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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549



SCHEDULE 14A INFORMATION

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Securities Exchange Act of 1934



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Table of Contents

LOGO

Comerica Incorporated

Proxy Statement and Notice of
2021 Annual Meeting of Shareholders


Table of Contents

LOGO

Comerica Incorporated

Comerica Bank Tower
1717 Main Street
Dallas, Texas 75201

March 16, 2021

Dear Shareholder,

It is our pleasure to invite you to attend the 2021 Annual Meeting of Shareholders of Comerica Incorporated at 9:30 a.m., Central Time, on Tuesday, April 27, 2021. Due to the ongoing COVID-19 pandemic and concern for the safety and well-being of our shareholders, the Annual Meeting will once again be held on a virtual-only basis.

2020 was a challenging and dynamic year due to the COVID-19 pandemic. Comerica moved quickly to protect and support customers and colleagues by implementing new operational protocols, significantly increasing our contributions to community organizations, supporting clients with Paycheck Protection Program loans, and providing additional pay and healthcare resources for colleagues. The Business Continuity Executive Team was mobilized and met at least bi-weekly throughout the year to assess strategies to operate safely during the pandemic. Our Board was highly engaged working through issues and discussion plans in both formal and informal meetings.

Despite these headwinds, our 2020 results included solid loan performance and a record level of deposits, which helped offset the rapid decline in interest rates. Expenses remained well-controlled and included COVID-related costs. In light of the unprecedented environment, we significantly increased our credit allowance in the first quarter. Credit migration was manageable, and our full-year net charge-offs were 38 basis points of average loans (14 basis points excluding Energy), reflective of our relationship banking strategy and deep credit experience. We maintained our strong capital levels, and our book value grew 7 percent from 2019, to over $55. In summary, it was a solid performance, particularly considering the difficult economic conditions.

Your vote is important to us. Whether or not you plan to attend the Annual Meeting, please submit your proxy promptly so that your shares will be voted as you desire.

Sincerely,    

GRAPHIC

 

GRAPHIC
Curtis C. Farmer
Chairman, President and Chief Executive Officer
  Barbara R. Smith
Facilitating Director

Table of Contents


PROXY STATEMENT

TABLE OF CONTENTS

NOTICE OF 2021 ANNUAL MEETING OF SHAREHOLDERS

  1

EXECUTIVE SUMMARY

  2

Proposal I Submitted for your Vote — Election of Directors

  8

Information about Nominees

  9

Board and Committee Governance

  14

Committees and Meetings of Directors

  17

Non-Management Directors and Communication with the Board

  19

Board Leadership Structure

  20

Role in Risk Oversight

  20

Transactions with Related Persons

  21

Director Independence

  23

Compensation Committee Interlocks and Insider Participation

  25

Compensation of Directors

  26

Proposal II Submitted for your Vote — Ratification of the Appointment of Independent Registered Public Accounting Firm

  28

Independent Registered Public Accounting Firm

  29

Audit Committee Report

  31

Executive Officers

  32

Proposal III Submitted for your Vote — Approval of a Non-Binding, Advisory Proposal Approving Executive Compensation

  36

Compensation Discussion and Analysis

  37

Governance, Compensation and Nominating Committee Report

  63

2020 Summary Compensation Table

  64

2020 Grants of Plan-Based Awards

  66

Outstanding Equity Awards at Fiscal Year-End 2020

  68

2020 Option Exercises and Stock Vested

  71

Pension Benefits at Fiscal Year-End 2020

  72

2020 Nonqualified Deferred Compensation

  74

Potential Payments upon Termination or Change of Control at Fiscal Year-End 2020

  76

Pay Ratio Disclosure

  80

Securities Authorized for Issuance under Equity Compensation Plans

  81

Proposal IV Submitted for your Vote — Approval of the Amended and Restated Comerica Incorporated 2018 Long-Term Incentive Plan

  84

Proposal V Submitted for your Vote — Approval of the Comerica Incorporated 2021 Employee Stock Purchase Plan

  96

Security Ownership of Management

  100

Security Ownership of Certain Beneficial Owners

  102

Shareholder Proposals and Director Nominations for 2022 Annual Meeting

  104

General Information for Shareholders About the Annual Meeting

  105

Appendix I — Amended and Restated Comerica Incorporated 2018 Long-Term Incentive Plan

  I-1

Appendix II — Comerica Incorporated 2021 Employee Stock Purchase Plan

  II-1

Table of Contents

NOTICE OF 2021 ANNUAL MEETING OF SHAREHOLDERS

Time and Date   9:30 a.m., Central Time, April 27, 2021
Place   Virtual Shareholder Meeting at www.meetingcenter.io/220952924
Record Date   February 26, 2021
Mailing Date   On or around March 16, 2021
Voting   Shareholders as of the record date are entitled to vote. Each share of common stock is entitled to one vote for each director nominee and one vote for each of the proposals to be voted on.
See the "General Information for Shareholders About the Annual Meeting" section of the proxy statement on page 105 for information about voting and attending the Annual Meeting virtually.

Voting Matters

Proposals

Board Vote
Recommendation


Page Reference
I. Election of directors   FOR EACH DIRECTOR NOMINEE   8
II. Ratification of Ernst & Young LLP as independent registered public accounting firm for 2021   FOR   28
III. Advisory approval of the Company's executive compensation   FOR   36
IV. Approval of the Comerica Incorporated Amended and Restated 2018 Long-Term Incentive Plan   FOR   84
V. Approval of the Comerica Incorporated 2021 Employee Stock Purchase Plan   FOR   96
VI. Other business that properly comes before the meeting        

Voting Your Shares

    BY TELEPHONE: 1-800-652-VOTE (8683)
    VIA THE INTERNET: www.envisionreports.com/CMA, or scan the QR code on the Notice of Internet Availability of Proxy Materials or proxy card
    BY MAIL: complete, sign, date and return your proxy card in the envelope provided
    DURING THE MEETING: attend our virtual Annual Meeting and click on the "Cast Your Vote" link

For shares held in Comerica's employee benefit plans, the deadline is 11:59 p.m. (Central Time), April 25, 2021.

GRAPHIC

Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting To Be Held on April 27, 2021. The proxy statement and annual report to security holders are available at www.envisionreports.com/CMA.

    By Order of the Board of Directors,

 

 

GRAPHIC
    John D. Buchanan
Executive Vice President — Chief Legal Officer,
and Corporate Secretary

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EXECUTIVE SUMMARY

This summary highlights information contained elsewhere in this proxy statement. This summary does not contain all of the information that you should consider, and you should read the entire proxy statement carefully before voting.

About Comerica

Founded in 1849, Comerica Incorporated (NYSE: CMA) is a financial services company headquartered in Dallas, Texas, strategically aligned by three business segments: The Commercial Bank, The Retail Bank and Wealth Management. Comerica focuses on relationships, and helping people and businesses be successful. In addition to Texas, Comerica locations can be found in Arizona, California, Florida and Michigan, with select businesses operating in several other states, as well as in Canada and Mexico.

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2020 Financial and Operating Performance

Comerica has a long history of successfully managing through challenging times. We have demonstrated our resiliency and unwavering dedication to provide a high-level of customer service as we navigate the COVID-19 pandemic. We maintain a culture that drives continuous efficiency improvement. Our consistent, disciplined credit standards and strong capital base continues to serve us well. These key attributes provide the foundation to continue to deliver long-term shareholder value. This has been demonstrated by our book value per share, which grew 7%, to a record level at year-end.

Some of our noteworthy financial accomplishments in 2020 included:

    Reached record levels of period-end assets, loans and deposits, as we worked tirelessly to support our customers through the COVID crisis:
      o
      20%, or $14.7 billion, increase in total assets to a record $88.1 billion at year-end;
      o
      4%, or $1.9 billion, increase in total loans to a record $52.3 billion; and
      o
      27%, or $15.6 billion, increase in total deposits to a record $72.9 billion, which included $12.0 billion growth in noninterest-bearing deposits.
    Revenue of $2.9 billion declined from a 2019 record, due to the rapid decline in interest rates as well as a slowdown in economic activity.
    Noninterest expenses remained well-controlled and increased only 2%, including COVID-related costs and increased FDIC insurance.
    Significantly increased our credit allowance in light of the unprecedented economic impacts of COVID.
    Credit metrics remained strong with nonperforming assets remaining below our historic norm at 69 basis points of total loans and foreclosed property. Net charge-offs were 38 basis points of average loans, or only 14 basis points excluding Energy.
    First quarter results were impacted by a rapid decline in rates and a large provision for credit losses to prudently increase our reserves; each subsequent quarter our net income increased.
    Capital level was near an all-time-high. Returned $378 million to common shareholders through dividends, including an increase in the dividend to $2.72 per share and the repurchase of $189 million of common stock (3.2 million shares) in the first quarter.

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Commitment to Diversity, Sustainability and Community

Our seven Core Values define how we act — internally and externally — to achieve our strategic objectives, and reflect our commitment to corporate responsibility:

    Customer-centricity.  Our decisions will be based first and foremost on what is best for our customers, be they internal or external.
    Collaboration.  We will work as a team to do what is right by our customers and our colleagues.
    Integrity.  We will maintain the highest ethical standards through our honesty and transparency. We will honor our commitments and take personal responsibility for our actions.
    Excellence.  We understand there are no trade-offs or short cuts on the road to success. We will strive for greatness through continuous self-improvement.
    Agility.  We aspire to become a company that fully embraces innovation as a means of driving ongoing growth and prosperity. We remain flexible and adaptable to change.
    Diversity.  We will create an environment that celebrates the differences among our colleagues and customers, with the understanding that such differences make us a stronger company.
    Involvement.  We embrace our critical role in the communities we serve and acknowledge that our success is intertwined with theirs. We will make sustainability a priority.

The Governance, Compensation and Nominating Committee is responsible for determining the constituency of the Board, and looks at diversity of experience, professions, skills, geographic representation and/or backgrounds when evaluating nominees. Historically annual updates on human capital, including diversity and inclusion information, were provided to the Governance, Compensation and Nominating Committee, and in 2021 the Chief Diversity Officer started providing those annual updates to the full Board instead, focusing on our strategic framework; progress made in corporate governance, workforce diversity, education and social impact over the past year; and the diversity and inclusion action plan for the upcoming year.

At the employee level, Comerica supports diversity and inclusion through our Executive Diversity Committee ("EDC"), comprised of our CEO, his leadership team and Comerica's Chief Diversity Officer. All of Comerica's EDC members are required to include diversity and inclusion in their annual performance review and to include diversity objectives throughout their lines of business. Employee diversity, inclusion and engagement highlights for 2020 included:

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The Enterprise Risk Committee of the Board oversees all of Comerica's risk management, including environmental and social risks. Comerica's Director of Corporate Sustainability provides annual updates to the Board's Enterprise Risk Committee, which reviews our value creation approach to corporate sustainability, including areas of progress, challenges and future initiatives. Sustainability highlights for 2020 included:

GRAPHIC

Comerica also formed an ESG Council in 2020 with the purpose of driving long-term value by establishing a cohesive, strategic direction to raise expectations of Comerica's ESG programs and performance. The ESG Council provides semi-annual updates to Comerica's CEO and his leadership team on ESG programs at Comerica and developing issues in the space. Members of the ESG Council include representatives from all three business lines, as well as our Chief Community Officer, Chief Diversity Officer, Director of Corporate Sustainability, Investor Relations Director, Director of Enterprise Risk and Credit Review, Portfolio Risk Analytics, Director of Government Relations, and Corporate Communications & Executive Administration.

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Board and Governance Highlights

Our management team and the Board are focused on serving the long-term interests of Comerica's shareholders. The Board's primary responsibility is the oversight of the Company's management team, and the Board has a number of measures in place to continually enhance Board composition, efficiency and effectiveness, demonstrated through the following:

Annual election of directors

Majority voting for directors

Annual self-evaluation by the Board and its committees

Regular assessment of Board composition — 3 new independent Board members since 2016

Regularly-scheduled executive sessions of non-management directors

45% of the Board is diverse, based on race, gender and/or ethnicity. Out of eleven Board members, three are female and three are racially/ethnically diverse.

Engagement in Comerica's long-term corporate strategy on an ongoing basis as well as at an annual dedicated session

Proxy access

Ten out of eleven directors (91%) are independent

 

No directors attended fewer than 75% of meetings

Independent audit, compensation and nominating committees

Independent Facilitating Director with robust duties and responsibilities

Women hold key Board leadership positions (Independent Facilitating Director and Governance, Compensation and Nominating Committee chair)

Board-level oversight of important matters, including COVID-19 response, cybersecurity and ESG issues

Mandatory Board retirement age: 72

No director serves on more than five public company boards, or two public company boards if they are a public company executive officer

COVID-19 Oversight

In 2020, management and the Board were highly engaged working through COVID-19 related issues in both formal and informal meetings. Issues were addressed internally through the Business Continuity Executive Team ("BCET"), consisting of senior leaders including the CEO, CFO, Chief Credit Officer, Chief Risk Officer, Chief Enterprise Technology & Operations Services Officer, heads of each business line, Chief Human Resources Officer, Chief Legal Officer, and Chief Marketing Officer, as well as representatives from government relations, HR operations, back-office operations, facilities and procurement. Additionally, special management committees related to capital and liquidity met under the leadership of the CEO and CFO. The CEO and senior leaders met more frequently with Board members and elevated issues as appropriate. The Board held additional meetings as well.

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Board Nominees

The following table provides summary information about each director nominee. Each director nominee will be elected for a one-year term. Directors are elected by a majority of votes cast.

 

 

        Director             Committee Memberships

  Other Public  
                                         

 

 

Name


 
Age

 
since

  Occupation

  Independent

  AC

  GCNC

  ERC

  QLCC

  Company Boards

 

 

Michael E. Collins

    69     2016     Chair and Sr. Counselor, Blake Collins Group; Former Consultant, Federal Reserve Bank of Cleveland; and Former EVP, Federal Reserve Bank of Philadelphia     X     X         C     X      

 

 

Roger A. Cregg

        64         2006       Former President & CEO, AV Homes, Inc.       X       C, F               X       X       Sterling Construction
Company, Inc.
   

