerit Corporation in August 2016. She also serves as Regional Banking Director. Mr. Heller is also responsible for Home Lending and the Phone Bank.
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(2)
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In accordance with the terms of the merger agreement between Huntington and FirstMerit Corporation, Ms. Pierce received an annual cash incentive award in the amount $805,949 based on FirstMerits performance
against the goals established by FirstMerit for 2016, measured as of the acquisition date and annualized for the full year. In addition, in February 2017, the Compensation Committee approved a supplemental cash incentive payment of $44,051 in
recognition of her performance with Huntington following the merger.
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(3)
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The amounts in this column are the grant date fair values of awards of restricted stock units and performance share units determined for accounting purposes in accordance with FASB ASC Topic 718. The performance share
units are valued at target. The assumptions made in the valuation are discussed in Note 15 Share-Based Compensation of the Notes to Consolidated Financial Statements for our financial statements for the year ended December 31, 2016.
These awards were granted on May 1, 2016, with the exception of the retention award which was granted on August 16, 2016 pursuant to the retention letter entered into between Huntington and Ms. Pierce.
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Time-Vesting
RSUs
|
|
|
Performance-
Based PSUs
(Target)
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Total Stock Awards
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Stephen D. Steinour
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$
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1,697,494
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$
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2,424,993
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$
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4,122,487
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Howell D. McCullough III
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419,995
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|
|
|
599,998
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|
|
|
1,019,993
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Sandra E. Pierce
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1,750,065
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|
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|
1,750,065
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Paul G. Heller
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419,995
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|
|
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599,998
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|
|
|
1,019,993
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|
Helga S. Houston
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|
|
367,492
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|
|
|
524,991
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|
|
|
892,483
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|
36
The grant date value of the performance share units assuming the highest level of performance is set forth
below.
|
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|
|
|
|
|
Dollar Value of Performance
Share Units at
Maximum Performance
|
|
Stephen D. Steinour
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|
$
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3,637,490
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|
Howell D. McCullough III
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|
|
899,998
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|
Sandra E. Pierce
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|
|
|
|
Paul G. Heller
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|
|
899,998
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|
Helga S. Houston
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|
|
787,487
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(4)
|
The amounts in this column are the grant date fair values of awards of stock options determined for accounting purposes in accordance with FASB ASC Topic 718. The assumptions made in the valuation are discussed in Note
15 Share-Based Compensation of the Notes to Consolidated Financial Statements for the year ended December 31, 2016.
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|
|
|
Risk-Free Interest Rate
|
|
1.63%
|
Expected Volatility
|
|
30%
|
Expected Term
|
|
6.5 years
|
Expected Dividend Yield
|
|
3.18%
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(5)
|
The amounts in this column are the dollar value of annual incentive awards earned under the Management Incentive Plan for 2016. These awards were paid in cash up to the target award amount; any amount earned in excess
of target was paid in RSUs which vest in three equal annual increments from the date of grant. The number of RSUs was determined by dividing the portion of the award in excess of target by $14.12, the closing price of a share of Huntington common
stock on the grant date, February 14, 2017, rounded down to the nearest whole share.
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016 MIP
Award Value
|
|
|
Amount Paid
in Cash
|
|
|
Amount Paid
in RSUs
|
|
|
Number
of RSUs
|
|
Stephen D. Steinour
|
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|
2,400,000
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|
|
|
1,326,923
|
|
|
|
1,073,077
|
|
|
|
75,996
|
|
Howell D. McCullough III
|
|
|
900,000
|
|
|
|
477,231
|
|
|
|
422,769
|
|
|
|
29,941
|
|
Sandra E. Pierce
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Paul G. Heller
|
|
|
875,000
|
|
|
|
472,308
|
|
|
|
402,692
|
|
|
|
28,519
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|
Helga S. Houston
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|
|
850,000
|
|
|
|
433,846
|
|
|
|
416,154
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|
|
|
29,472
|
|
(6)
|
The amounts in this column represent the change in the actuarial present value of accumulated benefit from December 31, 2015 to December 31, 2016, under two defined benefit pension plans: the Retirement Plan
and the Supplemental Retirement Income Plan, referred to as the SRIP. These plans were closed to new hires after December 31, 2009 and were frozen as of December 31, 2013. Benefits are based on levels of compensation and years of credited
service as of December 31, 2013. The valuation method used to determine the present values, and all material assumptions applied, are discussed in Note 16 Benefit Plans of the Notes to Consolidated Financial Statements for the
fiscal year ended December 31, 2016. The change in present value for each NEO under each plan is detailed below. Mr. McCullough, Ms. Pierce, Mr. Heller and Ms. Houston are not eligible to participate in these plans as they
were hired after participation was closed to new hires. Additional detail about these plans is set forth in the discussion following the table of Pension Benefits 2016 below. There were no above-market or preferential earnings on
non-qualified
deferred compensation.
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
Present
Value
Retirement
Plan
|
|
|
Change in
Present
Value
SRIP
|
|
|
Total
Change in
Present
Value
|
|
Stephen D. Steinour
|
|
$
|
5,364
|
|
|
$
|
49,589
|
|
|
$
|
54,953
|
|
Howell D. McCullough III
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
Sandra E. Pierce
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
Paul G. Heller
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
Helga S. Houston
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
37
(7)
|
All other compensation as reported in this column includes: our contributions to the Huntington Investment and Tax Savings Plan, a defined contribution (401(k)) plan, referred to as the 401(k) Plan, our Supplemental
Stock Purchase and Tax Savings Plan and Trust, and for Ms. Pierce, our contributions to the 2008 FirstMerit Corporation Supplemental Executive Retirement Plan ($350,013) and the Huntington Executive Deferred Compensation Plan ($1,750,068);
perquisites and personal benefits valued at incremental cost to us; premiums for group term life insurance; and dividends paid on vesting of previously awarded RSUs. These amounts are detailed below.
