DEF 14A 1 d629762ddef14a.htm DEF 14A DEF 14A
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities

Exchange Act of 1934 (Amendment No.    )

 

  Filed by the Registrant     Filed by a Party other than the Registrant

 

 

 

Check the appropriate box:

 

   

 

 

      

Preliminary Proxy Statement

 

   

 

 

      

CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE 14a-6(e)(2))

 

   

 

 

      

Definitive Proxy Statement

 

   

 

 

      

Definitive Additional Materials

 

   

 

 

      

Soliciting Material Under Rule 14a-12

 

SUNTRUST BANKS, INC.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if Other than the Registrant)

 

 

 

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(3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11:

 

   
        

 

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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11 (a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

   
        

 

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March 8, 2019

Fellow Owners:

One of my most important obligations is to oversee the work that our company does to execute on its purpose of Lighting the Way to Financial Well-Being while also deploying our owners’ capital and delivering consistently improving financial results.

I am proud of the strong financial performance that SunTrust delivered in 2018 and the value we created for our owners. In 2018, we continued our focus on growing the earnings of the company, improving our efficiency and increasing our capital returns to owners. Our progress in these areas is the result of our consistent long-term strategy, which involves, among other things, three key points of emphasis: (1) investing in technology and growth, (2) improving efficiency, and (3) optimizing the balance sheet and enhancing returns.

At SunTrust, leadership starts with your Board of Directors, which remains very focused on the Company’s strategic initiatives to strengthen financial performance and in turn foster long-term sustainable growth for our clients and owners. We are extremely fortunate to benefit from their wisdom, experience, expertise and dedication. Together, we will also remember and benefit from the outstanding service of Dr. Phail Wynn, Jr., our fellow director and friend who passed away unexpectedly last year. It is with the utmost honor that I want to recognize him here.

I am also grateful for each of our executive officers who provides their industry-leading expertise and strong leadership to our 23,000 teammates, each of whom was critical to SunTrust’s success in 2018.

On February 7th, we announced a merger of equals with BB&T. We are excited about the opportunities that we believe this transaction will provide for both companies, and we will be calling a separate special meeting in the future to allow shareholders to consider matters related to that transaction. While this merger of equals remains pending, however, we are continuing our purpose of Lighting the Way to Financial Well-Being, which includes engaging with our shareholders through our 2019 annual shareholders meeting.

I hope to see you at our 2019 annual meeting of shareholders on Tuesday, April 23, 2019 in Atlanta. Whether or not you plan to attend the meeting, please vote as promptly as possible to make sure your vote is counted. Every shareholder vote is important.

Sincerely,

 

 

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William H. Rogers, Jr.

Chairman and Chief Executive Officer


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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

 

DATE:

 

 

Tuesday,April 23, 2019

 

TIME:

 

 

9:30A.M. Local Time

 

PLACE:

 

 

Suite105 on the Atrium level of SunTrust Plaza Garden Offices, 303 Peachtree Center Avenue, Atlanta, Georgia

To the Shareholders of SunTrust Banks, Inc.

The Annual Meeting of Shareholders of SunTrust Banks, Inc. will be held in Suite 105 on the Atrium level of SunTrust Plaza Garden Offices, 303 Peachtree Center Avenue, Atlanta, Georgia, 30308 on Tuesday, April 23, 2019, at 9:30 a.m. local time, for the following purposes:

 

1.

To elect 10 directors nominated by the Board of Directors to serve until the next annual meeting of shareholders and until their respective successors have been elected,

 

2.

To approve, on an advisory basis, the Company’s executive compensation, and

 

3.

To ratify the appointment of Ernst & Young LLP as our independent auditor for 2019.

Only shareholders of record at the close of business on February 13, 2019 will be entitled to notice of and to vote at the Annual Meeting or any adjournment thereof.

This meeting does not relate to the Special Meeting of Shareholders that will be held in connection with our pending merger of equals with BB&T. A separate proxy statement will be delivered, and a separate Special Meeting of Shareholders will be held, in connection with the pending merger.