 

 

T. Kevin DeNicola

    66     2006     Retired; Former CFO, KIOR, Inc.     X     F         X     C      

 

 

Curtis C. Farmer

        58         2018       Chairman, President and CEO,
Comerica Inc. and Comerica Bank
                                                   

 

 

Jacqueline P. Kane

    68     2008     Retired; Former EVP, Human Resources and Corporate Affairs, The Clorox Company     X         C              

 

 

Richard G. Lindner

        66         2008       Retired; Former SEVP & CFO, AT&T, Inc.       X       F       X               X            

 

 

Barbara R. Smith

    61     2017     Chairman, President & CEO, Commercial Metals Company     IFD         X             Commercial Metals Company  

 

 

Robert S. Taubman

        67         2000       Chairman, President & CEO, The Taubman Realty Group LLC and The Taubman Company LLC       X                       X                    

 

 

Reginald M. Turner, Jr.

    61     2005     Attorney, Clark Hill     X     X         X     X     Masco Corporation  

 

 

Nina G. Vaca

        49         2008       Chairman & CEO, Pinnacle Technical Resources, Inc. and Vaca Industries Inc.       X               X       X               Cinemark Holdings, Inc.    

 

 

Michael G. Van de Ven

    59     2016     COO, Southwest Airlines Co.     X         X              

AC — Audit Committee; C — Chair; ERC — Enterprise Risk Committee; F — Financial expert; GCNC — Governance, Compensation and Nominating Committee; IFD — Independent Facilitating Director; QLCC — Qualified Legal Compliance Committee

Director Qualifications and Experience

The following table provides an overview of our director nominees' specific skills, experiences and areas of knowledge that allow the Board to effectively serve and represent the interests of Comerica's four core constituencies: its shareholders, its customers, the communities it serves and its employees. In addition, directors gain substantial experience through Comerica Board tenure, which involves significant exposure to the complex regulations and changing landscape of the financial services industry.

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PROPOSAL I SUBMITTED FOR YOUR VOTE

ELECTION OF DIRECTORS

The Board of Directors recommends that you vote "FOR"
the candidates for director.

Election of Directors.    The Board of Directors of Comerica Incorporated ("Comerica," the "Company" or "we") currently has eleven members, and directors are elected annually for terms of one year. Based on the recommendation of the Governance, Compensation and Nominating Committee, the Board has nominated all of Comerica's current directors to serve another term or until their successors are elected and qualified.

The Board has chosen to nominate Comerica's current directors based on their unique expertise, experiences, perspectives and leadership skills.

Our nominees include individuals who:

      Are experienced in leading complex, highly-regulated companies (including banks and other financial services entities)

      Have served in a variety of leadership roles on boards and management teams of U.S. public companies

      Have significant regulatory and risk management experience

      Have extensive experience in the geographic areas in which we operate

      Understand Comerica's business and unique position in the banking industry

The current directors are the only nominees, and each of them has been previously elected by the shareholders. Each of the nominees has consented to his or her nomination and has agreed to serve as a director of Comerica, if elected. Proxies cannot be voted for a greater number of people than the number of nominees named.

If any director is unable to stand for re-election, Comerica may vote the shares to elect any substitute nominees recommended by the Governance, Compensation and Nominating Committee, and it is intended that such shares represented by proxy, if given and unless otherwise specified therein, will be voted FOR the remaining nominees and substitute nominee or nominees so designated. If any such substitute nominees are so designated, Comerica would expect to provide supplemental proxy materials that, as applicable, identify the substitute nominees, disclose that such nominees have consented to being named in Comerica's proxy materials and to serve if elected, and include biographical and other information about such nominees to the extent required by the rules of the SEC. If the Governance, Compensation and Nominating Committee does not recommend any substitute nominees, the number of directors to be elected at the Annual Meeting may be reduced by the number of nominees who are unable to serve.

Further information regarding the Board and the nominees begins directly below.

COMERICA'S BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE DIRECTOR CANDIDATES LISTED BELOW.

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INFORMATION ABOUT NOMINEES

The following section provides information as of March 16, 2021 about each nominee for election as a director.

The information provided includes the age of each nominee or incumbent director; the nominee's or incumbent director's principal occupation, employment and business experience during the past five years, including employment with Comerica and Comerica Bank, a wholly-owned subsidiary of Comerica, if applicable, as well as other professional experience; other public company or registered investment company directorships during the past five years; and the year in which the nominee or incumbent director became a director of Comerica.

    Michael E. Collins   Director since 2016
GRAPHIC   Mr. Collins, 69, has served as the Chair and Senior Counselor of Blake Collins Group, a public relations and communications firm, since July 2013. He was an advisor to The Bancorp, Inc., a financial services institution, from July 2013 to November 2016. He also served as a consultant to the Federal Reserve Bank of Cleveland, a bank regulator, from November 2014 to March 2015 and as Executive Vice President and Lending Officer of the Federal Reserve Bank of Philadelphia, a bank regulator, from June 2009 to June 2011, where he worked in various capacities beginning in 1974. He was the President and Chief Executive Officer of TD Bank USA, a financial services institution, from March 2013 to July 2013 and Executive Vice President of TD Bank Group, a group of affiliated financial services entities, where he managed audit, legal, compliance, anti-money laundering, regulatory, loan review and government affairs functions from November 2011 to July 2013. He also was Executive Vice President of TD Bank Group and Strategic Advisor to TD Bank USA from September 2011 to October 2011. He was a director of Higher One Holdings, Inc. from April 2015 to August 2016.

As a former banking and finance executive with nearly 40 years of regulatory experience, including service with the Federal Reserve Banks of Cleveland and Philadelphia, Mr. Collins brings to the Board a number of key skills, including a strong background in risk management and relevant business management experience, as well as a deep understanding of the financial services industry, including bank regulation. As the Chair of our Enterprise Risk Committee, his experience in identifying, assessing, and managing risk exposures of large, complex financial firms allows Mr. Collins to provide invaluable insight to Comerica.

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Roger A. Cregg

 

Director since 2006
GRAPHIC   Mr. Cregg, 64, was President, Chief Executive Officer and a director of AV Homes, Inc., a developer and homebuilder in Florida, Arizona, Texas and North Carolina, from December 2012 to October 2018. From August 2011 through November 2012, he served as Senior Vice President of Finance and Chief Financial Officer of The ServiceMaster Company, a residential and commercial service company. He served as Executive Vice President of PulteGroup, Inc. (formerly known as Pulte Homes, Inc.), a national homebuilding company, from May 2003 to May 2011 and Chief Financial Officer of PulteGroup, Inc. from January 1998 to May 2011. He served as Senior Vice President of PulteGroup, Inc. from January 1998 to May 2003. He was a director of the Federal Reserve Bank of Chicago, Detroit Branch, from January 2004 to December 2009 and served as Chair from January to December 2006. He has been a director of Sterling Construction Company, Inc. since May 8, 2019.

As the former Chief Executive Officer and Chief Financial Officer of public companies, Mr. Cregg has demonstrated the leadership capability and extensive knowledge of complex financial and operational issues necessary to chair our Audit Committee.

 

 

T. Kevin DeNicola

 

Director since 2006
GRAPHIC   Mr. DeNicola, 66, is retired. He served as Chief Financial Officer of KIOR, Inc., a biofuels company, from November 2009 to January 2011. He was Senior Vice President and Chief Financial Officer of KBR, Inc., a global engineering, construction and services company, from June 2008 until October 2009. From June 2002 to January 2008, he was Senior Vice President and Chief Financial Officer of Lyondell Chemical Company, a global manufacturer of basic chemicals. Mr. DeNicola also served as Senior Vice President and Chief Financial Officer of Equistar Chemicals, LP and Millennium Chemicals Inc., both subsidiaries of Lyondell Chemical Company, from June 2002 to January 2008. In January 2009, Lyondell Chemical Company and certain of its subsidiaries, including Equistar Chemicals, LP and Millennium Chemicals Inc., filed voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code. Lyondell emerged from bankruptcy in April 2010. He was also a director of Axiall Corporation (formerly Georgia Gulf Corporation) from September 2009 to August 2016.

Mr. DeNicola is an experienced financial leader. His service as Chief Financial Officer of public companies makes him a valuable asset, both on our Board of Directors and as a member of our Audit Committee. Mr. DeNicola's positions have provided him with a wealth of knowledge in dealing with financial and accounting matters. The depth and breadth of his exposure to complex financial issues make him a skilled advisor.

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Curtis C. Farmer

 

Director since 2018
GRAPHIC   Mr. Farmer, 58, has been Chairman (since January 2020); Chief Executive Officer (since April 2019); President (since April 2015); Vice Chairman (April 2011 to April 2015) and Executive Vice President (October 2008 to April 2011) of Comerica Incorporated and Comerica Bank. Prior to joining Comerica, Mr. Farmer served as Executive Vice President and Wealth Management Director of Wachovia Corporation from October 2005 to October 2008. During his 23 years of service to Wachovia, he held a variety of positions of increasing scope and responsibility.

Mr. Farmer is an experienced financial services executive who has been nominated to serve on the Board because of his extensive skills and institutional knowledge in the areas of business and consumer banking. As Chairman, President and CEO of Comerica, he has a deep understanding of all aspects of Comerica's core businesses and markets, and has also supervised Comerica's credit, marketing, enterprise technology and operations functions. At Comerica, Mr. Farmer successfully guided the Commercial Bank, Retail Bank and Wealth Management — along with several support functions — through the GEAR Up efficiency initiative and laid the foundation for Comerica to undergo the digital transformation that is underway today. Mr. Farmer is active in the banking industry and serves on the boards of the Bank Policy Institute and The Clearing House, as well as the Dallas Citizens Council. He also has broad experience in wealth management and leadership through his long tenure at Wachovia Corporation.

 

 

Jacqueline P. Kane

 

Director since 2008
GRAPHIC   Ms. Kane, 68, is retired. She served as Executive Vice President, Human Resources and Corporate Affairs, from February 2015 to January 2016, Senior Vice President, Human Resources and Corporate Affairs, from December 2004 to February 2015, Senior Vice President, Human Resources from June 2004 to December 2004, and Vice President, Human Resources from March 2004 to May 2004 for The Clorox Company, a manufacturer and marketer of consumer products. From March 2003 to January 2004, she was Vice President, Human Resources and Executive Leadership for The Hewlett-Packard Company, a technology company. Prior to her role at The Hewlett-Packard Company, Ms. Kane spent 22 years in human resources in the financial services industry.

As a former senior executive with experience in human resources, including compensation matters, as well as experience in several of our key geographic markets, Ms. Kane has a unique and insightful perspective to offer the Board. As Chair of our Governance, Compensation and Nominating Committee, she is able to use her experience and perspectives to offer best practices advice.

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Richard G. Lindner

 

Director since 2008
GRAPHIC   Mr. Lindner, 66, is retired. He served as Senior Executive Vice President and Chief Financial Officer of AT&T, Inc. (formerly SBC Communications, Inc.), a telecommunications company, from May 2004 to June 2011. From October 2000 to May 2004, he was the Chief Financial Officer of Cingular Wireless LLC (now AT&T Mobility LLC), a wireless telecommunications company. From October 2002 to March 2007, he served as a director of Sabre Holdings.

As the former Chief Financial Officer of AT&T, Inc., Mr. Lindner has demonstrated leadership capability and extensive knowledge of complex financial and operational issues facing large organizations. In addition, Mr. Lindner is able to draw upon, among other things, his knowledge of several of our key geographic markets that he has gained through experience in the telecommunications industry.

 

 

Barbara R. Smith

 

Director since 2017
GRAPHIC   Ms. Smith, 61, has been President, Chief Executive Officer and a director of Commercial Metals Company, a manufacturer, recycler and marketer of steel and metal products, since September 2017, and Chairman since January 2018. She joined Commercial Metals Company as Senior Vice President and Chief Financial Officer in 2011 and served in that capacity until she was promoted to Chief Operating Officer in 2016 and President and Chief Operating Officer in January 2017. Previously, she served as Vice President and Chief Financial Officer of Gerdau Ameristeel from 2007-2011 and as Treasurer from 2006-2007. She also served as Senior Vice President and Chief Financial Officer of FARO Technologies, Inc. from February 2005 to July 2006. During the more than 20 prior years, Ms. Smith held positions of increasing financial leadership with Alcoa Inc. She was a director of Minerals Technologies Inc. from 2011 to July 2017, where she served as Chair of the Audit Committee and a member of the Compensation Committee.

Ms. Smith brings to the Board a number of key skills, including relevant business leadership and management experience, expertise in geographic markets in which Comerica has a presence, including our headquarters market, and significant financial expertise garnered through the chief financial officer and treasury roles she has held during her professional career. Additionally, her strong leadership experience is instrumental in her service as Facilitating Director.

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Robert S. Taubman

 

Director since 2000(1)
GRAPHIC   Mr. Taubman, 67, is Chairman, President and CEO of The Taubman Realty Group LLC, which owns, develops and operates regional shopping centers nationally. He was Chairman of Taubman Centers, Inc. from December 2001 to December 2020 and was President and Chief Executive Officer of Taubman Centers, Inc. from August 1992 to December 2020. He has been Chairman of The Taubman Company LLC, a shopping center management company engaged in leasing, management and construction supervision, since December 2001 and has been President and Chief Executive Officer of The Taubman Company LLC since September 1990. He was a director of Sotheby's Holdings, Inc. from 2000 until his retirement in May 2016, and served as a director of Taubman Centers, Inc. from 1992 until December 2020.

As an executive involved in real estate development and operations, Mr. Taubman has demonstrated leadership capability and brings key experience in the real estate sector. He also brings insight through experience in many of Comerica's geographic markets.

 

 

Reginald M. Turner, Jr.

 

Director since 2005
GRAPHIC   Mr. Turner, 61, has been an attorney with Clark Hill, a law firm, since April 2000 and has served on the firm's Executive Committee since January 2016. He has been a director of Masco Corporation since March 1, 2015. Mr. Turner is active in public service and with civic and charitable organizations, serving in leadership positions with the American Bar Association, the Detroit Public Safety Foundation, the Detroit Institute of Arts, the Community Foundation for Southeast Michigan and the Hudson-Webber Foundation.