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts
Contributed
to 401(k)
Plan ($)
|
|
|
Amounts
Contributed to
Supplemental
Plan ($)
|
|
|
Other
Amounts
Contributed
to
Defined
Contribution
Plans ($)
|
|
|
Perquisites and
Personal
Benefits ($)
|
|
|
Group Term
Life
Insurance ($)
|
|
|
Dividends Paid
Upon Vesting
Event ($)
|
|
|
Total All Other
Compensation ($)
|
|
Steinour
|
|
|
13,250
|
|
|
|
33,231
|
|
|
|
|
|
|
|
274,469
|
|
|
|
614
|
|
|
|
244,946
|
|
|
|
566,510
|
|
McCullough
|
|
|
13,250
|
|
|
|
15,900
|
|
|
|
|
|
|
|
|
|
|
|
614
|
|
|
|
25,562
|
|
|
|
55,326
|
|
Pierce
|
|
|
12,828
|
|
|
|
0
|
|
|
|
2,100,081
|
|
|
|
0
|
|
|
|
45
|
|
|
|
|
|
|
|
2,112,954
|
|
Heller
|
|
|
13,250
|
|
|
|
0
|
|
|
|
|
|
|
|
12,160
|
|
|
|
614
|
|
|
|
50,248
|
|
|
|
76,272
|
|
Houston
|
|
|
13,250
|
|
|
|
11,000
|
|
|
|
|
|
|
|
0
|
|
|
|
614
|
|
|
|
54,997
|
|
|
|
79,861
|
|
The amounts contributed to the 401(k) Plan include a profit sharing contribution earned for 2016 equal to 1% of base
salary subject to IRS limits on compensation that may be taken into account. In the ordinary course of business, Huntington maintains two automobiles and has access to a corporate aircraft as needed to provide efficient and secure business
transportation for senior management. When it is not otherwise needed for business travel, a corporate aircraft may be available to Mr. Steinour for personal usage given the constraints of commercial flight arrangements, en route work
requirements, travel or work schedules or other circumstances burdensome on time and the potential security risks for the company. The incremental cost to Huntington for personal use of a plane by Mr. Steinour during 2016 was based on an hourly
rate and totaled $243,334, consisting of charges for crew, landing and parking, fuel and oil, radio maintenance and repairs, supplies, and outside services. For efficiency and security Mr. Steinour is also permitted personal use of the
automobiles, driven by Huntington security personnel, including for commuting, which permits him to work while traveling. The incremental cost of this usage to Huntington for 2016 was based on a rate per mile for fuel and maintenance and overtime
costs for the drivers. Other perquisites and personal benefits for Mr. Steinour consisted of financial planning ($21,635) and security monitoring of his personal residence. Mr. Hellers perquisites consisted of financial planning
($12,000) and partial reimbursement for use of a personal mobile device (which benefit has been discontinued). Perquisites and personal benefits for each of the other named executive officers were zero or did not exceed $10,000 and are not included.
(8)
|
This column shows the total of all compensation for the fiscal year as reported in the other columns of this table.
|
38
The table below sets forth potential opportunities for annual cash incentive awards under the Management
Incentive Plan for Covered Officers and awards of RSUs, PSUs and stock options for 2016.
Grants of Plan-Based Awards 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Grant
Date
|
|
|
Date of
Board or
Committee
Action
|
|
|
Estimated Possible
Payouts Under
Non-Equity
Incentive
Plan Awards (1)
|
|
|
Estimated Future
Payouts Under
Equity Incentive
Plan Awards (2)
|
|
|
All Other
Stock
Awards:
Number of
Shares of
Stock or
Units
(#) (3)
|
|
|
All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#) (4)
|
|
|
Exercise or
Base
Price of
Option
Awards
($/Sh) (5)
|
|
|
Grant Date
Fair
Value of
Stock and
Option
Awards
($) (6)
|
|
|
|
|
Threshold
($)
|
|
|
Target
($)
|
|
|
Maximum
($)
|
|
|
Threshold
(#)
|
|
|
Target
(#)
|
|
|
Maximum
(#)
|
|
|
|
|
|
Steinour
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
663,462
|
|
|
|
1,326,923
|
|
|
|
2,653,846
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/1/2016
|
|
|
|
4/20/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
120,527
|
|
|
|
241,053
|
|
|
|
361,580
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,424,993
|
|
|
|
5/1/2016
|
|
|
|
4/20/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
335,253
|
|
|
|
10.06
|
|
|
|
726,124
|
|
|
|
5/1/2016
|
|
|
|
4/20/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
168,737
|
|
|
|
|
|
|
|
|
|
|
|
1,697,494
|
|
McCullough
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
238,616
|
|
|
|
477,231
|
|
|
|
954,462
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/1/2016
|
|
|
|
4/20/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,821
|
|
|
|
59,642
|
|
|
|
89,463
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
599,999
|
|
|
|
5/1/2016
|
|
|
|
4/20/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
82,949
|
|
|
|
10.06
|
|
|
|
179,659
|
|
|
|
5/1/2016
|
|
|
|
4/20/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
41,749
|
|
|
|
|
|
|
|
|
|
|
|
419,995
|
|
Pierce
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8/16/2016
|
|
|
|
5/31/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
181,542
|
|
|
|
|
|
|
|
|
|
|
|
1,750,065
|
|
Heller
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
236,154
|
|
|
|
472,308
|
|
|
|
944,616
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/1/2016
|
|
|
|
4/20/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,821
|
|
|
|
59,642
|
|
|
|
89,463
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
599,999
|
|
|
|
5/1/2016
|
|
|
|
4/20/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
82,949
|
|
|
|
10.06
|
|
|
|
179,659
|
|
|
|
5/1/2016
|
|
|
|
4/20/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
41,749
|
|
|
|
|
|
|
|
|
|
|
|
419,995
|
|
Houston
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
216,923
|
|
|
|
433,846
|
|
|
|
867,692
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/1/2016
|
|
|
|
4/20/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,093
|
|
|
|
52,186
|
|
|
|
78,279
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
524,991
|
|
|
|
5/1/2016
|
|
|
|
4/20/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
72,580
|
|
|
|
10.06
|
|
|
|
157,201
|
|
|
|
5/1/2016
|
|
|
|
4/20/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36,530
|
|
|
|
|
|
|
|
|
|
|
|
367,492
|
|
(1)
|
Each of the named executive officers, with the exception of Ms. Pierce, participated in the 2016 cycle of the Management Incentive Plan, our annual incentive plan. The award opportunities presented in the table are
based on percentages of salary and threshold, target and maximum levels of corporate performance. Awards are subject to adjustment for individual and business unit performance. Actual awards earned for 2016 are reported in the Summary Compensation
Table under the column headed
Non-Equity
Incentive Compensation.
|
(2)
|
Each of the named executive officers, with the exception of Ms. Pierce, is a participant in the PSU award cycle commencing in 2016. These columns reflect the potential number of PSUs to be vested upon satisfaction of
the applicable performance conditions as of December 31, 2018, at threshold, target and maximum performance.
|
(3)
|
The Compensation Committee awarded RSUs to each of the named executive officers. The RSU award for Ms. Pierce vests in three equal annual installments on the first, second and third anniversaries of the date of
grant. The RSU award for each of the other named executive officers vests in two equal installments on the third and fourth anniversaries of the grant date.
|
(4)
|
The Compensation Committee awarded stock options to each of the named executive officers, other than Ms. Pierce. These stock options vest in four equal annual increments beginning one year from the date of grant.
|
(5)
|
Each stock option reported has a per share exercise price equal to the closing price of a share of Huntington common stock on the grant date, as reported on the Nasdaq Stock Market.
|
(6)
|
The amounts in this column are the grant date fair values, for accounting purposes, of the awards of PSUs (at target), RSUs and stock options determined in accordance with FASB ASC Topic 718.
|
39
The following table sets forth details about the unexercised stock options and unvested awards of RSUs and
PSUs held by the named executive officers as of December 31, 2016.