For your convenience, we will offer a listen-only, audio webcast of the meeting. To listen to the webcast, please go to investors.suntrust.com shortly before the meeting time and follow the instructions provided. If you miss the meeting, you may listen to a replay of the webcast on our Investor Relations website beginning the afternoon of April 23. Please note that you will not be able to vote your shares via the webcast. If you plan to listen to the webcast, please submit your vote using one of the methods described below prior to the meeting.

BY ORDER OF THE BOARD OF DIRECTORS

Ellen M. Fitzsimmons, General Counsel and Corporate Secretary

March 8, 2019

Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to Be Held on April 23, 2019. The 2019 Proxy Statement and the 2018 Annual Report to Shareholders for the year ended December 31, 2018 are also available at www.proxydocs.com/sti. In addition, SunTrust will provide to any shareholder a copy of our 2018 Annual Report on Form 10-K, including complete audited financial statements, free of charge upon written request addressed to SunTrust Banks, Inc., Attention: Investor Relations, P.O. Box 4418, Mail Code 645, Atlanta, GA 30302-4418. Our Annual Report on Form 10-K is also available on our Investor Relations website at investors.suntrust.com.

IMPORTANT NOTICE: Whether or not you plan to attend the Annual Meeting, please vote your shares: (1) via a toll-free telephone call, (2) via the internet, or (3) if you received a paper copy of this Proxy Statement, by completing, signing, dating and returning the enclosed proxy card as soon as possible in the postage paid envelope provided. If you hold shares of common stock through a broker or other nominee, your broker or other nominee will vote your shares for you if you provide instructions on how to vote your shares. In the absence of instructions, your broker can only vote your shares on certain limited matters but will not be able to vote your shares on other matters (including the election of directors). It is important that you provide voting instructions because brokers and other nominees do not generally have authority to vote your shares for the election of directors without instructions from you.

Voting can be completed in one of four ways:

 

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   online at www.investorvote.com/STI    LOGO    returning the proxy card BY MAIL

 

LOGO

 

  

calling toll-free from the United States,

U.S. territories and Canada at 1-800-652-VOTE (8683)

   LOGO    or attending the meeting to vote IN PERSON


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PROXY SUMMARY      1  

 

    

 

 

NOMINEES FOR DIRECTORSHIP (ITEM 1)      3  

 

 

 

CORPORATE GOVERNANCE      14  

 

 

 

EXECUTIVE OFFICERS      23  
EXECUTIVE COMPENSATION      25  

 

 

 

ADVISORY VOTE ON EXECUTIVE COMPENSATION (ITEM 2)      50  
RATIFICATION OF INDEPENDENT AUDITOR (ITEM 3)      53  

 

 

 

STOCK OWNERSHIP OF DIRECTORS, MANAGEMENT, AND PRINCIPAL SHAREHOLDERS      54  
OTHER INFORMATION      55  

 

 

 

  SunTrust Banks, Inc. - 2019 Proxy Statement


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SUNTRUST BANKS, INC.

303 PEACHTREE STREET, N.E.

ATLANTA, GEORGIA 30308

PROXY STATEMENT

The following summary is intended to provide a broad overview of the items that you will find elsewhere in this Proxy Statement. As this is only a summary, we encourage you to read the entire Proxy Statement for more information about these topics prior to voting.

2019 Annual Meeting of Shareholders

 

 

    Date and Time:

 

  

 

April 23, 2019 at 9:30 AM

 

    Place:

 

  

 

SunTrust Plaza Garden Offices, 303 Peachtree Center Avenue, Suite 105, Atlanta, Georgia 30308

 

    Record Date:

 

  

 

February 13, 2019

 

    Audio Webcast:

 

  

 

investors.suntrust.com

How to Vote:

 

LOGO

 

  

online at www.investorvote.com/STI

 

  

LOGO

 

  

returning the proxy card BY MAIL

 

 

LOGO

  

 

calling toll-free from the United States, U.S. territories and Canada at 1-800-652-VOTE (8683)

 

  

LOGO

 

  

 

or attending the meeting to vote IN PERSON

 

SunTrust at a Glance

 

   

 

General1

 

  

Governance

 

  

Compensation

 

   

    1,218full-service branches

 

    $216billion total assets

 

    23,453teammates2

 

    NYSE:STI

  

 all independent directors other than CEO

 

 lead independent director

 

 all directors elected annually

 

 majority vote standard in bylaws

 

 Board adopted proxy access bylaw in October 2018

 

 average director nominee tenure is 3.8 years

 

  

 strong clawback policies

 

 share ownership and retention requirements

 

 84% of NEO target compensation is at risk

 

 double-triggers required for Change-
in-Control severance

 

 no tax gross-ups

 

 

1

as of December 31, 2018.