As a lawyer, Mr. Turner has a unique legal and risk management perspective to offer the Board. He also has extensive involvement and experience in community affairs.

 

 

Nina G. Vaca(2)

 

Director since 2008
GRAPHIC   Ms. Vaca, 49, has been Chairman and Chief Executive Officer of Pinnacle Technical Resources, Inc., a global workforce solutions provider offering staffing, managed services, payrolling and independent contractor compliance and a proprietary talent platform, since she founded the company in October 1996. She also has been Chairman and Chief Executive Officer of Vaca Industries Inc., a privately-held management company, since April 1999. She has been a director of Cinemark Holdings, Inc. since November 2014 and also served as a director of Kohl's Corporation from March 2010 to May 2019. In 2014, the Obama Administration appointed Ms. Vaca as a Presidential Ambassador for Global Entrepreneurship. Ms. Vaca is also a Henry Crown Fellow at the Aspen Institute and a lifetime member of the Council on Foreign Relations.

As a chief executive officer with experience in talent solutions, managed services and information technology, as well as successful entrepreneurial endeavors in the U.S. and abroad, Ms. Vaca offers a unique and insightful perspective to the Board.

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Michael G. Van de Ven

 

Director since 2016
GRAPHIC   Mr. Van de Ven, 59, has been Chief Operating Officer of Southwest Airlines Co., a passenger airline, since May 2008. Previously, he served as Executive Vice President from May 2008 to January 2017, Chief of Operations from September 2006 to May 2008, Executive Vice President Aircraft Operations from November 2005 through August 2006, and Senior Vice President Planning from August 2004 to November 2005. He joined Southwest in 1993 and held various positions and responsibilities for the airline including financial planning and analysis, fleet planning, aircraft operations and schedule planning. He also served as senior audit manager for Ernst & Young LLP for 9 years ending in 1993 and is a licensed CPA.

Mr. Van de Ven brings to the Board a number of key skills, including relevant business management experience, a strong background in risk management, expertise in geographic markets in which Comerica has a presence, particularly our headquarters market, and a deep understanding of financial planning and accounting, among others.

Footnotes:

(1)
Mr. Taubman became a director of Manufacturer's Bank, N.A. or its predecessors in 1987. He became a director of Comerica Bank in 1992 when it merged with Manufacturer's Bank, N.A. He resigned as a director of Comerica Bank in 2000, when he became a director of Comerica.

(2)
Professional name of Ximena G. Humrichouse.


BOARD AND COMMITTEE GOVERNANCE

Annual Elections.    Comerica's directors are elected each year by the shareholders at the Annual Meeting, to hold office until the next Annual Meeting and until their successors are elected and qualified.

Majority Voting Standard.    In an election of directors where the number of nominees does not exceed the number of directors to be elected, each director must receive the vote of the majority of the votes cast with respect to that director. If a director does not receive the vote of the majority of the votes cast and no successor has been elected at such meeting, the director will promptly tender his or her resignation to the Board.

Annual Self-Evaluation.    The Board conducts an annual self-evaluation to determine whether it and its committees are functioning effectively. The Governance, Compensation and Nominating Committee reviews the self-evaluation process. A report is made to the Board on the assessment of the performance of the Board and its committees.

Overboarding Limit.    To ensure that our directors have sufficient time to devote to Comerica and its shareholders, our directors may not serve on more than three public company boards in addition to the Comerica Board, and members of Comerica's Audit Committee may not serve on more than two other public company audit committees.

Nominee Selection Process.    In identifying candidates for nomination as directors, the Governance, Compensation and Nominating Committee considers the individual's specific qualities and skills. Criteria for assessing nominees include a potential nominee's ability to represent the interests of Comerica's four core constituencies: its shareholders, its customers, the communities it serves and its employees. Minimum qualifications for a director nominee are experience in those areas that the Board determines are necessary and appropriate to meet the needs of Comerica, including leadership positions in public companies, small or middle market businesses, or not-for-profit, professional/regulatory or educational organizations.

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For those proposed director nominees who meet the minimum qualifications, the Governance, Compensation and Nominating Committee then assesses the proposed nominee's specific qualifications, evaluates his or her independence, and considers other factors, including skills, geographic location, considerations of diversity, standards of integrity, memberships on other boards (with a special focus on director interlocks), and ability and willingness to commit to serving on the Board for an extended period of time and to dedicate adequate time and attention to the affairs of Comerica as necessary to properly discharge his or her duties. Considerations of diversity can include seeking nominees with a broad diversity of experience, professions, skills, geographic representation and/or backgrounds. The Governance, Compensation and Nominating Committee does not assign specific weights to particular criteria, and no particular criterion is necessarily applicable to all prospective nominees. Nominees are not discriminated against on the basis of race, religion, national origin, sexual orientation, disability or any other basis proscribed by law.

In addition, Article III, Section 12 of the bylaws requires a nominee for election or re-election as a director of Comerica to complete and deliver to the Corporate Secretary a written questionnaire prepared by Comerica with respect to the background and qualification of the person and, if applicable, the background of any other person or entity on whose behalf the nomination is being made. All of the director nominees completed the required questionnaire.

A nominee also must make certain representations and agree that he or she (A) will abide by the requirements of Article III, Section 14 of the bylaws (concerning, among other things, the required tendering of a resignation by a director who does not receive a majority of votes cast in an uncontested election), (B) is not and will not become a party to (1) any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how, if elected as a director of Comerica, he or she will act or vote on any issue or question (a "Voting Commitment") that has not been disclosed to Comerica or (2) any Voting Commitment that could limit or interfere with his or her ability to comply, if elected as a director of Comerica, with his or her fiduciary duties under applicable law, (C) is not and will not become a party to any agreement, arrangement or understanding with any person or entity other than Comerica with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a director that has not been disclosed, and (D) in his or her individual capacity and on behalf of any person or entity on whose behalf the nomination is being made, would be in compliance, if elected as a director of Comerica, and would comply with all applicable publicly disclosed corporate governance, conflict of interest, confidentiality and stock ownership and trading policies and guidelines of Comerica. All of the director nominees made the foregoing representations and agreements.

The Governance, Compensation and Nominating Committee does not have a separate policy for consideration of any director candidates recommended by shareholders. Instead, the Governance, Compensation and Nominating Committee considers any candidate meeting the requirements for nomination by a shareholder set forth in Comerica's bylaws (as well as applicable laws and regulations) in the same manner as any other director candidate. The Governance, Compensation and Nominating Committee believes that requiring shareholder recommendations for director candidates to comply with the requirements for nominations in accordance with Comerica's bylaws ensures that the Governance, Compensation and Nominating Committee receives at least the minimum information necessary for it to begin an appropriate evaluation of any such director nominee.

Board Refreshment.    The Governance, Compensation and Nominating Committee maintains an ongoing board refreshment process by identifying additional skills and expertise needed on the Board, and periodically uses a third-party search firm for the purpose and function of identifying potential director nominees. Due to the complexities of banking regulations, the Governance, Compensation and Nominating Committee consciously balances more tenured directors with strong regulatory experience and less tenured directors that can provide a fresh perspective. During 2020,

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this mix helped Comerica's Board oversee the Company's response to the COVID-19 pandemic and participation in the PPP program.

Shareholder Engagement.    Comerica is committed to acting in the best interests of its shareholders, and as part of this commitment, members of management actively engage with the Company's shareholders in order to fully understand their viewpoints concerning the Company, to garner feedback on areas for improvement, and to help our shareholders better understand our performance and long-term strategic plan.

Proxy Access.    In November 2020, Comerica amended its bylaws to adopt proxy access procedures, which permit a shareholder, or a group of up to 20 shareholders, who has continuously owned at least 3% of outstanding common stock of Comerica, par value $5.00 per share ("Comerica Common Stock") for at least 3 years to nominate and include in Comerica's annual meeting proxy materials director nominees constituting up to the greater of two individuals or twenty percent of the Board. Such nominations are subject to disclosure, eligibility and procedural requirements as set forth in the bylaws.

Code of Ethics.    Comerica has a Code of Business Conduct and Ethics for Employees, which applies to employees and agents of Comerica and its subsidiaries and affiliates, as well as a Code of Business Conduct and Ethics for Members of the Board of Directors. Comerica also has a Senior Financial Officer Code of Ethics that applies to the Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer and Treasurer. The Code of Business Conduct and Ethics for Employees, the Code of Business Conduct and Ethics for Members of the Board of Directors and the Senior Financial Officer Code of Ethics are available on Comerica's website at www.comerica.com. Copies of such codes can also be obtained in print by making a written request to the Corporate Secretary.

Board Oversight.    Comerica's Board has oversight of important matters, including COVID-19 response, cybersecurity and ESG issues.

In 2020, the Board was highly engaged working through issues and discussion plans in both formal and informal meetings. The Board and its committees held four additional meetings related to COVID-19. Also, senior members of management met more frequently with Board members to give additional updates and continued these communications throughout the course of the year. The CEO was able to provide fulsome reports to the Board based on his leadership of the BCET, which met every other day at the start of the pandemic, and at least bi-weekly the rest of the year.

The Enterprise Risk Committee of the Board oversees all of Comerica's risk management, including cybersecurity, environmental and social risks. Comerica's Chief Enterprise Technology & Operations Services Officer briefs the Enterprise Risk Committee on technology risks on a quarterly basis, at each regularly scheduled meeting. Comerica's Director of Corporate Sustainability provides annual updates to the Board's Enterprise Risk Committee along with our Annual Sustainability Action Plan, which reviews our value creation approach to corporate sustainability, including areas of progress, challenges and future initiatives. The process for raising sustainability issues starts with the corporate sustainability office, which is charged with identifying emerging issues and bringing those to the attention of appropriate business unit(s). This is done with the support of the Sustainability Council, which meets quarterly and includes senior managers from across the organization as well as the CFO, who serves as the executive sponsor of Comerica's sustainability program. The CFO can bring urgent issues directly to the attention of senior leadership and can also escalate to the Board of Directors more frequently than annually if needed.

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COMMITTEES AND MEETINGS OF DIRECTORS

The Board has several committees, as described below. The names of the directors currently serving on the committees and the committee chairs, where applicable, are also set forth in the chart. The current terms of the various standing committee members expire in April 2021.

AUDIT COMMITTEE

    Committee Chair: Roger A. Cregg

Other Committee Members:
Michael E. Collins
T. Kevin DeNicola
Richard G. Lindner
Reginald M. Turner, Jr.

Meetings held in 2020: 13

All members are independent and financially literate in accordance with New York Stock Exchange ("NYSE") requirements

The Board has determined that Mr. Cregg, Mr. DeNicola and Mr. Lindner are audit committee financial experts in accordance with SEC rules

None of the members of the Audit Committee serve on the audit committees of more than three public companies

Governed by a Board-approved Charter

     
This committee is responsible, among other things, for providing assistance to the Board by overseeing: (i) the integrity of Comerica's financial statements; (ii) Comerica's compliance with legal and regulatory requirements; (iii) the independent registered public accounting firm's qualifications and independence; and (iv) the performance of Comerica's internal audit function and independent registered public accounting firm, including with respect to both bank and non-bank subsidiaries; and by preparing the "Audit Committee Report" found in this proxy statement.

A current copy of the charter of the Audit Committee is available to security holders on Comerica's website at www.comerica.com or may be obtained in print by making a written request to the Corporate Secretary.

   

ENTERPRISE RISK COMMITTEE

    Committee Chair:    Michael E. Collins

Other Committee Members:
Roger A. Cregg
T. Kevin DeNicola
Robert S. Taubman
Reginald M. Turner, Jr.
Nina G. Vaca

Meetings held in 2020:    4

All members are independent

Mr. Collins has been designated the Board's risk expert

Governed by a Board-approved Charter

     
This committee has responsibility for the risk-management policies of Comerica's operations and oversight of the operation of Comerica's risk-management framework.

A current copy of the charter of the Enterprise Risk Committee is available to security holders on Comerica's website at www.comerica.com or may be obtained in print by making a written request to the Corporate Secretary.

   

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GOVERNANCE, COMPENSATION AND NOMINATING COMMITTEE

    Committee Chair:    Jacqueline P. Kane

Other Committee Members:
Richard G. Lindner
Barbara R. Smith
Nina G. Vaca
Michael G. Van de Ven

Meetings held in 2020:    8

All members are independent

Governed by a Board-approved Charter

     
This committee, among other things, establishes Comerica's executive compensation policies and programs, oversees administration of Comerica's 401(k), stock, incentive, pension and deferral plans, monitors compliance with laws and regulations applicable to the documentation and administration of Comerica's employee benefit plans, monitors the effectiveness of the Board, oversees corporate governance issues and periodically reviews succession plans for key officers of Comerica and reports to the Board on succession planning. Among its various other duties, this committee reviews and recommends to the full Board candidates to become Board members, develops and administers performance criteria for members of the Board, and oversees matters relating to the size of the Board, its committee structure and assignments, and the conduct and frequency of Board meetings. The Governance, Compensation and Nominating Committee also oversees the discussion, review and evaluation of our compensation plans as described below. This committee may delegate its authority to a subcommittee of its members and may allow limited delegations to management. Authority has been delegated to the Off-Cycle Equity Grant Subcommittee (which is composed of two independent directors) to make grants of stock awards, not to exceed 15,000 shares to any one individual per calendar year.

A current copy of the charter of the Governance, Compensation and Nominating Committee is available to security holders on Comerica's website at www.comerica.com or may be obtained in print by making a written request to the Corporate Secretary.

   

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QUALIFIED LEGAL COMPLIANCE COMMITTEE

    Committee Chair:    T. Kevin DeNicola

Other Committee Members:
Michael E. Collins
Roger A. Cregg
Richard G. Lindner
Reginald M. Turner, Jr.

Meetings held in 2020:    1

All members are independent

Governed by a Board-approved Charter

     
This committee assists the Board in promoting the best interests of Comerica by reviewing evidence of potential material violations of securities law or breaches of fiduciary duties or similar violations by Comerica or any officer, director, employee, or agent thereof, providing recommendations to address any such violations, and monitoring Comerica's remedial efforts with respect to any such violations.