Outstanding Equity Awards at Fiscal
Year-End
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
|
|
|
Stock Awards
|
|
Name
|
|
Grant
Date
|
|
|
Number of
Securities
Underlying
Unexercised
Options(#)
Exercisable
(1)
|
|
|
Number of
Securities
Underlying
Unexercised
Options(#)
Unexercisable
(1)
|
|
|
Option
Exercise
Price($)
|
|
|
Option
Expiration
Date
|
|
|
Number of
Shares or
Units of
Stock That
Have Not
Vested (#)
(2)
|
|
|
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested ($)
(3)
|
|
|
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units,
or Other
Rights That
Have not
Yet
Vested
(#) (4)
|
|
|
Equity
Incentive
Plan Awards:
Market or
Payout Value
of Unearned
Shares,
Units,
or Other
Rights That
Have not
Vested
($) (4)
|
|
Stephen D. Steinour
|
|
|
|
|
7/25/2011
|
|
|
|
2,120,153
|
|
|
|
|
|
|
|
6.0200
|
|
|
|
7/25/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/1/2012
|
|
|
|
483,826
|
|
|
|
|
|
|
|
6.7700
|
|
|
|
5/1/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/1/2013
|
|
|
|
440,160
|
|
|
|
146,720
|
|
|
|
7.0600
|
|
|
|
5/1/2020
|
|
|
|
70,822
|
|
|
|
936,267
|
|
|
|
|
|
|
|
|
|
|
|
2/11/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,836
|
|
|
|
116,812
|
|
|
|
|
|
|
|
|
|
|
|
5/1/2014
|
|
|
|
161,055
|
|
|
|
161,055
|
|
|
|
9.0800
|
|
|
|
5/1/2021
|
|
|
|
173,458
|
|
|
|
2,293,115
|
|
|
|
247,797
|
|
|
|
3,275,876
|
|
|
|
2/17/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,452
|
|
|
|
283,595
|
|
|
|
|
|
|
|
|
|
|
|
5/1/2015
|
|
|
|
69,309
|
|
|
|
207,928
|
|
|
|
10.8900
|
|
|
|
5/1/2025
|
|
|
|
159,797
|
|
|
|
2,112,516
|
|
|
|
228,282
|
|
|
|
3,017,885
|
|
|
|
2/16/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
47,082
|
|
|
|
622,420
|
|
|
|
|
|
|
|
|
|
|
|
5/1/2016
|
|
|
|
|
|
|
|
335,253
|
|
|
|
10.0600
|
|
|
|
5/1/2026
|
|
|
|
172,326
|
|
|
|
2,278,150
|
|
|
|
246,180
|
|
|
|
3,254,502
|
|
Howell D. McCullough III
|
|
|
|
|
4/9/2014
|
|
|
|
150,000
|
|
|
|
150,000
|
|
|
|
9.8700
|
|
|
|
4/9/2021
|
|
|
|
50,659
|
|
|
|
669,712
|
|
|
|
|
|
|
|
|
|
|
|
5/1/2014
|
|
|
|
30,421
|
|
|
|
30,422
|
|
|
|
9.0800
|
|
|
|
5/1/2021
|
|
|
|
32,764
|
|
|
|
433,140
|
|
|
|
46,806
|
|
|
|
618,775
|
|
|
|
2/17/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,969
|
|
|
|
131,790
|
|
|
|
|
|
|
|
|
|
|
|
5/1/2015
|
|
|
|
16,050
|
|
|
|
48,152
|
|
|
|
10.8900
|
|
|
|
5/1/2025
|
|
|
|
37,005
|
|
|
|
489,210
|
|
|
|
52,865
|
|
|
|
698,881
|
|
|
|
2/16/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,211
|
|
|
|
346,516
|
|
|
|
|
|
|
|
|
|
|
|
5/1/2016
|
|
|
|
|
|
|
|
82,949
|
|
|
|
10.0600
|
|
|
|
5/1/2026
|
|
|
|
42,637
|
|
|
|
563,661
|
|
|
|
60,911
|
|
|
|
805,238
|
|
Sandra E. Pierce
|
|
|
|
|
4/1/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
90,606
|
|
|
|
1,197,811
|
|
|
|
|
|
|
|
|
|
|
|
8/16/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
183,945
|
|
|
|
2,431,755
|
|
|
|
|
|
|
|
|
|
Paul G. Heller
|
|
|
|
|
10/29/2012
|
|
|
|
15,797
|
|
|
|
|
|
|
|
6.3300
|
|
|
|
10/29/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/1/2013
|
|
|
|
99,036
|
|
|
|
33,012
|
|
|
|
7.0600
|
|
|
|
5/1/2020
|
|
|
|
15,935
|
|
|
|
210,661
|
|
|
|
|
|
|
|
|
|
|
|
2/11/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,052
|
|
|
|
40,347
|
|
|
|
|
|
|
|
|
|
|
|
5/1/2014
|
|
|
|
39,369
|
|
|
|
39,369
|
|
|
|
9.0800
|
|
|
|
5/1/2021
|
|
|
|
42,400
|
|
|
|
560,528
|
|
|
|
60,572
|
|
|
|
800,762
|
|
|
|
2/17/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,346
|
|
|
|
123,554
|
|
|
|
|
|
|
|
|
|
|
|
5/1/2015
|
|
|
|
16,050
|
|
|
|
48,152
|
|
|
|
10.8900
|
|
|
|
5/1/2025
|
|
|
|
37,005
|
|
|
|
489,210
|
|
|
|
52,865
|
|
|
|
698,881
|
|
|
|
2/16/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,914
|
|
|
|
276,489
|
|
|
|
|
|
|
|
|
|
|
|
5/1/2016
|
|
|
|
|
|
|
|
82,949
|
|
|
|
10.0600
|
|
|
|
5/1/2026
|
|
|
|
42,637
|
|
|
|
563,661
|
|
|
|
60,911
|
|
|
|
805,238
|
|
Helga S. Houston
|
|
|
|
|
5/1/2012
|
|
|
|
54,347
|
|
|
|
|
|
|
|
6.7700
|
|
|
|
5/1/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/1/2013
|
|
|
|
90,783
|
|
|
|
30,261
|
|
|
|
7.0600
|
|
|
|
5/1/2020
|
|
|
|
14,607
|
|
|
|
193,105
|
|
|
|
|
|
|
|
|
|
|
|
2/11/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,987
|
|
|
|
39,488
|
|
|
|
|
|
|
|
|
|
|
|
5/1/2014
|
|
|
|
34,000
|
|
|
|
34,001
|
|
|
|
9.0800
|
|
|
|
5/1/2021
|
|
|
|
36,618
|
|
|
|
484,090
|
|
|
|
52,312
|
|
|
|
691,565
|
|
|
|
2/17/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,993
|
|
|
|
118,887
|
|
|
|
|
|
|
|
|
|
|
|
5/1/2015
|
|
|
|
14,591
|
|
|
|
43,774
|
|
|
|
10.8900
|
|
|
|
5/1/2025
|
|
|
|
33,641
|
|
|
|
444,735
|
|
|
|
48,059
|
|
|
|
635,338
|
|
|
|
2/16/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,860
|
|
|
|
249,330
|
|
|
|
|
|
|
|
|
|
|
|
5/1/2016
|
|
|
|
|
|
|
|
72,580
|
|
|
|
10.0600
|
|
|
|
5/1/2026
|
|
|
|
37,307
|
|
|
|
493,198
|
|
|
|
53,296
|
|
|
|
704,573
|
|
40
(1)
|
Awards of stock options granted in 2013 through 2016 become exercisable in four equal annual increments from the date of grant and are fully vested on the fourth anniversary. The earlier awards of stock options reported
in the table have all become exercisable and are fully vested.