 

2 

full-time and part-time employees

Proxy Statement and Solicitation

The enclosed proxy is solicited on behalf of the Board of Directors of SunTrust Banks, Inc. in connection with the Annual Meeting of Shareholders of SunTrust to be held in Suite 105 on the Atrium level of SunTrust Plaza Garden Offices, 303 Peachtree Center Avenue, Atlanta, Georgia 30308, on Tuesday, April 23, 2019, at 9:30 a.m. local time. We are first mailing this proxy statement and the enclosed proxy to our shareholders on or about March 8, 2019. We will bear the cost of soliciting proxies. SunTrust has retained Georgeson LLC to assist in the solicitation of proxies for a fee of $10,000 plus expenses. Proxies may also be solicited by our employees. Proxies may be solicited in person, by physical and electronic mail, and by telephone call.

 

SunTrust Banks, Inc. - 2019 Proxy Statement           1


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Proxy Summary

 

Meeting Agenda and Voting Recommendation

 

     Proposal      Board’s
Recommendation
     Page
Reference

    1. Election of 10 Directors

     FOR EACH      3

    2. Advisory Vote To Approve Executive Compensation

     FOR      50

    3. Ratification of Independent Auditor

     FOR      53

Director Nominees (Proposal No. 1, page 3)

Each director nominee is elected annually by a majority of votes cast. See pages 3-4 of this proxy statement for more information about the nominees.

 

  Director    Age      Since    Tenure    Independent      Committees

  Agnes Bundy Scanlan

   61      2017    2         GN, RC

  Dallas S. Clement

   53      2015    3         AC*, EC, GN

  Paul D. Donahue

   62      nominee    0         to be determined

  Paul R. Garcia

   66      2014    4         AC, CC*, EC

  Donna S. Morea

   64      2012    6         CC, EC, RC*

  David M. Ratcliffe

   70      2011    7         CC, EC, GN*

  William H. Rogers, Jr.

   61      2011    7    CEO      EC*

  Frank P. Scruggs, Jr.

   67      2013    5         CC, RC

  Bruce L. Tanner

   60      2015    3         GN, RC

  Steven C. Voorhees

   64      2018    1         AC, CC

 

AC

 

Audit Committee

  

GN

 

Governance and Nominating Committee

CC

 

Compensation Committee

  

RC

 

Risk Committee

EC

 

Executive Committee

  

*

 

Committee Chair

Advisory Vote to Approve Executive Compensation (Proposal No. 2, page 50)

Our shareholders have the opportunity to cast a non-binding advisory vote to approve our executive compensation. We recommend that you review our Compensation Discussion and Analysis, which begins on page 25, for a description of the actions and decisions of the Compensation Committee of the Board during 2018 regarding our compensation programs, as well as the accompanying compensation tables and related narrative disclosures. We are pleased that last year our shareholders approved our executive compensation by more than 97% of votes cast.

 

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The Board of Directors recommends a vote FOR the proposal.

 

Ratification of the Independent Auditor (Proposal No. 3, page 53)

Ernst & Young LLP has served as the Company’s independent registered public accounting firm since 2007. Shareholders are being asked to ratify the appointment of Ernst & Young by the Audit Committee for 2019.

 

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The Board of Directors recommends a vote FOR the proposal.

 



 

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Nominees for Directorship (Item 1)

 

Nominees for Directorship (Item 1)

Upon the recommendation of its Governance and Nominating Committee, the Board nominated the following 10 persons for election as directors at the Annual Meeting of Shareholders in 2019: Agnes Bundy Scanlan, Dallas S. Clement, Paul D. Donahue, Paul R. Garcia, Donna S. Morea, David M. Ratcliffe, William H. Rogers, Jr., Frank P. Scruggs, Jr., Bruce L. Tanner, and Steven C. Voorhees. Each of the 10 persons nominated for election, if elected, is expected to serve until next year’s Annual Meeting of Shareholders and until his or her successor is elected and qualified. If, at the time of the Annual Meeting, any of the nominees should be unable or decline to serve as a director, the proxies are authorized to be voted for such substitute nominee or nominees as the Board recommends. The Board has no reason to believe that any nominee will be unable or decline to serve as a director. The number of shares of common stock beneficially owned by each nominee for director is listed under the heading “Stock Ownership of Directors, Management and Principal Shareholders” on page 54.