A current copy of the charter of the Qualified Legal Compliance Committee is available to security holders on Comerica's website at www.comerica.com or may be obtained in print by making a written request to the Corporate Secretary.

   

Other Committees.    The Special Preferred Stock Committee was formed in 2020 to carry out the Board's authority with respect to the issuance of preferred securities and to set the terms of such preferred securities. The Special Preferred Stock Committee met one time in 2020.

Board and Committee Meetings.    There were six regular and two special meetings of the Board and 28 meetings of the various committees and subcommittees of the Board during 2020. All director nominees and all incumbent directors attended at least seventy-five percent (75%) of the aggregate number of meetings held by the Board and all the committees of the Board on which the respective directors served.

Comerica expects all of its directors to attend the Annual Meeting except in cases of illness, emergency or other reasonable grounds for non-attendance. All of the eleven Board members serving at the time of the 2020 Annual Meeting attended the 2020 Annual Meeting.


NON-MANAGEMENT DIRECTORS AND COMMUNICATION WITH THE BOARD

The non-management directors meet at regularly scheduled executive sessions without management. Every year, the non-management directors elect a Facilitating Director, for a one-year term, to lead such sessions. Currently, Barbara R. Smith is the Facilitating Director at such sessions. Interested parties may communicate directly with Ms. Smith or with the non-management directors as a group by sending written correspondence, delivered via United States mail or courier service, to: Secretary of the Board, Comerica Incorporated, Comerica Bank Tower, 1717 Main Street, MC 6404, Dallas, Texas 75201, Attn: Non-Management Directors. Alternatively, shareholders may send communications to the full Board by sending written correspondence, delivered via United States mail or courier service, to: Secretary of the Board, Comerica Incorporated, Comerica Bank Tower, 1717 Main Street, MC 6404, Dallas, Texas 75201, Attn: Full Board of Directors. The Board of Directors' current practice is that the Secretary will relay all communications received to the Facilitating Director, in the case of communications to non-management directors, and to the Chairman of the Board, in the case of communications to the full Board.

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BOARD LEADERSHIP STRUCTURE

Our Chief Executive Officer also serves as the Chairman of the Board. Mr. Farmer has provided strong leadership to the Board and management, instilling a clear focus on the Company's strategy and business plans. The Board has chosen this structure because it believes the Chief Executive Officer serves as a bridge between management and the Board, ensuring that both groups act with a common purpose. Although the Board believes that it is more effective to have one person serve as the Company's Chairman and Chief Executive, it also believes that it is simultaneously important to have a robust governance structure to ensure a strong and independent Board. All directors, with the exception of the Chairman, are independent as defined under NYSE rules, and the Audit Committee, the Enterprise Risk Committee, the Governance, Compensation and Nominating Committee and the Qualified Legal Compliance Committee are comprised entirely of independent directors. The Board also has an independent Facilitating Director (Ms. Smith) who leads the non-management directors in regularly scheduled executive sessions. As Facilitating Director, Ms. Smith's duties include, but are not limited to, the following:

Presiding at all other meetings of the Board at which the Chairman is not present;

Serving as liaison between the Chairman and the independent directors;

Approving information sent to the Board;

Approving meeting agendas for the Board;

Approving meeting schedules for the Board to assure that there is sufficient time for discussion of all agenda items;

Having the authority to call meetings of the independent directors; and

If requested by major shareholders, ensuring that she is available for consultation and direct communication.

The Facilitating Director position is elected annually by the non-management directors. The Board believes that the Facilitating Director further strengthens the Board's independence and autonomous oversight of our business as well as Board communication and effectiveness. The executive sessions over which she presides allow non-management directors to discuss issues facing the Company, including matters concerning management, without any members of management present. The role of the Facilitating Director provides the necessary leadership for such discussions and serves as a bridge between the independent directors and the Company's management team.


ROLE IN RISK OVERSIGHT

Comerica has historically had and continues to pursue a strong risk management culture. We recognize that nearly every action taken as a financial institution requires some degree of risk. Our objective is not to eliminate risk but to give consideration to ensure we take the appropriate risks. Risk management is one of the interlinking pillars of Comerica's corporate strategy which reinforces its critical role within our organization. In choosing when and how to take risks, we evaluate our capacity for risk and seek to protect our brand and reputation, our financial flexibility, the value of our assets and the strategic potential of our Company. Each year, our Board approves a statement of our Company's risk appetite, which is used internally to help our Board and management understand our Company's tolerance for risk in each of the major risk categories and allow for the adaption of those tolerances to align with a changing economic environment.

Governance and oversight of risk management activities are shared by management and our Board as follows:

Enterprise Risk Committee.      The Enterprise Risk Committee, as discussed on page 17, oversees policies, procedures and practices relating to credit risk, market risk, liquidity risk, technology risk (including cybersecurity risk), operational risk, strategic risk, compliance risk (including compliance with bank regulatory obligations), and other general risks to

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    Comerica and the actions undertaken or to be undertaken to identify, measure, monitor and control such risks. To help discharge its duties, the Enterprise Risk Committee has established the Enterprise-Wide Risk Management Committee.

Enterprise-Wide Risk Management Committee.      The Enterprise-Wide Risk Management Committee is principally composed of senior officers and executives representing the different risk areas and business units and is chaired by the Chief Risk Officer. It meets at least quarterly and periodically submits a comprehensive risk report to the Enterprise Risk Committee providing its view of Comerica's risk position.

Chief Risk Officer.       Comerica's Chief Risk Officer, Jay K. Oberg, reports directly to Comerica's Chairman and Chief Executive Officer and to the Enterprise Risk Committee. He is responsible for overseeing risk on an enterprise-wide basis. This includes ongoing compliance with policies and procedures relating to risk management governance, risk management procedures, and risk control infrastructure, and monitoring compliance with such policies and procedures, among other responsibilities.

Board Risk Expert.       Michael E. Collins, the Chair of the Enterprise Risk Committee, has been designated the Board's risk expert. As a former banking and finance executive with nearly 40 years of regulatory experience, including service with the Federal Reserve Banks of Cleveland and Philadelphia, Mr. Collins has experience identifying, assessing, and managing risk exposures of large, complex financial firms.

Audit Committee.      In addition to providing oversight of our financial statements and compliance with legal and regulatory requirements, the Audit Committee plays a key role in risk management through the validation and oversight of our internal controls, policies and procedures to ensure their effectiveness.

General Auditor.       Comerica's General Auditor, Christine M. Moore, reports directly to Comerica's Chairman and Chief Executive Officer and to the Audit Committee. She is responsible for evaluating and opining on the effectiveness of Comerica's internal controls, policies and procedures.

Governance, Compensation and Nominating Committee.      The Governance, Compensation and Nominating Committee provides information on the risks associated with the Company's compensation programs. A more detailed discussion of the Governance, Compensation and Nominating Committee's evaluation of risk and compensation programs can be found on pages 60 to 62.

Each of the Enterprise Risk Committee, the Audit Committee and the Governance, Compensation and Nominating Committee reports regularly to the full Board. The Board believes that Comerica has the appropriate leadership to help ensure effective risk oversight. This risk leadership includes our Chief Risk Officer, our Chairman and Chief Executive Officer, our independent Facilitating Director, the Board, various committees of the Board, and various management committees.


TRANSACTIONS WITH RELATED PERSONS

Review of Transactions with Related Persons

Comerica has adopted a Regulation O Policy and Procedure document to implement the requirements of Regulation O of the Federal Reserve Board, which restricts the extension of credit to directors and executive officers and their family members, as well as 10% or greater shareholders, and the related interests of any of the foregoing. Under the policy and procedure, extensions of credit that exceed regulatory thresholds must be approved by the board of the appropriate subsidiary bank.

In addition to loan transactions that are covered by Regulation O, the Board has also adopted a policy setting forth procedures for the review, approval, and monitoring of other transactions greater

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than $120,000 involving Comerica and related persons (directors, director nominees, executive officers, 5% shareholders and immediate family members or primary business affiliations of such persons). Under the policy, the Governance, Compensation and Nominating Committee is responsible for reviewing and approving or ratifying all transactions involving related persons. Directors may not vote on a related party transaction in which he or she or any member of his or her immediate family is a related person, but the director may participate in some or all of the Committee's discussions. The policy also permits the Chair of the Governance, Compensation and Nominating Committee to review and, if deemed appropriate, approve proposed related-person transactions that arise between Committee meetings, in which case they will be reported to the full Committee at its next meeting.

The policy also contains a list of categories of transactions involving related persons that need not be brought to the Governance, Compensation and Nominating Committee for approval. These include transactions involving brokerage, banking, insurance, investment advisory or asset management services, and other financial services entered into between Comerica and any related person, if the services are provided in the ordinary course of business, on substantially the same terms as those prevailing at the time for comparable services provided to non-affiliates and comply with applicable law, including the Sarbanes-Oxley Act of 2002 and Federal Reserve Board Regulation O. Exempted transactions also include other commercial transactions where Comerica has transacted with either a 5% shareholder or an entity employing a related party, and where payments constitute less than 1% of Comerica's consolidated gross revenues or constitute less than 1% of such entity's consolidated gross revenues.

The Governance, Compensation and Nominating Committee will review the following information when assessing a related party transaction:

the related party's interest in the transaction:

the purpose and timing of the transaction;

the approximate dollar value of the transaction and the approximate dollar value of the related party's interest in the transaction;

whether the terms of the transaction are fair to Comerica and on the same basis as would apply if the transaction did not involve a related party;

Comerica's business reasons for entering into the transaction;

whether the transaction would impair the independence of an outside director or nominee for director;

the acceptability of the transaction to Comerica's regulators;

whether the transaction would present an improper conflict of interest for any director, director, nominee for director or executive officer of the Company; and

any other relevant information regarding the transaction.

The Regulation O Policy and Procedure and the Related Party Transactions Policy are both in writing.

BlackRock, Inc. ("BlackRock") reported that it beneficially owns greater than 5% of Comerica Common Stock. In 2020, Comerica paid $691,043 to BlackRock for cash management software in the ordinary course of business. This transaction did not require approval pursuant to the Related Party Transactions Policy.

FMR LLC ("Fidelity") reported that it beneficially owns greater than 5% of Comerica Common Stock. In 2020, Comerica paid $482,862 to Fidelity Investments for equity and benefits plan administration services in the ordinary course of business. This transaction did not require approval pursuant to the Related Party Transactions Policy.

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Financial Services Transactions with Executive Officers and Directors

Certain of the executive officers and directors of Comerica, their related entities, and members of their immediate families were customers of and had financial transactions in the ordinary course of business (including loans and loan commitments, as well as other financial products and services) with affiliates of Comerica during 2020 that did not require approval under the Related Party Transactions Policy. Comerica made all loans and commitments in the ordinary course of business, on substantially the same terms (including interest rates and collateral) as those prevailing at the time for comparable transactions with other persons not related to or affiliated with Comerica or its subsidiaries, and the transactions did not involve more than the normal risk of collectability or present other unfavorable features. Further, such loans and commitments were all made in accordance with Comerica's Regulation O Policy and Procedure. Comerica also offers employee discounts to its employees, including executive officers, on certain financial services not involving an extension of credit.


DIRECTOR INDEPENDENCE

The Board of Directors has determined that all non-management directors, currently constituting 91% of the full Board of Directors of Comerica, are independent within the meaning of the listing standards of the NYSE. In making such determination, the Board of Directors has affirmatively determined that the following current directors meet the categorical standards of independence described below and have no material relationship with Comerica (either directly or as a partner, shareholder or officer of an organization that has a relationship with Comerica) other than as a director: Michael E. Collins, Roger A. Cregg, T. Kevin DeNicola, Jacqueline P. Kane, Richard G. Lindner, Barbara R. Smith, Robert S. Taubman, Reginald M. Turner, Jr., Nina G. Vaca and Michael G. Van de Ven. Additionally, all of the Audit Committee members satisfy the independence standards under Exchange Act Rule 10A-3 and NYSE rules, and all of the Governance, Compensation and Nominating Committee members satisfy the independence standards under NYSE rules. The Board of Directors further determined that Curtis C. Farmer is not independent because he is an employee of Comerica.

Categorical Standards

Pursuant to Comerica's Corporate Governance Guidelines, in no event will a director be considered "independent" if, currently or (for items (i) through (v)) within the preceding three (3) years:

    (i)
    the director is or was employed by Comerica;

    (ii)
    an immediate family member of the director is or was employed by Comerica as an executive officer;

    (iii)
    the director, or any of his or her immediate family, receives or received more than $120,000 per year in direct compensation from Comerica, other than director and committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service);

    (iv)
    the director or any immediate family member of the director, is or has been a partner or employee of a firm that is or was during the preceding three years Comerica's internal or external auditor and personally works or worked on Comerica's audit within that time;

    (v)
    the director or an immediate family member of the director is or was employed as an executive officer of another company if any of Comerica's present executives at the same time serves or served on that company's compensation committee;

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    (vi)
    the director is a current partner or employee of a firm that is Comerica's internal or external auditor, or any immediate family member of the director is a current partner of such firm; or

    (vii)
    the director is a current executive officer or an employee, or any of the Director's immediate family is a current executive officer, of another company (other than a tax exempt charitable organization) that makes payments to or receives payments from Comerica for property or services in an amount which, in any of the last three fiscal years, exceeds the greater of $1 million or 2% of such other company's consolidated gross revenues.

Subject to the foregoing, the Corporate Governance Guidelines also state that the following relationships are considered immaterial:

    (i)
    ordinary lending relationships with the director or any of the director's related interests, as defined in the Federal Reserve Board's Regulation O, if, (A) in each such case, the extension of credit was made in the ordinary course of business and is on substantially the same terms as those with non-affiliated persons; (B) in each such case, the extension of credit has been made in compliance with applicable law, including the Federal Reserve Board's Regulation O, if applicable; (C) in each such case, no material event of default has occurred under the extension of credit; (D) the aggregate amount of the extensions of credit to the Director and all of his or her related interests does not exceed 1% of Comerica's consolidated assets; and (E) in each such case, the borrower represents to Comerica that, if the borrower is a company or other entity, that a termination of the extension of credit would not reasonably be expected to have a material and adverse effect on the financial condition, results of operations or business of the borrower; or, if the borrower is an individual, that a termination of the extension of credit would not reasonably be expected to have a material and adverse effect on the financial condition of the borrower.