|
(2)
|
The awards of restricted stock units granted on May 1st each year vest in two equal installments on the third and fourth anniversaries of the date of grant. The awards of restricted stock units granted to
Mr. McCullough on April 9, 2014, and to Ms. Pierce on August 16, 2016, vest in 3 equal increments over 3 years. An award of restricted stock granted to Ms. Pierce by FirstMerit Corporation on April 1, 2016, was
converted to a restricted stock award with respect to Huntington common stock upon the merger effective August 16, 2016, subject to the same terms and conditions applicable to the award as granted by FirstMerit Corporation. One third of these
restricted shares will vest on April 21 of each of the following three years. Each other award of restricted stock units reflected in this column was granted in partial payment of annual incentive earned under the Management Incentive Plan and
vests in 3 equal increments over 3 years. The awards granted on and after May 1, 2015, reflect the impact of dividend reinvestment.
|
(3)
|
The market value of the awards of restricted stock units that have not yet vested was determined by multiplying the closing price of a share of Huntington common stock on December 30, 2016 ($13.22) by the number of
shares.
|
(4)
|
The performance share units reported in these columns will vest subject to achievement of the applicable performance goals as of the end of a three-year performance period. Each performance share unit is equal to one
share of common stock. The number of performance share units and the market value reported were determined on the basis of achieving target performance goals. The market value of the performance share units was determined by multiplying the closing
price of a share of Huntington common stock on December 30, 2016 ($13.22) by the number of units. The performance share units granted on May 1, 2014 vested on December 31, 2016; awards will be released in April 2017 after final award
values are determined and certified by the Compensation Committee. Awards granted on and after May 1, 2015, reflect the impact of dividend reinvestment.
|
The table below sets forth the number of shares that were acquired upon the exercise of options and the vesting of RSUs in 2016. Also included are shares
acquired from the vesting of PSU awards for the cycle that ended December 31, 2015. These shares were released on April 20, 2016. Not reflected are shares to be received for the three-year PSU performance cycle that ended on
December 31, 2016. The metrics for this cycle were relative return on assets, absolute efficiency ratio and absolute revenue growth, as reported, unadjusted for significant items. The Compensation Committee expects to certify the results and
determine the final award values in April 2017.
Option Exercises and Stock Vested 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
|
|
|
Stock Awards
|
|
Name
|
|
Number of Shares
Acquired on
Exercise
(#)
|
|
|
Value Realized
on Exercise
($) (1)
|
|
|
|
|
|
Number of Shares
Acquired on Vesting
(#)
|
|
|
Value
Realized on
Vesting
($) (1)
|
|
Stephen D. Steinour
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
371,640
|
|
|
$
|
3,703,432
|
|
Howell C. McCullough
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
55,642
|
|
|
|
516,349
|
|
Sandra E. Pierce
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul G. Heller
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
77,836
|
|
|
|
782,651
|
|
Helga S. Houston
|
|
|
143,234
|
|
|
|
670,499
|
|
|
|
|
|
|
|
85,284
|
|
|
|
838,134
|
|
(1)
|
The value realized upon exercise of options reflects the difference between the market value of the shares on the exercise date and the exercise price of the options. The value realized upon vesting of RSUs was
determined by multiplying the number of shares by the market value on the vesting date. Mr. Steinour and Mr. Houston deferred 184,135 shares and 9,932 shares, respectively, acquired upon vesting pursuant to the terms of the Executive
Deferred Compensation Plan described below.
|
41
We maintain two plans under which executive officers may defer compensation on a
non-qualified
basis: the Supplemental Stock Purchase and Tax Savings Plan and Trust, referred to as the Supplemental Plan, and the Executive Deferred Compensation Plan, referred to as the EDCP. For each named
executive officer, information about participation in the Supplemental Plan and the EDCP is contained in the table below.
Nonqualified Deferred
Compensation 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Executive
Contributions in
Last Fiscal Year($)
|
|
|
Registrant
Contributions
in Last Fiscal
Year ($) (1)
|
|
|
Aggregate
Earnings (Loss)
in Last Fiscal
Year($)
|
|
|
Aggregate
Withdrawals/
Distributions($)
|
|
|
Aggregate
Balance at Last
Fiscal Year
End($) (2)
|
|
Stephen D. Steinour
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Plan
|
|
|
33,231
|
|
|
|
33,231
|
|
|
|
136,288
|
|
|
|
|
|
|
|
707,491
|
|
EDCP
|
|
|
2,004,097
|
|
|
|
|
|
|
|
153,515
|
|
|
|
|
|
|
|
8,796,931
|
|
Howell D. McCullough III
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Plan
|
|
|
39,749
|
|
|
|
15,900
|
|
|
|
25,733
|
|
|
|
|
|
|
|
121,443
|
|
EDCP
|
|
|
|
|
|
|
|
|
|
|
15,996
|
|
|
|
|
|
|
|
729,516
|
|
Sandra E. Pierce (3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EDCP
|
|
|
|
|
|
|
1,708,942
|
|
|
|
276
|
|
|
|
|
|
|
|
1,709,217
|
|
FirstMerit Corporation SERP
|
|
|
|
|
|
|
350,013
|
|
|
|
4,125
|
|
|
|
|
|
|
|
681,977
|
|
Paul G. Heller
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EDCP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Helga S. Houston
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Plan
|
|
|
13,750
|
|
|
|
11,000
|
|
|
|
21,843
|
|
|
|
|
|
|
|
112,628
|
|
EDCP
|
|
|
171,070
|
|
|
|
|
|
|
|
8,813
|
|
|
|
|
|
|
|
454,361
|
|
(1)
|
The employer contributions are also reported in the Summary Compensation Table under All Other Compensation. The amount reported as contributed to the Executive Deferred Compensation Plan for Ms. Pierce
represents the net amount of the cash retention bonus of $1,750,068, after reduction for taxes.