Below is a description of each nominee, the director’s age, the year in which the person first became a director of SunTrust, and a brief description of the experience, attributes, and skills considered by the Governance and Nominating Committee and the Board in recommending or nominating such person for election as a director. Except for Mr. Rogers, our CEO, none of the nominees is employed by SunTrust or any affiliate of SunTrust.

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EXPERIENCE

Agnes Bundy Scanlan, 61, has been a director since 2017. She is a senior adviser for Treliant Risk Advisors where she counsels financial services firms on regulatory, compliance, and risk management matters. She also worked as a senior adviser at Treliant from 2012 to 2015. From 2015 to 2017, she served as the Northeast Regional Director of Supervision Examinations for the Consumer Financial Protection Bureau. Previously, she served as Chief Compliance Officer, Chief Privacy Officer, Regulatory Relations Executive, and Director of Corporate Community Development for, and as legal counsel to, a number of banks and financial services firms, and as legal counsel to the United States Senate Budget Committee. Ms. Bundy Scanlan holds a JD degree from Georgetown University Law Center and is a member of several Bar associations.

SKILLS AND QUALIFICATIONS

Ms. Bundy Scanlan’s deep risk management, regulatory, compliance, and government affairs experience well qualify her to serve on our Board.

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EXPERIENCE

Dallas S. Clement, 53, has been a director since 2015. He is Executive Vice President and Chief Financial Officer of Cox Enterprises, responsible for its treasury, financial reporting and control, tax, audit and financial planning and analysis functions. Previously, he served as Executive Vice President and Chief Financial Officer for Cox Automotive, the largest automotive marketplace and leading provider of software solutions to auto dealers throughout the U.S. He previously served on the boards of Unwired Planet and BitAuto.

SKILLS AND QUALIFICATIONS

Mr. Clement’s financial and business experience, including service as a CFO of a large customer-facing company with significant technology operations, well qualifies him to serve on our Board.

 

 

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Nominees for Directorship (Item 1)

 

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EXPERIENCE

Paul D. Donahue, 62, has been nominated to serve on the Board of Directors. Mr. Donahue is the President and Chief Executive Officer of Genuine Parts Company, a position he has held since May 1, 2016. He also serves on its board of directors. Mr. Donahue was elected President of Genuine Parts in 2012. He joined S.P. Richards Company, the office products group of Genuine Parts, as Executive Vice President Sales and Marketing in 2003. He was soon after appointed President and Chief Operating Officer, a position he held until his election to Executive Vice President of Genuine Parts in 2007. From 2009 to 2015, Mr. Donahue was President of the U.S. Automotive Parts Group of Genuine Parts.

SKILLS AND QUALIFICATIONS

Mr. Donahue’s extensive business, executive and management experience, including serving as a director and chief executive officer of a large, publicly-traded company with significant consumer-facing operations, well qualify him to serve on our Board.

 


 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 

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EXPERIENCE

Paul R. Garcia, 66, has been a director since 2014. Mr. Garcia is the retired Chairman and CEO of Global Payments Inc., a leading provider of credit card processing, check authorization and other electronic payment processing services. Previously, he served on the boards of The Dun & Bradstreet Corporation, West Corporation, Global Payments Inc. and Mastercard International.

SKILLS AND QUALIFICATIONS

Mr. Garcia’s extensive knowledge of and experience in the payment services and financial services industries, and his service as a Chairman and CEO of a publicly-traded company, well qualify him to serve on our Board.