    (ii)
    ordinary lending relationships entered into in the ordinary course of business between Comerica and any entity, which is not a related interest of a director, that employs a director or any member of a director's family;

    (iii)
    other commercial transactions (not including extensions of credit) entered into in the ordinary course of business between Comerica and any entity that employs (a) a director, (b) a director's spouse or (c) any child of a director who is residing in the director's home, if the annual sales to, or purchases from, such entity constitute less than 1% of Comerica's consolidated gross revenues or constitute less than 1% of such entity's consolidated gross revenues;

    (iv)
    a director of Comerica serving as a board or trustee member, but not as an executive officer, of a not-for-profit organization that received discretionary charitable contributions in any given year from Comerica or the Comerica Charitable Foundation; and

    (v)
    a director of Comerica serving as an executive officer of a not-for-profit organization, if the discretionary charitable contributions made to the organization in any given year by Comerica and the Comerica Charitable Foundation, in the aggregate (exclusive of any employee contributions), are less than 5% (or $1,000,000, whichever is greater) of that organization's consolidated gross revenues.

A current copy of the Corporate Governance Guidelines is available to security holders on Comerica's website at www.comerica.com or may be obtained in print by making a written request to the Corporate Secretary.

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Director Transactions, Relationships or Arrangements by Category or Type

In connection with making its director independence determinations, the Board specifically considered the following relationships and transactions, all of which were deemed immaterial:

    Loans, extensions of credits and related commitments to certain directors and/or their respective immediate family members, affiliated entities and/or charities with which they are affiliated (Mr. Taubman, Mr. Turner, Ms. Vaca, Mr. Van de Ven) have been made by Comerica Bank in the ordinary course of business, on substantially the same terms (including interest rates and collateral) as those prevailing at the time for comparable transactions with other persons not related to or affiliated with Comerica or its subsidiaries, and the transactions did not involve more than the normal risk of collectability or present other unfavorable features.

    Banking and financial services (other than extensions of credit) provided by Comerica in the ordinary course of business to certain directors and/or their respective immediate family members, affiliated entities and/or charities with which they are affiliated, on terms and conditions not more favorable than those available to other similarly situated customers.

    Charitable contributions or other payments in the ordinary course of business by Comerica and/or the Comerica Charitable Foundation to charitable organizations with which a director or immediate family member is affiliated.

    Other commercial transactions (not including extensions of credit) entered into in the ordinary course of business between Comerica and entities where a director of Comerica serves in an advisory capacity or the director's spouse is employed as a non-executive officer, where the annual purchases from such entity constitute less than 1% of Comerica's consolidated gross revenues.

    Situations in which Comerica serves in a fiduciary capacity for a client needing legal services where it selects, on behalf of its client, a law firm to represent the client. If applicable, the firm with a related pre-existing relationship with the client is typically selected by Comerica (e.g., the firm that drafted a will in which Comerica is named fiduciary of the associated estate). From time to time, this has resulted in the engagement, by the client, of the firm with which Mr. Turner is a member. Mr. Turner is not directly involved in providing these legal services, and any associated fees are paid to the firm from the client's funds, not from funds belonging to Comerica.

    Situations in which other members of Mr. Turner's law firm represent clients in legal matters indirectly or potentially directly adverse to Comerica, such as loans and other commercial transactions (in which his firm represents a borrower), trust administration matters (where Clark Hill might represent a trust or beneficiary and/or act as co-trustee for a trust for which Comerica serves as trustee), real property claims (in which Clark Hill may represent an entity seeking an easement or condemnation with respect to real property in which Comerica holds the mortgage) and bankruptcy litigation (in which his firm represents creditors other than Comerica), and thus receives fees from such parties it represents, but not from Comerica.


COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

During 2020, Ms. Kane, Mr. Lindner, Ms. Smith, Ms. Vaca and Mr. Van de Ven served as members of the Governance, Compensation and Nominating Committee. No such individual is, or was during 2020, an officer or employee of Comerica or any of its subsidiaries, nor was any such member formerly an officer of Comerica or any of its subsidiaries. No executive officer of Comerica served as a director or member of the compensation committee of another entity, one of whose directors or executive officers served as a member of our Board or a member of the Governance, Compensation and Nominating Committee.

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COMPENSATION OF DIRECTORS

The Governance, Compensation and Nominating Committee determines the form and amount of non-employee director compensation and makes a recommendation to the Board of Directors for final approval. In determining director compensation, the Governance, Compensation and Nominating Committee considers the recommendations of Mr. Farmer, as well as information provided by the compensation consultant retained by the Governance, Compensation and Nominating Committee to provide market analyses and consulting services on director compensation matters. When setting director compensation the Governance, Compensation and Nominating Committee targets the median of the peer group. See "Role of the Independent Compensation Consultant" on pages 40 to 41 for more information about the compensation consultant retained by the Governance, Compensation and Nominating Committee.

    Director Compensation Highlights

Comerica maintains director stock ownership guidelines encouraging non-employee directors to own at least 5,000 shares of Comerica Common Stock (including restricted stock units) within five years of the date the non-employee director was initially appointed or elected to the Board. Of those 5,000 shares, at least 1,000 shares should be beneficially owned within 12 months of the date the non-employee director was initially appointed to the Board.

o
As of December 31, 2020, all non-employee directors have met their respective stock ownership guideline levels, based on period of service.

Restricted stock units granted to non-employee directors generally vest over a period of three years after the grant date and will be settled in Comerica Common Stock on the later of the first anniversary of the director's separation from service on the Board and three years after the grant date.

The table below illustrates the compensation structure for non-employee directors in 2020. Employee directors receive no compensation for their Board service. In addition to the compensation described below, each director is reimbursed for reasonable out-of-pocket expenses incurred for travel and attendance related to meetings of the Board of Directors or its committees.

 
   
   
   
   
   
 
  Elements of 2020 Annual Compensation
   
   
   
   

 

 

Retainer (cash)

      $ 100,000        

 

 

Audit Committee Chair Retainer and Facilitating Director Retainer (cash)

      $ 30,000        

 

 

Enterprise Risk Committee and Governance, Compensation and Nominating Committee Chair Retainer (cash)

      $ 25,000        

 

 

Qualified Legal Compliance Committee Chair Retainer (cash)

      $ 20,000        

 

 

Audit Committee Member Retainer (cash)

      $ 10,000        

 

 

Board or Committee Meeting Fees — per meeting (cash)

        N/A        

 

 

Board-Sponsored Training Seminar Fees — per seminar (cash)

        N/A        

 

 

Briefing Fees — per briefing session (cash)

        N/A        

 

 

Restricted Stock Unit Award(1)

      $ 105,000        

Footnotes:

(1)
On July 28, 2020, each non-employee director received a grant of 2,865 restricted stock units with a fair market value of approximately $105,000 based on the closing stock price on the date of grant, generally vesting over three years following the date of grant.

The following table provides information on the compensation of Comerica's directors who served at any point during the fiscal year ended December 31, 2020.

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2020 Director Compensation Table

 
   
   
   
   
   
   
   
   
   

 

 

Name(1)

  Fees Earned
or Paid in
Cash(2)
($)
  Stock
Awards(3)
($)
  Option
Awards
($)
  Non-Equity
Incentive Plan
Compensation
($)
  Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings(4)(5)
  All Other
Compensation
($)
  Total
($)
   
 

 

 

Michael E. Collins

  135,000       105,002       —       —       —       —       240,002      

 

 

Roger A. Cregg

  110,000       105,002       —       —       —       —       215,002      

 

 

T. Kevin DeNicola

  160,000       105,002       —       —       —       —       265,002      

 

 

Jacqueline P. Kane

  125,000       105,002       —       —       —       —       230,002      

 

 

Richard G. Lindner

  110,000       105,002       —       —       —       —       215,002      

 

 

Barbara R. Smith

  130,000       105,002       —       —       —       —       235,002      

 

 

Robert S. Taubman

  100,000       105,002       —       —       —       —       205,002      

 

 

Reginald M. Turner, Jr.

  110,000       105,002       —       —       —       —       215,002      

 

 

Nina G. Vaca

  100,000       105,002       —       —       —       —       205,002      

 

 

Michael G. Van de Ven

  100,000       105,002       —       —       —       —       205,002      

Footnotes:

(1)
Employee directors do not receive any compensation with respect to their service on the Board; accordingly, Mr. Farmer is not included in this table.

(2)
This column reports the amount of cash compensation earned with respect to the 2020 calendar year for Board and committee service. Comerica pays the applicable retainer and meeting fees to each non-employee director on a quarterly basis.

(3)
This column represents the grant date fair value of restricted stock units granted to non-employee directors in 2020 in accordance with ASC 718 and Item 402 of Regulation S-K. For additional information on the assumptions used in determining fair value for share-based compensation, refer to Notes 1 and 16 in the Consolidated Financial Statements in Comerica's Annual Report on Form 10-K for the year ended December 31, 2020. The aggregate number of restricted stock units, including dividend equivalents that were reinvested in restricted stock units, outstanding as of December 31, 2020 for non-employee directors who served on the Board during 2020, is as follows: Mr. Collins: 7,283 stock units; Mr. Cregg: 29,733 stock units; Mr. DeNicola: 29,733 stock units; Ms. Kane: 25,585 stock units; Mr. Lindner: 28,165 stock units; Ms. Smith: 5,748 stock units; Mr. Taubman: 33,034 stock units; Mr. Turner: 32,522 stock units; Ms. Vaca: 25,585 stock units; and Mr. Van de Ven: 7,283 stock units. The restricted stock units can be accelerated due to death or disability.

(4)
None of the earnings under the deferred compensation programs are above-market or preferential, so no such amounts are shown in this column. For more details see the "Deferred Compensation Plans" section below. Any 2020 contributions to non-employee director deferred compensation programs are included in the "Fees Earned or Paid in Cash" column, in accordance with SEC rules. This column does not include distributions under non-employee director deferred compensation programs in 2020 since they were reported in fees earned in the previous years.

(5)
Because benefit accruals froze for both of Comerica's director retirement plans on May 15, 1998, there was no change in the participants' pension values in 2020. The only non-employee director who served in 2020 and who was covered by the retirement plans is Mr. Taubman.

Director Compensation Plans

 
   
   
   
   
    Deferred Compensation Plans       Non-employee directors can defer some or all of their cash compensation into either a stock-settled plan — where deferred compensation earns a return based on the return of Comerica Common Stock during the deferral period — or a cash-settled investment fund plan — where deferred compensation earns a return based on broad-based investment funds elected by the director.    
    Equity Incentive Plans       A total of 350,000 shares of Comerica Common Stock can be issued as stock options, stock appreciation rights, restricted stock, restricted stock units and other equity-based awards under the 2015 Incentive Plan for Non-Employee Directors. Please see "Proposal IV- Approval of the Amended and Restated Comerica Incorporated 2018 Long-Term Incentive Plan" for proposed changes to this plan.    
    Retirement Plans       No retirement plan is currently offered to non-employee directors.    

 

 

 

 

 

 

Mr. Taubman has vested benefits under legacy plans that were terminated in 1998. He will receive a monthly benefit of $1,666.67 for 120 months, payable when he retires from the Board, except in the case of illness or disability. There is no survivor benefit.

 

 

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PROPOSAL II SUBMITTED FOR YOUR VOTE
RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors recommends that you vote "FOR"
the proposal set forth below.

The Audit Committee of Comerica has selected Ernst & Young LLP ("Ernst & Young"), our independent registered public accounting firm, to audit our financial statements for the fiscal year ending December 31, 2021, and recommends that the shareholders vote for ratification of such appointment.

Ernst & Young has served as our independent registered public accounting firm since 1992. The Audit Committee has carefully considered the selection of Ernst & Young as Comerica's independent registered public accounting firm, and has also considered whether there should be regular rotation of the independent registered public accounting firm. The selection is based on an evaluation of Ernst & Young's qualifications, experience, quality control processes and results, independence, and past performance. The selection also considers a review of the estimated fees, scope of services, and staffing approach, including coordination of the external auditor's efforts with our internal audit staff. In conjunction with the mandated rotation of the independent registered public accounting firm's lead engagement partner, the Audit Committee and its Chairman are involved in the process for selecting Ernst & Young's lead engagement partner. This rotation process last occurred in 2017 and will occur again in 2022, with a new individual assuming the role of lead engagement partner. The members of the Audit Committee believe that the continued retention of Ernst & Young to serve as Comerica's independent registered public accounting firm is in the best interests of the Company and its shareholders.

As a matter of good corporate governance, the selection of Ernst & Young is being submitted to the shareholders for ratification. In the event of a negative vote on such ratification, the Audit Committee will reconsider its selection. Even if Ernst & Young is ratified as Comerica's independent registered public accounting firm by the shareholders, the Audit Committee, in its discretion, may direct the appointment of a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of Comerica and its shareholders. Representatives of Ernst & Young are expected to be present at the Annual Meeting of Shareholders and will have the opportunity to make a statement if they so desire. The representatives also are expected to be available to respond to appropriate questions from shareholders.

COMERICA'S BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL TO RATIFY THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.

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INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Fees to Independent Registered Public Accounting Firm

The following aggregate fees were billed to Comerica for professional services by Ernst & Young for fiscal years 2020 and 2019.

 
  2020   2019  

Audit Fees

  $   3,124,977            $   3,633,654           

Audit-Related Fees

    283,724              302,369           

Tax Fees

    160,959              126,248           

All Other Fees

    57,722              254,165           

  $   3,627,382            $   4,316,436           

Audit Fees

Audit fees consist of fees billed to Comerica and its subsidiaries by Ernst & Young for the audit of Comerica's annual consolidated financial statements included in our Annual Reports on Form 10-K, the review of financial statements included in Comerica's Quarterly Reports on Form 10-Q, and services that are normally provided by Ernst & Young in connection with statutory and regulatory filings or engagements.