|
(2)
|
The
year-end
balances in this column reflect our employer matching contributions under the Supplemental Plan made and reported as compensation for the named executive officers for
2014 and 2015 in the Summary Compensation Table under All Other Compensation as follows: $65,625 for Mr. Steinour, $11,402 for Mr. McCullough, and $9,711 for Ms. Houston.
|
(3)
|
Ms. Pierce has an account under the 2008 FirstMerit Corporation Supplemental Executive Retirement Plan. A participant in this plan will receive a distribution in cash equal to the value of the vested portion of his
or her account generally within 90 days following his or her separation from service. Each participant may direct that the participants account be valued as if it is invested in one or more available investment fund indices.
|
The Supplemental Plan
The purpose of
the Supplemental Plan is to provide a supplemental savings program for eligible employees (as determined by the Compensation Committee) who are unable to continue to make contributions to the Huntington Investment and Tax Savings Plan, a tax
qualified 401(k) plan referred to as the 401(k) Plan, for part of the year because the individual has: (I) contributed the maximum amount permitted by the Internal Revenue Service for the calendar year ($18,000 in 2016); or (II) received
the maximum amount of compensation permitted to be taken into account by the Internal Revenue Service for the calendar year ($265,000 in 2016). The 401(k) Plan and the Supplemental Plan work together. When an employee elects to participate in the
401(k) Plan, he or she designates the percentage between 1% and 75% of base pay on a
pre-tax,
Roth after tax, or a combination of
pre-tax
and Roth
after-tax
basis that is to be contributed to the 401(k) Plan. Contributions to the 401(k) Plan are automatically deducted from the employees pay and then allocated to the employees 401(k) Plan account.
For 2016, we matched 100% on the first 4% of base compensation deferred. The Supplemental Plan generally works the same way. When a participant elects to participate in the Supplemental Plan, he or she designates the percentage of base pay that is
to be contributed to the Supplemental Plan between 1% and 75% of
42
base pay. All contributions to the Supplemental Plan must be on a
pre-tax
basis. We then match contributions according to the same formula used by the
401(k) Plan. Under the 401(k) Plan, employees can invest their contributions and our matching contributions in any of 30 investment alternatives. Under the Supplemental Plan, employee
pre-tax
contributions and
our matching contributions are generally invested in Huntington common stock.
A participant cannot receive a distribution of any part of
his account in the Supplemental Plan until his or her employment terminates. Once employment terminates, the account in the Supplemental Plan is required to be distributed to the participant. Portions of accounts invested in our common stock are
distributed in shares of common stock and the remaining portions are distributed in cash. Distributions from the Supplemental Plan are subject to federal and state income tax withholding.
The Executive Deferred Compensation Plan
The EDCP provides senior officers designated by the Compensation Committee the opportunity to defer up to 90% of base salary, annual bonus compensation and certain equity awards. An election to defer can only
be made on an annual basis and is generally irrevocable. Other than the
one-time
cash contribution made by Huntington in 2016 for Ms. Pierce, contributions to this plan consist of compensation deferred by
the participants. Deferrals of common stock are held as common stock until distribution. Cash amounts deferred will accrue interest, earnings and losses based on the performance of the investment option selected by the participant and tracked by a
book-keeping account. The investment options consist of common stock and a variety of mutual funds that are generally available and/or consistent with the types of investment options under the 401(k) Plan.
At the time of each deferral election, a participant elects the method and timing of account distribution in the event of termination or retirement.
In addition, a participant may elect an
in-service
distribution. Accounts distributed upon termination, retirement or
in-service
event may be distributed in a single
lump sum payment or in substantially equal installments. A participant may request a hardship withdrawal prior to termination or retirement. In addition, for amounts earned and vested on or before December 31, 2004, a participant may obtain an
in-service
withdrawal subject to a 10% penalty and suspension of future contributions for at least 12 months. Cash that is deferred is paid out in cash, except that any cash that is invested in our common stock at
the time of distribution is distributed in shares. Common stock that is deferred is distributed in kind.
The table below sets forth the
rate of return for the
one-year
period ending December 31, 2016 for each of the investment options under the EDCP.
|
|
|
|
|
|
|
|
|
|
|
American Funds EuroPacific Growth Fd CI
R-4
|
|
|
0.69
|
%
|
|
Huntington Bancshares Inc. Common Stock
|
|
|
22.92
|
%
|
Federated Total Return Bond Fund Instl Shares
|
|
|
4.96
|
%
|
|
Rational Dividend Capture Fd
|
|
|
6.15
|
%
|
Federated Total Return Govt Bond Fund Instl Shares
|
|
|
1.19
|
%
|
|
Rational Real Strategies Fd IV
|
|
|
7.39
|
%
|
Fidelity Asset Manager 20%
|
|
|
4.70
|
%
|
|
T Rowe Price
Mid-Cap
Growth
|
|
|
6.30
|
%
|
Fidelity Asset Manager 60%
|
|
|
6.76
|
%
|
|
T Rowe Price Small Cap Stock Fd Adv
|
|
|
18.27
|
%
|
Fidelity Asset Manager 85%
|
|
|
7.38
|
%
|
|
Vanguard Institutional Index Fd
|
|
|
11.93
|
%
|
Fidelity Retirement Money Market Portfolio
|
|
|
0.05
|
%
|
|
Vanguard Wellington Fd Adm
|
|
|
11.09
|
%
|
Harbor International Fund Instl Class
|
|
|
0.25
|
%
|
|
|
|
|
|
|
43
Huntingtons Retirement Plan and Supplemental Retirement Income Plan, the SRIP, were frozen as of
December 31, 2013. One of the named executive officers is a participant in both of these plans. The table below presents information for the named executive officers under the Retirement Plan and the SRIP.