 

 

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Nominees for Directorship (Item 1)

 

 

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EXPERIENCE

Donna S. Morea, 64, has been a director since 2012. Ms. Morea is a nationally recognized executive in IT professional services management with over 30 years of experience. From May 2004 until her retirement at the end of 2011, Ms. Morea served as President of CGI Technology and Solutions, Inc., a wholly-owned U.S. subsidiary of CGI Group, one of the largest independent information technology firms in North America. In that role, she led CGI’s IT and business process services in the US and India for large enterprises in financial services, healthcare, telecommunications and government. She previously served on CGI Group’s board of directors and presently serves on the board of Science Applications International Corporation, a publicly-traded firm which provides technical, engineering, and enterprise information technology services. She has also served as the Chair of the Northern Virginia Technology Council, with over 1,000 member organizations.

SKILLS AND QUALIFICATIONS

Ms. Morea’s extensive management experience and information technology expertise well qualify her to serve on our Board.

 


 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 

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EXPERIENCE

David M. Ratcliffe, 70, has been a director since 2011. Mr. Ratcliffe retired in December 2010 as Chairman, President and Chief Executive Officer of Southern Company, one of America’s largest producers of electricity, a position he had held since 2004. From 1999 until 2004, Mr. Ratcliffe was President and CEO of Georgia Power, Southern Company’s largest subsidiary. Prior to becoming President and CEO of Georgia Power in 1999, Mr. Ratcliffe served as Executive Vice President, Treasurer and Chief Financial Officer. Mr. Ratcliffe previously served as a member of the board of directors of CSX Corporation, a publicly-traded railroad company.

SKILLS AND QUALIFICATIONS

Mr. Ratcliffe’s experience as a director and chief executive officer of a highly-regulated, publicly-traded company well qualifies him to serve on our Board.

 

 

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Nominees for Directorship (Item 1)

 

 

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EXPERIENCE

William H. Rogers, Jr., 61, has been a director since 2011 and has served as Chairman of our Board since January 1, 2012. He was named Chief Executive Officer in June 2011 after having served as our Chief Operating Officer since 2010 and President since 2008. Mr. Rogers began his career with SunTrust in 1980 and has served in a leadership capacity in all business segments of the Company. Mr. Rogers previously served as a director of Books-a-Million, Inc. and presently serves on the Federal Reserve Board of Governors’ Federal Advisory Council as a representative of the Federal Reserve Bank of Atlanta.

SKILLS AND QUALIFICATIONS

Mr. Rogers’ long history and success with our company and industry well qualify him to serve on our Board.

 


 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 

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EXPERIENCE

Frank P. Scruggs, Jr., 67, has been a director since 2013. He has been a partner in the law firm of Berger Singerman LLP since 2007 where he represents companies and executives in employment law matters and litigates commercial disputes. Prior to joining Berger Singerman, he was an Executive Vice President for Office Depot, Inc. and was a shareholder of the law firm Greenberg Traurig LLC. He previously served as the Florida Secretary of Labor and Employment Security, as a member of the Florida Board of Regents, and on the board of directors of Office Depot, Inc.

SKILLS AND QUALIFICATIONS

Mr. Scruggs’ extensive governmental affairs, legal, and regulatory experience well qualify him to serve on our Board.

 

 

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Nominees for Directorship (Item 1)

 

 

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EXPERIENCE

Bruce L. Tanner, 60, has been a director since 2015. He is currently an Executive Vice President and Strategic Advisor for Lockheed Martin Corporation. From 2007 to February 2019, he served as Executive Vice President and Chief Financial Officer for Lockheed. As Chief Financial Officer, he was responsible for all aspects of Lockheed’s financial strategies, processes and operations.

SKILLS AND QUALIFICATIONS

Mr. Tanner’s financial and business experience, including service as a CFO of a highly-regulated, publicly-traded company with operations in substantial portions of our footprint, well qualifies him to serve on our Board.

 


 

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EXPERIENCE

Steven C. Voorhees, 64, has been a director since January 1, 2018. Since July 2015, Mr. Voorhees has served as the President and Chief Executive Officer and as a director of WestRock Company, an international provider of paper and packaging solutions. Prior to that he served as the Chief Executive Officer and as a director of a predecessor entity, RockTenn Company. Before becoming CEO, Mr. Voorhees held various executive leadership positions with RockTenn, including President and Chief Operating Officer, Executive Vice President and Chief Financial Officer, and Chief Administrative Officer. Before joining RockTenn, he was in operations and executive roles at Sonat Inc., a diversified energy company.