Audit-Related Fees

Audit-related fees consist of fees billed to Comerica and its subsidiaries by Ernst & Young for the assurance and related services provided by Ernst & Young that are reasonably related to the performance of the audit or review of Comerica's financial statements. Audit-related fees consisted mainly of the audits of Comerica's benefit plans and the internal control (SSAE 18 Report) for Comerica's trust department. The Audit Committee considered whether, and determined that, the provision of these services is compatible with maintaining the independence of Ernst & Young.

Tax Fees

Tax fees consist of fees billed to Comerica and its subsidiaries by Ernst & Young for professional services rendered by Ernst & Young for tax compliance, tax advice and tax planning. Tax fees consisted mainly of consultation on tax planning for Comerica and its subsidiaries, IRS examinations and Form 1120. The Audit Committee considered whether, and determined that, the provision of these services is compatible with maintaining the independence of Ernst & Young.

All Other Fees

Ernst & Young billed Comerica for fees for products and services other than those described in the previous three paragraphs. Those products and services consisted of subscription fees for on-line accounting and tax research tools for both 2020 and 2019, for an IBOR (interbank offer rate) project in 2019, which provided management with an evaluation of Comerica's transition process and for a project in 2020 to perform a Federal Deposit Insurance Corporation fee assessment.

Services for Investment Vehicles

In connection with the advisory, management, trustee and similar services that Comerica's affiliates provide to mutual funds, collective funds and common trust funds, Comerica from time to time selects, and in limited circumstances employs, outside accountants to perform audit and other services for the investment vehicles. In such cases, Comerica typically uses a request-for-proposal process that has resulted in the selection of Ernst & Young, among other independent registered public accounting firms. In addition, Ernst & Young has agreements with financial services

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companies pursuant to which it may receive compensation for certain transactions, including transactions in which Comerica may participate from time to time, and Ernst & Young also receives fees from time to time from Comerica's customers when acting on their behalf in connection with lending or other relationships between Comerica's affiliates and their customers. The fees discussed in this paragraph are not included in the totals provided in the above paragraphs because the fees are generally charged to the investment vehicle, customer or other applicable party, except as noted on the "Fees to Independent Registered Public Accounting Firm" schedule above.

Pre-Approval Policy

The Audit Committee has a policy to review, and, if such services are appropriate in the discretion of the Audit Committee, pre-approve (i) all auditing services to be provided by the independent registered public accounting firm (which may entail providing comfort letters in connection with securities underwritings or statutory audits required for insurance companies for purposes of state law) and (ii) all permitted(1) non-audit services (including tax services) to be provided by the independent registered public accounting firm, provided that pre-approval is not required with respect to non-audit services if (a) the aggregate amount of non-audit services provided to Comerica constitutes not more than 5% of the total amount of revenues paid by Comerica to its auditor during the fiscal year in which the non-audit services are provided; (b) such services were not recognized by Comerica at the time of the engagement to be non-audit services; and (c) such services are promptly brought to the attention of the Audit Committee and approved prior to the completion of the audit by the Audit Committee or by one or more members of the Audit Committee who are members of the Board of Directors to whom authority to grant such approvals has been delegated by the Audit Committee. The Audit Committee has authorized its chair to pre-approve such services between Audit Committee meetings. All of the services provided by Ernst & Young for the years ended December 31, 2020 and December 31, 2019 were pre-approved by the Audit Committee under its pre-approval policy.

Footnote:

(1)

 

For purposes of the foregoing, permitted non-audit services shall not, unless otherwise allowed under applicable laws, include: (i) bookkeeping or other services related to the accounting records or financial statements of Comerica; (ii) financial information systems design and implementation; (iii) appraisal or valuation services, fairness opinions, or contribution-in-kind reports; (iv) actuarial services; (v) internal audit outsourcing services; (vi) management functions or human resources; (vii) broker or dealer, investment adviser, or investment banking services; (viii) legal services and expert services unrelated to the audit; and (ix) any other service that the Public Company Accounting Oversight Board determines, by regulation, is impermissible.

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The information contained in the Audit Committee Report is not deemed to be soliciting material or to be filed for purposes of the Securities Exchange Act of 1934, shall not be deemed incorporated by reference by any general statement incorporating the document by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that Comerica specifically incorporates such information by reference, and shall not be otherwise deemed filed under such acts.


AUDIT COMMITTEE REPORT

The Audit Committee oversees Comerica's financial reporting process on behalf of the Board of Directors and is comprised of all outside directors who are independent within the meaning of, and meet the experience requirements of, the applicable rules of the NYSE and the SEC. In addition to its duties regarding oversight of Comerica's financial reporting process, including as it relates to the integrity of the financial statements, the independent registered public accounting firm's qualifications and independence and the performance of the independent registered public accounting firm and Comerica's internal audit function, the Audit Committee also has sole authority to appoint or replace the independent registered public accounting firm and is directly responsible for the compensation and oversight of the work of the independent registered public accounting firm as provided in Rule 10A-3 under the Securities Exchange Act of 1934. The Audit Committee charter, which was adopted and approved by the Board, specifies the scope of the Audit Committee's responsibilities and the manner in which it carries out those responsibilities. Management has primary responsibility for the financial statements, reporting processes and system of internal controls. In fulfilling its oversight responsibilities, among other things, the Audit Committee reviewed and discussed the audited financial statements included in Comerica's Annual Report on Form 10-K with management and the independent registered public accounting firm, including a discussion of the quality, not just the acceptability, of the accounting principles, reasonableness of significant judgments, and clarity of disclosures in the financial statements and a discussion of related controls, procedures, compliance and other matters.

The Audit Committee has discussed with the independent registered public accounting firm the matters required to be discussed by the statement on Auditing Standards No. 1301, Communications with Audit Committees, as adopted by the Public Company Accounting Oversight Board.

The Audit Committee also has received the written disclosures and the letter from the independent accountant required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant's communications with the Audit Committee concerning independence. The Audit Committee discussed with the independent registered public accounting firm their independence from management and Comerica, and reviewed and considered whether the provision of non-audit services and receipt of certain compensation by the independent registered public accounting firm are compatible with maintaining the independent registered public accounting firm's independence. In addition, the Audit Committee reviewed with the independent registered public accounting firm all critical accounting policies and practices to be used.

In reliance on the reviews and discussions referred to above and such other considerations as the Audit Committee determined to be appropriate, the Audit Committee recommended to the Board of Directors, and the Board of Directors approved, that the audited financial statements be included in Comerica's Annual Report on Form 10-K for the year ended December 31, 2020 for filing with the SEC.

The Audit Committee

Roger A. Cregg, Chairman
Michael E. Collins
T. Kevin DeNicola
Richard G. Lindner
Reginald M. Turner, Jr.

February 22, 2021

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EXECUTIVE OFFICERS



GRAPHIC


 


John D. Buchanan, EVP, Chief Legal Officer and Corporate Secretary
Executive Officer since 2015
Mr. Buchanan, 57, has been Executive Vice President (since August 2015) and Chief Legal Officer and Corporate Secretary (since January 2016) of Comerica Incorporated and Comerica Bank; previously, he served as Senior Vice President, General Counsel and Corporate Secretary (February 2012 to August 2015), Federal Reserve Bank of Dallas (regulatory agency).

 


Megan D. Burkhart, EVP, Chief Human Resources Officer
Executive Officer since 2010
Ms. Burkhart, 49, has been Executive Vice President, Chief Human Resources Officer (since January 2010) and Senior Vice President and Director of Compensation (February 2007 to January 2010), Comerica Incorporated and Comerica Bank.


 


GRAPHIC

 

GRAPHIC

 

J. McGregor Carr, EVP, Wealth Management
Executive Officer since March 2020
Mr. Carr, 53, has been Executive Vice President, Wealth Management (since March 2020), Comerica Incorporated and Comerica Bank; previously, he served as Senior Managing Director, Southeast Region (October 2017 to February 2020) and Regional Managing Director (2008 to October 2017), Wells Fargo Bank, N.A.

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Melinda A. Chausse, EVP and Chief Credit Officer
Executive Officer since May 2020
Ms. Chausse, 55, has been Executive Vice President and Chief Credit Officer, Comerica Incorporated and Comerica Bank (since May 2020); she previously served as Executive Vice President (August 2010 to May 2020) and Executive Director of Commercial Underwriting (February 2017 to May 2020) and Executive Director, Business Banking (July 2013 to February 2017), Comerica Bank.

 

GRAPHIC

 

GRAPHIC

 

Megan D. Crespi, EVP and Chief Enterprise Technology & Operations Services Officer
Executive Officer since March 2020
Ms. Crespi, 47, has been Executive Vice President and Chief Enterprise Technology & Operations Services Officer (since March 2020), Comerica Incorporated and Comerica Bank; prior to that, she was Chief Technology Officer (November 2018 to March 2020) and Chief Information Officer — Auto Finance (August 2014 to October 2018), Ally Financial.

 

Curtis C. Farmer, Chairman, President and CEO
Executive Officer since 2008
Mr. Farmer, 58, has been Chairman (since January 2020), President (since April 2015) and Chief Executive Officer (since April 2019); Vice Chairman (April 2011 to April 2015) and Executive Vice President (October 2008 to April 2011), Comerica Incorporated and Comerica Bank. He has also been a director of Comerica Incorporated since July 2018.

 

GRAPHIC

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GRAPHIC


 


James J. Herzog, EVP and CFO
Executive Officer since 2019
Mr. Herzog, 58, has been Chief Financial Officer (since February 2020) and Executive Vice President (since November 2011), Interim Chief Financial Officer (September 2019 to February 2020) and Treasurer (November 2011 to February 2020), Comerica Incorporated and Comerica Bank.

 

Cassandra M. McKinney, EVP, Retail Bank
Executive Officer since April 2020
Ms. McKinney, 60, has been Executive Vice President, Retail Bank, Comerica Incorporated and Comerica Bank (since April 1, 2020); and Senior Vice President, Retail Bank (since 2005), Comerica Bank.

 

GRAPHIC

 


GRAPHIC


 


Christine M. Moore, EVP and General Auditor
Executive Officer since 2016
Ms. Moore, 58, has been Executive Vice President (since July 2016), General Auditor (since May 2016), Senior Vice President (January 2007 to July 2016), Deputy General Auditor (September 2013 to May 2016), and Audit Director (January 2007 to September 2013), Comerica Incorporated and Comerica Bank.

 


Jay K. Oberg, EVP and Chief Risk Officer
Executive Officer since 2019
Mr. Oberg, 51, has been Chief Risk Officer (since January 2019), Executive Vice President (since January 2017), and Senior Vice President (October 2007 to January 2017), Comerica Incorporated and Comerica Bank.


 


GRAPHIC

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Mauricio A. Ortiz, SVP and CAO
Executive Officer since 2018
Mr. Ortiz, 42, has been Chief Accounting Officer (since January 2018), Senior Vice President (since February 2015), Assistant Controller (February 2015 to January 2018) and Vice President, Accounting Policy and Research (July 2011 to February 2015), Comerica Incorporated and Comerica Bank.

 

GRAPHIC

 


GRAPHIC


 


Peter L. Sefzik, EVP, Commercial Bank
Executive Officer from 2015-2018 and May 2019- Present
Mr. Sefzik, 45, has been Executive Vice President, Commercial Bank (since July 2018), Comerica Incorporated and Comerica Bank; Executive Vice President (September 2015 to July 2018), Comerica Incorporated; President — Texas Market (September 2015 to July 2018) and Senior Vice President (April 2010 to September 2015), Comerica Bank.

 

James H. Weber, EVP and Chief Experience Officer
Executive Officer since 2019
Mr. Weber, 58, has been Chief Experience Officer (since January 2020), Executive Vice President (since February 2012) and Chief Marketing Officer (February 2012 to January 2020); and Senior Vice President, Corporate Marketing and Communications (July 2007 to February 2012), Comerica Incorporated.

 

GRAPHIC

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PROPOSAL III SUBMITTED FOR YOUR VOTE

APPROVAL OF A NON-BINDING, ADVISORY PROPOSAL APPROVING EXECUTIVE COMPENSATION

The Board of Directors recommends that you vote "FOR"
the proposal set forth below.

Executive Compensation

The Governance, Compensation and Nominating Committee (the "Committee") annually reviews Comerica's compensation programs to ensure that they demonstrate a strong pay-for-performance link, reflect good governance and are consistent with appropriate industry practices. These programs are described in the "Compensation Discussion and Analysis" section, the compensation tables and the related narrative discussion. As outlined in the "Compensation Discussion and Analysis" section, our compensation programs are structured to align the interests of our executives with the interests of our shareholders, to attract, retain and motivate superior executive talent; to provide a competitive advantage within the banking industry; to create a framework that delivers pay commensurate with financial results over the short and long-term; and to reduce incentives for unnecessary and excessive risk-taking.

The Board strongly supports Comerica's executive pay practices and, as required pursuant to Section 14A of the Securities Exchange Act of 1934, asks shareholders to support its executive compensation program by approving the following resolution:

    RESOLVED, that the shareholders of Comerica Incorporated approve, on an advisory basis, the compensation of Comerica's named executive officers, as disclosed pursuant to Item 402 of Regulation S-K and Section 14(a) of the Securities Exchange Act of 1934, including the Compensation Discussion and Analysis, compensation tables and narrative discussion in this proxy statement.

Because your vote on this proposal is advisory, it will not be binding on the Board. However, the Governance, Compensation and Nominating Committee will take into account the outcome of the vote when considering future executive compensation arrangements. As required pursuant to Section 14A of the Securities Exchange Act, the Board has determined to hold an advisory vote on executive compensation every year until our shareholders vote again on the frequency of this advisory vote. Accordingly, shareholders will have the ability to vote again on our executive compensation next year at our 2022 Annual Meeting of Shareholders. Additionally, our shareholders will have the ability to vote on the frequency of the advisory vote (every one, two or three years) at our 2023 Annual Meeting of Shareholders.

COMERICA'S BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL TO APPROVE EXECUTIVE COMPENSATION.