Pension Benefits 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Plan Name
|
|
|
Number of
Years of
Credited Service
(#) (1)
|
|
|
Present Value of
Accumulated
Benefit
($) (2)
|
|
|
Payments
During Last
Fiscal Year
($)
|
|
Stephen D. Steinour
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement Plan
|
|
|
|
5.0000
|
|
|
|
124,741
|
|
|
|
0
|
|
|
|
|
SRIP
|
|
|
|
5.0000
|
|
|
|
888,416
|
|
|
|
0
|
|
Howell D. McCullough III
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement Plan
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
|
SRIP
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
Sandra E. Pierce
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement Plan
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
|
SRIP
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
Paul G. Heller
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement Plan
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
|
SRIP
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
Helga S. Houston
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement Plan
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
|
SRIP
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
(1)
|
Years of credited service reported in the table are the final years of credited service, frozen as of December 31, 2013.
|
(2)
|
This column reflects the actuarial present value of the executive officers accumulated benefit under the Retirement Plan and the SRIP as of December 31, 2016. The valuation method used to determine the
benefit figures shown, and all material assumptions applied, are discussed in Note 16 Benefit Plans of the Notes to Consolidated Financial Statements for the fiscal year ended December 31, 2016.
|
Only employees hired before January 1, 2010, are eligible to participate in the Retirement Plan, as frozen. Mr. McCullough, Ms. Pierce,
Mr. Heller and Ms. Houston were hired after January 1, 2010 and are not eligible to participate in the Retirement Plan. Eligibility for participation in the SRIP is limited to employees eligible to participate in the Retirement Plan
who (a) have been nominated by the Compensation Committee; and (b) earn compensation in excess of the limitation imposed by Internal Revenue Code Section 401(a)(17) or whose benefit exceeds the limitation of Code Section 415(b).
Benefits under both the Retirement Plan and the SRIP are based on levels of compensation and years of credited service. Benefits under the SRIP, however,
are not limited by Code Sections 401(a)(17) and 415(b). Code Section 401(a)(17) limits the annual amount of compensation that may be taken into account when calculating benefits under the Retirement Plan. For 2016, this limit was $265,000
.
Code Section 415 limits the annual benefit amount that a participant may receive under the Retirement Plan. For 2016, this amount was $210,000.
The benefit formula under the Retirement Plan was previously revised for benefits earned beginning on January 1, 2010. While the change did not
affect the benefit earned under the Retirement Plan through December 31, 2009, there was a reduction in future benefits. The benefit earned in the Retirement Plan prior to January 1, 2010 is based on compensation earned in the five
consecutive highest years of service. For service on and after January 1, 2010 and through December 31, 2013, the benefit earned in the Retirement Plan is based on compensation earned each year. For executives who are eligible for
retirement or early retirement, the benefit earned in the SRIP is based on compensation earned in the five consecutive highest years of service and the Retirement Plan formula in effect on December 31, 2009. For executives who are not eligible
for retirement or early retirement, the accrued benefit under the SRIP is based on the Retirement Plan formula in effect on and after January 1, 2010. Compensation consists of base salary and 50% of overtime, bonuses, incentives and commissions
paid pursuant to plans with a measurement period of one year or less. Bonuses are taken into account in the year paid rather than earned. A participant who is at least 55 years of age with at least 10 years of service may retire and receive an early
retirement benefit, reduced to reflect the fact that he or she will be receiving payments over a longer period of time.
44
The years of credited service have been capped for participants to the actual years of service with us
through December 31, 2013, the date the plans were frozen. The maximum years of credited service recognized by the Retirement Plan and the SRIP is 40.
Benefit figures shown are computed on the assumption that participants retire at age 65, the normal retirement age specified in the plans. The normal
form of benefit under the Retirement Plan is a life annuity. The Retirement Plan offers additional forms of distribution that are actuarially equivalent to the life annuity. Benefits with a present value greater than the applicable dollar limit
under Code Section 402(g) ($18,000 for 2016) are paid from the SRIP in the form of a life annuity. The SRIP also offers additional forms of distribution that are actuarially equivalent to the life annuity. Benefits with a present value equal to or
less than the applicable dollar limit under Code Section 402(g) are paid in the form of a lump sum distribution.
Payments upon
Termination of Employment or Change in Control
Each of our named executive officers has a change in control agreement with us referred to as an
Executive Agreement. The purposes of these agreements are to encourage retention of our key executives and to provide protection from termination related to a change in control of our company. Huntingtons board of directors adopted the current
forms of agreement in November 2012 when they were updated to more closely align with current best practices. The primary changes from the prior agreements were the elimination of the golden parachute excise tax
gross-up
provision and the elimination of a provision that provided the executive serving as chief executive officer with the right to terminate employment solely as a result of a
change-in-control.
In addition, the updated agreements contain restrictions relating to the disclosure of confidential information and competing with Huntington (three year
non-competition
for the chief executive officer, and one year
non-competition
for the other named executive officers, post termination).
Huntington has an employment agreement with Mr. Steinour pursuant to which Mr. Steinour will continue to serve as Huntingtons president
and chief executive officer through December 31, 2019. The agreement became effective December 1, 2012 for an initial three-year term, subject to three-year renewal periods upon expiration of the initial term and each renewal term, unless
either party gives timely notice of nonrenewal. Mr. Steinours employment agreement provides for certain payments to him upon termination in certain situations other than a change in control.
In addition, each of the named executive officers has outstanding RSU awards and PSU awards which may be subject to accelerated vesting upon involuntary
termination (not for cause), death, or disability.
Executive Agreements
Under the Executive Agreements, change in control generally includes:
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the acquisition by any person of beneficial ownership of 25% or more of our outstanding voting securities;
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a change in the composition of the board of directors if a majority of the new directors were not appointed or nominated by the directors currently sitting on the board of directors or their subsequent nominees;
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a merger involving our company where our shareholders immediately prior to the merger own less than 51% of the combined voting power of the surviving entity immediately after the merger;
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the dissolution of our company; and
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a disposition of assets, reorganization, or other corporate event involving our company which would have the same effect as any of the above-described events.
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Under each Executive Agreement, we, or our successor, will provide severance benefits to the executive officer if his employment is terminated (other
than on account of the officers death or disability or for cause):
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by us, at any time within 24 months after a change in control;
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by us, at any time prior to a change in control but after commencement of any discussions with a third party relating to a possible change in control involving such third party if the executive officers
termination is in contemplation of such possible change in control and such change in control is actually consummated within 12 months after the date of such executive officers termination;
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by the executive officer voluntarily with good reason at any time within 24 months after a change in control of our company; and
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45
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by the executive officer voluntarily with good reason at any time after commencement of change in control discussions if such change in control is actually
consummated within 12 months after the date of such officers termination.
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Good reason generally means the
assignment to the executive officer of duties which are materially different from such duties prior to the change in control, a reduction in such officers salary or benefits, or a demand to relocate to an unacceptable location, made by us or
our successor either after a change in control or after the commencement of change in control discussions if such change or reduction is made in contemplation of a change in control and such change in control is actually consummated within 12 months
after such change or reduction. An executive officers determination of good reason will be conclusive and binding upon the parties if made in good faith.