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COMPENSATION DISCUSSION AND ANALYSIS

Executive Summary

2020 Compensation Highlights

Management and the Governance, Compensation and Nominating Committee (the "Committee") of the Board of Directors met eight times during 2020, including two special meetings called for the purpose of discussing the unprecedented challenges posed by the COVID-19 pandemic. In particular, the Committee discussed impacts on Comerica's financial plan and performance, potential strategies to appropriately assess 2020 performance, the retention of talent, and potential changes to incentive programs for 2021. In total, senior members of management met with Ms. Kane, the Committee Chair, either formally or informally at least twice a quarter. The CEO had individual updates with each member of the Committee at least quarterly in addition to any Committee meetings.

The 2020 financial plan was established at the beginning of the year, prior to the escalation of the pandemic and the resulting rapid decrease in interest rates. After robust discussion, and despite the highly unusual circumstances, the Committee determined not to make any changes to the 2020 annual cash incentive plan awards for the senior leadership team or to any outstanding long-term performance awards (SELTPP) (2018-2020, 2019-2021 and 2020-2022 performance periods), including with respect to performance goals, due to the COVID-19 pandemic.

Because of the ongoing uncertainty of COVID-19, management and the Committee worked throughout 2020 to thoughtfully plan the 2021 senior executive programs. Changes incorporate additional performance metrics, heavier weighting on relative performance, and lower funding at threshold performance levels. These changes are detailed in the section titled "Looking Forward — 2021 Compensation Design Changes".

2020 Named Executive Officers

For 2020, Comerica's named executive officers ("NEOs") were as follows:

 
   
   
   
   
    Named Executive Officers
    Curtis C. Farmer       Chairman, President and Chief Executive Officer    
    James J. Herzog(1)       Executive Vice President and Chief Financial Officer(1)    
    J. McGregor Carr       Executive Vice President, Wealth Management    
    Megan D. Crespi       Executive Vice President and Chief Enterprise Technology & Operations Services Officer    
    John D. Buchanan       Executive Vice President, Chief Legal Officer, and Corporate Secretary    
(1)
Mr. Herzog was promoted to this role in February 2020. He served as Executive Vice President, Treasurer and Interim Chief Financial Officer from September 2019 until February 2020.

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Shareholder Outreach & Compensation Philosophy

SHAREHOLDER OUTREACH

Shareholder outreach is an integral part of Comerica's business practices, as shareholders provide insight on a variety of topics, including operations, governance and compensation. In addition to discussing industry matters and Comerica's performance, we receive feedback frequently from our investors at investor conferences, in which we participate at least quarterly, and during one-on-one visits with investors held either in-person or virtually. Comerica regularly solicits input from shareholders specifically aimed at supporting an ongoing dialogue to address governance, compensation, environmental and social issues and other topics of interest.

During 2020, as is our customary practice, we reached out to our top 25 shareholders, who collectively hold approximately 55% of our shares, as well as a number of additional shareholders who expressed an interest in providing feedback or who had provided feedback in the past.

Approximately 95% of our shareholders voted for our 2020 "Say On Pay" proposal. We considered this strong shareholder support for our executive compensation and governance programs. Shareholder support has been above 90% for the last four years. Accordingly, the Committee believes that our compensation programs meet our objectives — ensuring the compensation programs demonstrate a strong pay-for-performance linkage, reflect good governance and are consistent with appropriate industry practices. Keeping with those principles, the Committee did evolve the structure of our plans for 2021 to provide a more robust view of performance and align both short and long-term objectives. For additional details please see pages 53-56.

COMPENSATION PHILOSOPHY

We use our executive compensation programs to align the interests of executive officers with the interests of our shareholders. Our programs are designed to attract, retain and motivate leadership to sustain our competitive advantage in the financial sector, and to provide a framework that encourages outstanding financial results and shareholder returns over the long-term. We generally strive to set target compensation opportunities near the median of our peer group, with actual payouts in respect of variable compensation dependent on performance. We utilize a mix of variable compensation programs that measure long-term and short-term results with rewards delivered in cash and shares of Comerica's stock. This balanced approach towards compensation supports our business strategies, aligns with our pay-for-performance philosophy, and is reinforced through sound compensation governance to mitigate excessive risk.

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What We Do Have:

What We Don't Have:

 

Clawback policy in addition to Sarbanes-Oxley requirements

Employment agreements

 

Forfeiture provisions which the Committee can utilize in the event of adverse risk outcomes to cancel all or part of outstanding, unvested stock awards

Excise tax gross-up payments for current change of control agreements entered into after 2008 and will not include this provision in future agreements

Carefully-considered risk management process, including the use of compensation that vests over multiple time periods based on a variety of performance metrics

Modified single-trigger severance for change of control agreements entered into after 2008 and will not include this provision in future agreements

Robust stock ownership guidelines for senior executives and the Board of Directors. The CEO is expected to own 6X his salary and the other NEOs 3X; directors have a 5,000-share holding expectation

Repricing or replacing of underwater stock options or SARs without shareholder approval

Post vesting holding requirement for directors. Vested restricted stock units are settled in Comerica Common Stock on the first anniversary of the director's separation of service from the Board

Pledging or hedging shares by employees or directors is prohibited

Minimum vesting requirement for at least 95% of equity incentive plan awards

Non-independent directors on the compensation committee: the entire Committee meets SEC and NYSE independence requirements

Independent compensation consultant who works solely for the Committee and performs no other work for Comerica

 

Negative discretion which the Committee can utilize in determining incentive funding or award determinations

 

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ROLES AND RESPONSIBILITIES

Role of the Compensation Committee:

The Committee is responsible for overseeing the development and administration of our compensation programs, is comprised of independent directors, and reviews and approves all aspects of our executive compensation programs. To aid the Committee in satisfying its responsibilities, the Committee has retained Frederic W. Cook & Co. Inc., ("FW Cook") to act as its independent consultant. FW Cook reports directly to the Committee and performs no other work for Comerica. Each year the Committee undertakes an evaluation of FW Cook's primary representative regarding advice and counsel, quality and accuracy of data and information provided, and overall service. Following such review in 2020, the relationship was extended through July 2021.

Prior to entering into its most recent engagement of FW Cook in 2020, the Committee analyzed if hiring FW Cook would raise a conflict of interest. The Committee performed this analysis by taking into consideration the following factors:

    Any other services provided to Comerica by FW Cook
    The amount of fees FW Cook received from Comerica as a percentage of FW Cook's total revenue
    Policies and procedures FW Cook utilizes to prevent conflicts of interest
    Any business or personal relationship of the individual compensation advisor of FW Cook with any member of the Committee or an executive officer of Comerica
    Any Comerica stock owned by FW Cook or the Committee's individual advisor
    Any business or personal relationship of FW Cook with an executive officer of Comerica

With respect to the Committee's evaluation of FW Cook's independence, Comerica did not pay any fees to FW Cook in 2020 other than in connection with work performed for the Committee. During the analysis, FW Cook's primary representative to the Committee indicated that fees paid annually to FW Cook by Comerica are less than 1% of FW Cook's annual consolidated total revenue. He also discussed with the Committee various policies developed by FW Cook to safeguard the independence of the compensation advice it provides; indicated that he has no personal or business relationship with Committee members or executive officers at Comerica; indicated that he is not aware of any personal or business relationship between Comerica's executive officers and FW Cook; and indicated that neither he nor his immediate family members own any Comerica shares. The Committee determined, based on its analysis of the above factors that the work of FW Cook and the individual compensation advisors employed by FW Cook as compensation consultants to the Committee has not presented any conflict of interest.

Role of the Independent Compensation Consultant:

    Attends Committee meetings
    Provides independent advice to the Committee on current trends and best practices in compensation design and program alternatives and advises on plans or practices that may improve effectiveness
    Furnishes the Committee with peer compensation data on the NEOs and non-employee directors to provide independent recommendation on compensation
    Reviews the Compensation Discussion and Analysis section of the proxy statement
    Evaluates the programs in light of regulatory expectations and provides feedback to the Committee
    Helps the Committee ensure programs align executives with shareholders' interests

The compensation consultant does not separately meet with the CEO or discuss with the CEO any aspect of his compensation.

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The Committee may consult with its independent compensation consultant as described above; however, the Committee uses its own judgment in making final decisions regarding the compensation paid to our executive officers.

Role of the CEO:

    Provides compensation recommendations on the other NEOs and other members of the leadership team. The CEO leverages our internal compensation staff, led by our Chief Human Resources Officer, to aid in determining compensation recommendations
    Assesses the corporate contribution and individual performance of each of his direct reports
    Meets privately in executive session with the Committee to discuss talent management
    Does not play a role in determining his own compensation.

PEER GROUP AND BENCHMARKING

The Committee utilized the following peer group to evaluate and understand market pay levels and practices among similarly situated financial institutions. To determine the peer group, the top 50 U.S. financial institutions based on asset size were reviewed using a variety of financial metrics (assets, revenue, net income, and market capitalization), business models, geographic locations and competition for talent. The same peer group is used in making financial comparisons for purposes of investor presentations. FW Cook provides feedback on the construct of the peer group.

For 2020, Citizens Financial Group, Inc. and Synovus Financial Corporation were added to the peer group to replace BB&T Corporation and SunTrust Banks, Inc. due to their merger.

2020 Peer Group

BOK Financial Corp.

 

KeyCorp

Citizens Financial Group,  Inc.

 

M&T Bank Corp.

Cullen/Frost Bankers,  Inc.

 

Regions Financial Corp.

Fifth Third Bancorp

 

Synovus Financial Corporation

First Horizon National Corp.

 

Zions Bancorporation

Huntington Bancshares Inc.

 

 

FW Cook annually generates a compensation analysis for the Committee based on our peer group's proxy data. Recognizing that peers may be bigger or smaller than Comerica, and that officer positions listed in the proxy vary from company to company, FW Cook's data is used only as a general indicator of compensation trends and pay levels and is not used to set specific compensation levels for the CEO or the other NEOs. The Committee reviews individual and company performance, historical compensation, as well as the scope of each position, to determine total compensation for the NEOs. We strive to be at the median of the marketplace on all elements of total compensation and expect variable compensation to increase or decrease relative to the median based on performance. Once total compensation targets are established, they are reviewed in relation to the market data to ensure they are both appropriate and competitive.

Additionally, on an annual basis, Comerica purchases several standard surveys from compensation specialists to evaluate compensation for our broader executive group and other employee positions.

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Compensation Elements & 2020 Pay Actions

PAY MIX ALLOCATION

Our pay mix allocation is heavily weighted towards variable compensation or "pay-for-performance." Placing more emphasis on pay-for-performance helps to incentivize and reward long-term value creation, which aligns with shareholder interests. This is evidenced by the fact that 82% of our CEO's total target direct compensation opportunity is variable or "at-risk."

Our executives' total compensation is comprised of three primary elements: base salary, a short-term incentive and long-term incentives. The long-term incentives consist of SELTPP units, RSUs and stock options. The emphasis on variable compensation is illustrated below.

GRAPHIC

BASE SALARY

Base salary is used to compete in the market for talent and forms the foundation for our other reward vehicles. We provide competitive base salaries to our NEOs in recognition of their responsibilities. In addition to benchmark data, we consider the NEO's performance, experience, time in the position, contribution and internal parity. In determining if an adjustment should be made during our annual merit cycle, the CEO and Committee primarily consider the NEO's performance against the prior year's goals, along with any changes in responsibilities. To promote a performance culture, increases are not automatic or guaranteed.

The Committee approved base salary increases for the NEOs hired prior to 2020, which were effective February 2020. Salary increases at the beginning of the year included a standard merit increase and also recognized individual performance, experience, criticality of the position and market data.

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Over his 12-year tenure with Comerica Mr. Farmer has held various leadership roles, giving him breadth of knowledge and allowing for a smooth transition into the role of Chairman at the beginning of 2020. The transition was planned well in advance and occurred over most of 2019, allowing Mr. Farmer access to the former CEO and Chairman's knowledge and experience. In addition, Comerica's Board of Directors are each experienced business leaders with a strong understanding of Comerica's business practices. Mr. Farmer's salary includes a promotional increase for assuming the Chairman title.

Mr. Herzog received an increase in his base salary upon his promotion to the role of Chief Financial Officer in February 2020. Mr. Buchanan received an ordinary course merit increase in base salary in February 2020. Mr. Carr and Ms. Crespi's base salaries were set upon their hire in March 2020.

    Name

 


Base Salary
as of
1/1/2020



 


Base Salary
as of
12/31/2020



 
% Increase

  Notes

    Mr. Farmer         $900,000         $975,000           8.3%       Became Chairman (in addition to being CEO) in
January 2020 and to better align with market
   
    Mr. Herzog         $360,000         $525,000         45.8%       Includes promotion to CFO in
February 2020
   
    Mr. Carr         N/A             $535,000         N/A           Salary at hire in March 2020    
    Ms. Crespi         N/A             $500,000         N/A           Salary at hire in March 2020    
    Mr. Buchanan         $633,000         $648,825           2.5%       Merit increase    

INCENTIVE COMPENSATION

A summary of the incentive compensation designs is provided in the chart below.

 
   
   
   
   
   
   
   
   
    SUMMARY OF 2020 INCENTIVE COMPENSATION

    Short-Term     Long-Term    
   
    AEI     SELTPP       Stock Option       RSU    
   
    Cash Performance
Program

 
  Equity Performance
Program
      Equity Incentive       Equity Incentive    
   
    1-year Measurement
Period (2020)

 
  3-year Prospective
Measurement Period
(2020 – 2022)
      4-year Vesting Schedule       5-year Vesting Schedule    
   
    Absolute EPS Excluding
Non-Performance Items
(75%)


 
  Absolute ROCE Excluding
Non-Performance Items
      Exercise price is set to the
closing price on the date of
grant
           
   
    Absolute ROA Excluding Non-Performance Items (25%)     Relative TSR – negative modifier                    
   

These programs:

    Utilize differing key metrics that align with financial performance and measure varying time horizons, providing a broader performance assessment
    Combine absolute performance measures and a negative relative TSR modifier to align executives' interests with shareholders
    Incorporate shareholder feedback
    Align with regulatory expectations
    Are subject to our clawback policy and, with respect to the equity awards, our forfeiture provisions

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ANNUAL EXECUTIVE INCENTIVE (SHORT-TERM CASH INCENTIVE)

The NEOs, along with other senior leaders within the organization (approximately 325), participate in the AEI. The AEI is awarded pursuant to Comerica's shareholder-approved Management Incentive Plan ("MIP"). This program measures Comerica's absolute performance for one-year earnings per share ("EPS") excluding non-performance items ("MIP EPS") and return on average assets ("ROA") excluding non-performance items ("MIP ROA") against internal goals. We selected these metrics because they are commonly used by investors and analysts to evaluate a financial institution's performance. In addition, unlike other metrics that may be calculated differently, these metrics have a generally prescribed formula that may be easily validated. We believe the use of measures that are well understood, transparent and based on the audited financial results of Comerica are the foundation of a responsible incentive program that rewards performance without encouraging participants to take excessive risk.