In addition to any accrued salary and annual cash incentive payable as of termination, severance payments and benefits under the Executive Agreements consist of:
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a
lump-sum
cash payment equal to three times annual base salary for the chief executive officer and two and
one-half
times annual base salary for each of the other named executive officers;
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a
lump-sum
cash payment equal to three times for the chief executive officer, and two and
one-half
times for the other named executive officers, of the greater of the executives target annual incentive award for the calendar year during which the change in control occurs or the immediately
preceding calendar year, provided the executive was a participant in the Management incentive Plan during the calendar year, or the immediately preceding calendar year;
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a
pro-rata
annual incentive award paid upon a change in control under the Management Incentive Plan based on either the
actual level of
year-to-date
performance, or the target award as a percent of base salary for the plan year preceding the change in control, whichever is greater, in
accordance with the terms of the Management Incentive Plan;
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36 months of continued insurance benefits for the chief executive officer, and 30 months for the other named executive officers;
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fees for outplacement services for the executive up to a maximum amount equal to 15% of the executives annual base salary plus reimbursement for job search
travel expenses up to $5,000;
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stock options, restricted stock, RSU, and PSU awards under our stock and incentive plans become vested according to the terms of the plans; and
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other benefits to which the executive was otherwise entitled including perquisites, benefits, and service credit for benefits.
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The Executive Agreements also provide for 36 months of additional service credited for purposes of retirement benefits for the chief executive
officer and 30 months for the other named executive officers. Because the Retirement Plan and the SRIP were frozen as of December 31, 2013, this provision will not operate to increase accrued benefits under these plans. Additional service and
compensation earned after the freeze date are not included in the calculation of benefits under the Executive Agreements. The additional service period will count for purposes of determining vesting or entitlement to early retirement benefits under
these plans.
The Executive Agreements have a
best-net-benefit
clause which replaced the excise tax
gross-ups.
If an executive triggers the excise tax, the individual will
either be
cut-back
to an amount that is $1 less than such amount that would cause the excise tax, or the executive will have the opportunity to pay the excise tax himself, depending on the result
that provides the better
after-tax
result.
For a period of five years after any termination of
the executive officers employment, we will provide the executive officer with coverage under a standard directors and officers liability insurance policy at our expense, and will indemnify, hold harmless, and defend the officer to
the fullest extent permitted under Maryland law against all expenses and liabilities reasonably incurred by the officer in connection with or arising out of any action, suit, or proceeding in which he may be involved by reason of having been a
director or officer of our company or any subsidiary.
In the event an executive officer is required to enforce any of the rights granted
under his Executive Agreement, we, or our successor, will pay the cost of counsel (legal and accounting). In addition, the executive officer is entitled to prejudgment interest on any amounts found to be due in connection with any action taken to
enforce such officers rights under the Executive Agreement.
46
As a condition to receiving the payments and benefits under the Executive Agreements, the executive officer
will be required to execute a release. Severance benefits payable in a lump sum will be paid not later than 45 business days following the date the executives employment terminates, subject to applicable laws and regulations.
The Executive Agreements are extended annually and are subject to an extension for 24 months upon a change in control. An Executive Agreement will
terminate if the executive officers employment terminates under circumstances that do not trigger benefits under the agreement. We may elect not to renew an agreement upon 30 days prior written notice.
Sandra Pierce
In connection with the
completion of Huntingtons acquisition of FirstMerit Corporation, Huntington entered into a retention letter with Ms. Pierce. The retention letter provided that if Ms. Pierces employment was terminated by Huntington without cause or if
she died or became disabled prior to February 16, 2017, Huntington would contribute a cash amount equal to $1,750,065 to her account under the Executive Deferred Compensation Plan that would become payable upon her separation from service with
Huntington (the Contingent Cash Retention Award). This benefit was intended to make Ms. Pierce whole upon certain qualifying terminations of employment that may occur prior to February 16, 2017, because upon any termination of employment
prior to February 16, 2017, Ms. Pierce would have forfeited her retention RSU award. As of February 16, 2017, Ms. Pierce is no longer eligible to receive the Contingent Cash Retention Award and her retention RSU award would vest in full upon a
termination of her employment by Huntington without cause or her death or disability.
In addition, pursuant to the merger agreement between
Huntington and FirstMerit Corporation, upon the completion of Huntingtons acquisition of FirstMerit Corporation, FirstMerit determined the amount of fiscal year 2016 bonus payable to Ms. Pierce under its incentive plan. Such annual bonus would
have been paid at the time Huntington pays annual cash bonuses to similarly situated employees, except that if Ms. Pierce was terminated without cause or resigned with good reason prior to the payment date, Ms. Pierce would have been eligible to
receive her annual bonus for 2016 without proration.
The estimated payments and benefits that would be paid in the event each named executive
officer terminated employment on December 31, 2016 and became entitled to benefits under his or her Executive Agreement are set forth below. For purposes of quantifying these benefits, we assumed that a change in control occurred on
December 31, 2016 and that the executive officers employment was terminated on that date without cause. The closing price of a share of our common stock on December 30, 2016, the last business day of the year, was $13.22.
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Name
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|
Cash
Severance/
Retention (1)
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Pro-Rata
Bonus
Value (2)
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Total
Out-placement
Value (3)
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Total
Welfare
Value (4)
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Additional
Retirement
Value (5)
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Performance
Contingent
Equity
Value (6)
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Time-
Based Equity
Accel. Value
(7)
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Scale Back
Amount,
if applicable
(8)
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Final
Benefit (9)
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Steinour
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$
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7,425,000
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$
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2,400,000
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$
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170,000
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|
$
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58,392
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$
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521,412
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$
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6,505,553
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$
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11,938,715
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$
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0
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$
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29,019,072
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McCullough
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$
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2,745,000
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$
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900,000
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$
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96,500
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$
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44,839
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$
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0
|
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$
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1,340,880
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$
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3,693,097
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$
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0
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$
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8,820,316
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Pierce
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$
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3,235,327
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$
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805,949
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$
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94,116
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$
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53,131
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$
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0
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$
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0
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$
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1,197,811
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$
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0
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$
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5,386,334
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Heller
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$
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2,700,000
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$
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875,000
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$
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95,000
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$
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48,329
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$
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0
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|
$
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1,573,256
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$
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3,050,803
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$
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0
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$
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8,342,388
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Houston
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$
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2,475,000
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$
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850,000
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$
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87,500
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$
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48,165
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$
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0
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$
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1,376,881
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$
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2,722,170
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$
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0
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$
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7,559,716
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(1)
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Multiple of base salary and target annual incentive, payable in a lump sum for all executives other than Ms. Pierce. Ms. Pierces cash severance is based on to a multiple of her base salary only since she
was not a participant in the Management Incentive Plan in 2016. If terminated at the end of the fiscal year due to involuntary termination, death or disability, Ms. Pierce would also have been entitled to a Contingent Cash Retention Award in an
amount equal to $1,750,065.
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(2)
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Reflects full year annual incentive earned for fiscal year 2016 for all executives other than Ms. Pierce. The value for Ms. Pierce reflects her full-year FirstMerit bonus amount for 2016 as calculated under
the terms of the merger agreement between Huntington and FirstMerit Corporation.
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(3)
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Reflects 15% of base salary plus $5,000 for job search travel.
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(4)
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Reflects 36 and
30-months
of benefits for the CEO and other named executive officers, respectively.
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(5)
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Value of additional 36 and 30 months of credited service under SRIP for the CEO and other named executive officers, respectively. Mr. Steinour has less than ten years of vesting service as of December 31,
2016. With the additional service credit, he attains early retirement eligibility (ten years of vesting service), so there is additional present value earned through the
change-in-control.
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47
(6)
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For performance share units (PSUs), a prorated value based on the estimated performance as of December 31, 2016; includes dividend equivalents.
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(7)
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In-the-money
value of time-based unvested stock options and RSUs; includes dividend equivalents.
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(8)
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Ms. Pierce would not be subject to the excise taxes if terminated following a change in control of Huntington at December 31, 2016. All other executives would be in a better
after-tax
position when paying the excise tax liability themselves.
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(9)
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The total benefit to the executive under a
change-in-control
of the company and termination of employment.
|
Mr. Steinours Employment Agreement
Mr. Steinours employment agreement provides for certain payments upon a termination of his employment without cause or for
good reason (each as defined in the agreement). The potential payments under these agreements are described and quantified below.
Upon
termination without cause or for good reason, Mr. Steinour is entitled to payment of the following amounts:
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accrued amounts consisting of unpaid base salary through termination, earned but unpaid annual incentive payments for the prior period, accrued and unused paid time off and incurred but unreimbursed business expenses;
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a
pro-rata
incentive payment in respect of the fiscal year of the company in which the date of termination occurs, with such amount to equal the amount determined by the
Compensation Committee based on the Companys actual performance for the fiscal year in which the date of termination occurs and otherwise on a basis no less favorable than annual incentive award determinations are made by the Compensation
Committee for the companys executive officers; and
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a severance payment equal to two times his annual base salary and the higher of the target incentive payment for the year of termination or the incentive payment paid or payable with respect to the prior fiscal year;
and
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Mr. Steinour would also be entitled to payment and provision of any other amounts or benefits to which he was otherwise entitled.
If Mr. Steinour had terminated employment with us without cause or for good reason as of December 31, 2016, he would
have been entitled to, in addition to accrued amounts and benefits, a pro rata annual incentive payment equal to $2,475,000 and a severance payment equal to $5,500,000.
If Mr. Steinour had terminated employment as of December 31, 2016, due to death or disability, he or his estate would have been entitled to a
pro rata annual incentive payment for the year of termination (based on the companys actual performance for the fiscal year in which the date of termination occurs and otherwise on a basis no less favorable than annual incentive award
determinations are made by the Compensation Committee for the companys executive officers) equal to $2,475,000 and accrued obligations and benefits.
If Mr. Steinour had terminated employment as of December 31, 2016 without good reason and due to his retirement, he would have been
entitled to a pro rata annual incentive payment for the year of termination equal to $2,475,000. Mr. Steinour was not eligible for normal retirement benefits as of December 31, 2016.
Severance benefits and payments are subject to execution and nonrevocation of a release of claims.
RSUs and PSUs Potential Accelerated Vesting
Each of the named executive officers has outstanding RSU awards and PSU awards which are subject to accelerated vesting upon involuntary termination (not
for cause), death or disability. The table below sets forth the value of the shares and accumulated dividends that would have been payable under outstanding grants of RSUs and PSUs to the respective officers upon involuntary termination (not for
cause), death or disability as of December 31, 2016.
48
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Name
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Award
Type (1)
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For
Cause (2)
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Involuntary Termination
(Not for Cause) (3)
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Death (4)
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Disability (5)
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Steinour
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RSU
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$3,091,987
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|
$
|
5,117,014
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|
|
$
|
3,091,987
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|
|
|
PSU
|
|
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|
|
|
|
$6,526,282
|
|
|
$
|
8,695,949
|
|
|
$
|
6,526,282
|
|
McCullouch
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RSU
|
|
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|
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$ 920,618
|
|
|
$
|
1,421,643
|
|
|
$
|
920,618
|
|
|
|
PSU
|
|
|
|
|
|
|
|
$1,382,140
|
|
|
$
|
1,918,964
|
|
|
$
|
1,382,140
|
|
Pierce
|
|
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|
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|
|
|
RSU (6)
|
|
|
|
|
|
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|
$2,417,132
|
|
|
$
|
2,417,132
|
|
|
$
|
2,417,132
|
|
|
|
RSA (7)
|
|
|
|
|
|
|
|
$1,197,811
|
|
|
$
|
1,197,811
|
|
|
$
|
1,197,811
|
|
Heller
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RSU
|
|
|
|
|
|
|
|
$ 811,917
|
|
|
$
|
1,312,941
|
|
|
$
|
811,917
|
|
|
|
PSU
|
|
|
|
|
|
|
|
$1,572,661
|
|
|
$
|
2,109,486
|
|
|
$
|
1,572,661
|
|
Houston
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RSU
|
|
|
|
|
|
|
|
$ 729,951
|
|
|
$
|
1,168,340
|
|
|
$
|
729,951
|
|
|
|
PSU
|
|
|
|
|
|
|
|
$1,382,433
|
|
|
$
|
1,852,140
|
|
|
$
|
1,382,433
|
|
(1)
|
In the event accelerated vesting applies to a prorated award rather than the full award, the proration is based on the number of months from the grant date to the month of termination. Generally, in the event of
proration of a PSU award, the proration is calculated on the target number of shares, subject to adjustment at the end of the performance cycle when the shares would be released along with all other PSU awards for the same cycle. Dividends for
awards granted prior to May 1, 2015 are accumulated and paid in cash. Dividends for awards granted on or after May 1, 2015 are reinvested and accumulated as additional award shares.
|
(2)
|
There is full forfeiture of any unvested awards in the event of termination for cause.
|
(3)
|
Involuntary termination (not for cause) results in accelerated vesting of a prorated number of shares.
|
(4)
|
Termination in the event of death results in acceleration in full for all awards granted on or after May 1, 2016, and acceleration of a prorated number of shares for all awards granted prior to May 1, 2016.
PSUs granted on May 1, 2016 that are subject to accelerated vesting due to termination in the event of death are not subject to adjustment at the end of the performance cycle.
|
(5)
|
Termination due to disability results in accelerated vesting of a prorated number of shares.
|
(6)
|
Involuntary termination (not for cause), death or disability that, in each case, occurs on or following February 16, 2017, results in accelerated vesting of all shares.
|
(7)
|
An award of restricted stock granted to Ms. Pierce by FirstMerit Corporation on April 1, 2016, was converted to a restricted stock award with respect to Huntington common stock upon the merger effective
August 16, 2016, subject to the same terms and conditions applicable to the award as granted by FirstMerit Corporation. This award provides for acceleration in full in cases of death, disability, involuntary termination not for cause or
termination for good reason.
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