Each year, Comerica undertakes a robust planning process to identify areas of opportunity from both a revenue and expense standpoint. Several factors are considered, such as strategic initiatives, shareholder expectations, the current economic environment and potential regulatory changes. Utilizing these factors, the Committee sets internal financial goals for the performance awards at the beginning of the year that are balanced, in that they require rigor and focus to achieve, but that do not incent excessive risk-taking. Factors such as prior year performance, the forecasted economic and regulatory environment and strategic initiatives are all considered when establishing target performance.

  Metrics:

MIP EPS versus goal – weighted 75%

MIP ROA versus goal – weighted 25%

Measurement Period:

One-year prospective

  GRAPHIC
  Corporate Funding:

Below 75% of goal = no funding

75% of goal = threshold funding (50%)

100% of goal = target funding (100%)

125% of goal = maximum funding (200%)

 

 

 

Funding increases by 4% for every 1% of achievement above target performance and decreases 2% for every 1% below target performance.

Individual incentive targets:

Each senior officer has an individual incentive target determined by the Committee that is applied to the corporate funding and the senior officer's base salary to calculate individual funding:

 
   
   
   
   
    Level
Target
Maximum
    CEO   125%   250%    
    CFO     90%   180%    
    Other NEOs     80%   160%    

Individual awards may differ from the amount determined by the program formula, as they are ultimately based on each NEO's performance. To help evaluate individual performance and

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determine each NEO's award, performance assessments are utilized. The Committee evaluates the CEO's individual performance based on accomplishment of key priorities, leadership, community involvement and overall performance of the Company.

2020 AEI Goals

EPS is calculated based on net income attributed or allocated to common shares, and ROA is calculated based on net income. For AEI targets, the net income measures use net charge-offs in lieu of provision expense. Additionally, the after-tax impact of any adjustments related to a change in accounting principle, results from discontinued operations, merger/acquisition charges, changes in the corporate tax rate and restructuring charges incurred during the year, if applicable, are added back to reported net income available to common shareholders and net income to determine MIP EPS and MIP ROA, respectively. For the awards made with respect to performance periods ending December 31, 2020, the use of net charge-offs in lieu of provision expense in calculating net income and net income attributed or allocated to common shares increased both measures by $263 million (after-tax).

2020 MIP EPS and MIP ROA were set in January 2020, prior to the escalation of the COVID-19 pandemic, but following interest rate declines in 2019, resulting in a goal that was lower than 2019, but still robust. Comerica's historical practice when setting annual goals was not to forecast interest rate changes into the planning process. Actions taken by the Federal Reserve in response to COVID-19, coupled with the economic shut-down, hindered Comerica's performance against goal.

The Committee met several times to discuss how to assess performance during 2020, given the unique challenges of the year and Comerica's progress against planned performance. Ultimately, management recommended, and the Committee decided, not to make any adjustments to the AEI payout for the senior leadership team, which resulted in funding at 54% of target.

The table below outlines the MIP EPS and MIP ROA goals set at the beginning of 2020 and the achievement against plan.

 
   
   
   
   
   
    2020 Annual Corporate Performance
   
Metric
  CMA
Goal
  CMA
Actual Performance
  Achievement    
   

MIP EPS

  $6.53   $5.14   79%    
   

MIP ROA

  1.29%   0.91%   71%    
    Total Weighted Achievement           77%    
    Total Funding as a Percent of Target           54%    

GRAPHIC

Funding Percentage Calculation

GRAPHIC

Each NEO had a target opportunity under the 2020 AEI expressed as a percentage of base salary. Mr. Farmer's award was determined by the Committee utilizing the corporate funding level as the baseline as well as an assessment of his performance against objectives laid out at the beginning of the year, along with his leadership response to COVID.

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For the other NEOs, the Committee determined individual AEI awards utilizing the corporate funding amount achieved based on corporate results outlined above, followed by an assessment of individual performance, including feedback from the CEO.

    Curtis C. Farmer – Performance Highlights

      Responded to the COVID crisis by implementing Comerica's programs to support both communities and colleagues:

      o
      Funded $3.9 billion of PPP loans.

      o
      Provided customer assistance in the form of waiver of overdraft balances to ensure customers received the full amount of consumer stimulus payments and considered loan deferrals and fee waivers as appropriate.

      o
      Granted stipends to help cover unexpected dependent- and elder-care costs, as well as no-cost health care benefits pertaining to COVID-19 and free telehealth visits for colleagues.

      o
      Colleagues whose functions required them to be physically present were eligible for additional "Promise Pay."

      Executed key leadership transitions due to retirements of executive officers and developed strong working relationships within the Management Executive Committee.

      Expanded interaction with key stakeholders (regulators, investors and customers).

      Supported and sponsored social justice, diversity and inclusion activities across the organization and within the communities Comerica serves.

      Managed treasury strategies around capital and liquidity.

      Developed and executed strategic initiatives to drive financial results and evolve technology.

    James J. Herzog – Performance Highlights

      Executed the capital plan and liquidity management, including successful preferred stock issuance.

      Ensured maintenance of appropriate levels of capital and liquidity through the pandemic.

      Oversaw the transition to CECL loan loss reserve standard in a challenging economic year.

      Collaborated on the development of short and long-term financial plans.

      Supported diversity, inclusion and volunteer activities throughout the organization.

      Developed stronger relationships with shareholders and the investment community, including increased outreach as the pandemic took hold.

      Continued focus on talent development across the Finance Department.

      Worked with business leaders to balance expense control and infrastructure investment.

      Maintained focus on supplier diversity and sustainability goals, supporting Comerica's achievement of several sustainability milestones in 2020.

      Transitioned fully into the CFO role.

    John D. Buchanan – Performance Highlights

      Advised on legal and regulatory aspects of the PPP and other COVID responses.

      Administered governance matters for the Board of Directors and Board Committees.

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      Supported Comerica's 2020 priorities around revenue growth, customer experience, operational excellence, talent management and risk management.

      Provided counsel and input regarding regulatory matters as well as litigation issues.

      Demonstrated leadership within the department and across the organization as well as supported Comerica's diversity and inclusion goals.

      Directed legal affairs in all areas, including legal compliance with federal and state laws, rules and regulations.

      Achieved 2020 department financial goals.

      Appropriately managed risk and provided guidance across the organization.

    J. McGregor Carr – Performance Highlights

      Successfully transitioned into the Executive Director of Wealth Management position and effectively led the Wealth Management team through the pandemic.

      Executed team-based approach to identify growth opportunities and accelerated activity for the 1849 program.

      Expanded Institutional Trust product offerings.

      Supported diversity, inclusion and social justice activities throughout the organization.

      Provided key insights in establishing Comerica's 2021 priorities and strategic initiatives.

      Collaborated with other lines of business to expand customer relationships.

      Achieved 2020 department financial goals.

      Appropriately managed risk and provided guidance across the organization.

    Megan D. Crespi – Performance Highlights

      Successfully transitioned into the Chief Enterprise Technology & Operations Services role.

      Played a critical role in the execution of the PPP by enabling automation.

      Focused on executing key technology programs, including digital transformation, payment platform enhancements, expanded use of automation and improved data analytics.

      Collaborated with other lines of business to drive results.

      Helped develop Comerica's Return to Office plan for post pandemic.

      Supported social impact goals through volunteerism and supplier diversity.

      Strengthened human capital by executing against employee engagement goals.

      Expanded capabilities via talent development and attracting talent for key positions within her business unit.

Based on evaluations of the foregoing individual factors, the Committee approved the NEOs' AEI awards at the full corporate funding amounts, which equates to 54% of target funding. The

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Committee has the ability to use negative discretion to further reduce the awards below target based on individual performance but did not do so in 2020.

 

 

2020 AEI Program Awards(1)


 

          Individual Award       Individual Target as
a Percent of Base
      Individual Award as
a Percent of Target
   

 

 

Mr. Farmer

      $658,125       125.0%       54%    

 

 

Mr. Herzog

      $255,150         90.0%       54%    

 

 

Mr. Carr(1)

      $192,600         80.0%       54%    

 

 

Ms. Crespi(1)

      $162,000         80.0%       54%    

 

 

Mr. Buchanan

      $280,292         80.0%       54%    
(1)
Mr. Carr's and Ms. Crespi's targets are pro-rated using the normal AEI targets associated with each of the positions held during the year.

LONG-TERM INCENTIVES

Comerica compensates the NEOs with a mix of equity vehicles composed of stock options, RSUs and SELTPP units.

Overall, our long-term incentives emphasize performance-based awards, as you can see in the chart below.

GRAPHIC

Stock Options

Stock options align management with shareholders by providing value only if Comerica's stock price increases. We grant non-qualified stock options that vest 25% per year over four years and have a term of 10 years. The exercise price is based on Comerica's closing stock price on the date of grant.

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RSUs

RSUs are utilized to provide balance to our total compensation program and help build long-term value that is realized with continued employment. RSUs comprise 25% of the equity awards. The shares vest 50% in year three, 25% in year four and 25% in year five for all awardees.   GRAPHIC

SELTPP

The SELTPP is a forward-looking equity performance program. The awards are full value awards that are subject to robust performance measures.

  Metrics:

Comerica's average return on common equity ("ROCE") excluding certain non-performance items ("SELTPP ROCE") versus goal. For years impacted by CECL (as defined below), SELTPP ROCE is calculated utilizing net charge-offs instead of provision for credit losses.

Relative TSR modifier.

  GRAPHIC

    In order to establish the three-year SELTPP ROCE, Comerica's Finance and Human Resources departments work together to model several possible performance outcomes based on various economic and operating factors. The results of this modeling are analyzed to set a goal which can be achieved with solid, sustained performance over the measurement period. Utilizing this analysis, the Committee establishes the performance goal for the three-year measurement period. The targets represent strong, yet achievable levels of performance based on current information available and various future scenarios.

    TSR, measured against the KBW Bank Index, acts as a negative modifier that can reduce the payout percentage. TSR performance cannot increase the payout percentage.

    Measurement Period:

      Three-year prospective.

    Target Awards:

      Target awards are granted at the beginning of the measurement period.
      A payout percentage will be calculated based on Comerica's long-term SELTPP ROCE versus the goal.
      The SELTPP ROCE calculated payout percentage will be reduced by 10 percentage points if Comerica's three-year TSR ranks in the bottom quartile of the KBW Bank Index.

    Key Features:

      50% of the target award will be distributed at threshold performance.
      100% of the target award will be distributed if the SELTPP ROCE goal is achieved.
      150% of the target award will be delivered at maximum performance.
      The TSR modifier can reduce the award but cannot increase the award.
      If threshold SELTPP ROCE performance is not achieved, the target award is forfeited.
      The same payout percentage will be applied to the dividends that accrue over the measurement period. Dividends will be paid out in cash at settlement for the shares underlying the vested portion of the award.
      The awards are settled in shares of Comerica stock at the end of the performance period.

    If threshold SELTPP ROCE performance is not achieved, the target SELTPP award is forfeited.

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2020 Long-Term Incentive Awards

2020 equity grants, which were made in January 2020, are composed of SELTPP units (65%), RSUs (25%) and stock options (10%). A substantial portion of the total grant amount is subject to robust performance measures, and the value that is ultimately earned by the NEOs is contingent on both corporate performance and stock price. The target award for each individual was determined based on the NEO's position, experience, contribution and internal parity, as well as competitiveness of equity values compared to market data compiled by the Committee's independent compensation consultant. Equity values are reviewed on the basis of both their monetary value and as a percentage of salary.

The Committee may reduce any executive's target award if it deems it appropriate.

 

2020 Grants


 

NEO

  Stock Option
Grant
  Restricted
Stock Grant
  SELTPP Grant
(Target)
  Total Equity
Grant Value
 

 

Mr. Farmer

  $326,141   $812,425   $2,050,151   $3,188,716  

 

Mr. Herzog

  $80,093   $200,123   $504,806   $785,022  

 

Mr. Carr(1)

  $62,606   $156,551   $394,853   $614,010  

 

Ms. Crespi(1)

  $58,486   $646,153   $369,001   $1,073,639  

 

Mr. Buchanan

     $74,336   $185,030   $467,336   $726,702  
(1)
Mr. Carr's and Ms. Crespi's awards consist of their new hire awards.

SELTPP Units for the Performance Period Ended December 31, 2020

The Committee determined not to make any changes to outstanding SELTPP awards (2018-2020, 2019-2021 and 2020-2022 performance periods) due to COVID-19, as these are multi-year awards.

SELTPP units granted in 2018 were eligible to vest based on Comerica's SELTPP ROCE over a three-year period (2018-2020) relative to a goal SELTPP ROCE established at the beginning of the performance period. As shown in the table below, the approved payout was 112% of target, reflecting two strong years of ROCE performance (2018 and 2019) and lower ROCE in 2020 given the challenges brought on by the pandemic, as well as the impact of the TSR modifier. The Committee did not make any adjustments to the 2018-2020 SELTPP cycle outside of the pre-established non-performance items set at the beginning of the performance period.

 

 

2018—2020 SELTPP Performance


 

Metric

  Target   Actual
Achievement
  Payout
as a % of
Target Award
  Negative
Modifier
Applied
   

 

3 Year Average ROCE Excluding Non-Performance Items

  12.0%   14.15%   112.0%        

 

TSR Modifier

     

4th Quartile

     

Yes

 

 

 

 

 

2018-2020 SELTPP Award Vesting(1)