SKILLS AND QUALIFICATIONS

Mr. Voorhees’ extensive business, executive and financial experience, including serving as a director, chief executive officer and chief financial officer of a large, publicly-traded company, well qualify him to serve on our Board.

 

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The Board of Directors recommends a vote FOR all nominees.

 

 

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Nominees for Directorship (Item 1)

 

Board Skills and Diversity

Our director nominees bring a balance of relevant skills to the boardroom as well as an effective mix of diversity and experience. The following graph displays a summary of the director nominees’ core competencies:

 

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Nominees for Directorship (Item 1)

 

Board Committees and Attendance

The Board has created certain standing and ad hoc committees. These committees allow regular monitoring and deeper analysis of various matters. The committee structure also allows committees to be comprised exclusively of independent directors to address certain matters. Because of the complexity of our business and the depth and scope of matters reviewed by our Board, much of the Board’s work is delegated to its committees and then reported to and discussed with the full Board.

Regular meetings of the Board are held at least quarterly. During 2018, the Board held seven meetings, and various standing and ad hoc committees of the Board met another 55 times (including five joint meetings of our Audit and Risk Committees), for an aggregate of 62 meetings. Each committee and Board

 


 

meeting generally includes a meeting of the independent directors in executive session. All incumbent directors attended at least 75% of the aggregate number of Board meetings and meetings of the committees on which they served. In addition, all but one of our incumbent directors attended last year’s annual meeting of shareholders. We expect, but do not require, directors to attend the annual meeting of shareholders.

The Board reviews the membership of the committees from time to time. Specific committee assignments are proposed by the Governance and Nominating Committee in consultation with the Chair of each committee and with the consent of the member, and are then submitted to the full Board for approval. The current membership of these committees, and the number of meetings each committee held in 2018, are as follows:

 

Membership by Director

 

     Audit            Compensation        Executive   

Governance &    

Nominating    

   Risk        
    Number of Meetings Held:    131            6            9            6        131        

    Agnes Bundy Scanlan

                        

    Dallas S. Clement

   Chair                          

    Paul R. Garcia

           Chair                  

    M. Douglas Ivester2

                             

    Donna S. Morea

                         Chair    

    David M. Ratcliffe

                      Chair       

    William H. Rogers, Jr.

         Chair          

    Frank P. Scruggs, Jr.

                        

    Bruce L. Tanner

                        

    Steven C. Voorhees

                        

    Thomas R. Watjen3

                              
1 

Number of meetings does not include five joint sessions of the Audit and Risk Committees.

2 

Mr. Ivester will reach our mandatory retirement age of 72 prior to our 2019 annual meeting of shareholders and will retire from the Board at the meeting.

3 

Mr. Watjen has indicated a preference to not be nominated for reelection at our 2019 annual meeting of shareholders and will retire from the Board at the meeting.

 

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Nominees for Directorship (Item 1)

 

Membership by Committee

 

 

AUDIT COMMITTEE

 

  

The Audit Committee consists solely of members that are independent under our Corporate Governance Guidelines, the Securities Exchange Act of 1934 and applicable rules, and the rules of the New York Stock Exchange. Our Board has determined that Mr. Clement, the Chair of the Audit Committee, and Mr. Watjen each meet the definition of “audit committee financial expert” as defined by the Securities and Exchange Commission’s rules and regulations. The Audit Committee:

 

  appoints, compensates, retains and directly oversees the work of our independent auditor (subject to shareholder ratification, if applicable).

 

  is charged with monitoring the integrity of our financial statements, the independence and qualifications of our independent auditor, our system of internal controls, the performance of our internal audit process and independent auditor, and our compliance with laws and regulations.

 

  resolves any disagreements between management and the auditors regarding financial reporting.

 

  pre-approves all audit services and permitted non-audit services provided to SunTrust by its independent auditor.

 

 

MEMBERS:

 

Mr. Clement, Chair

Mr. Garcia

Mr. Voorhees

Mr. Watjen1

 

NUMBER OF MEETINGS
HELD IN 2018: 13

 

 

 

 

 

 

 

COMPENSATION COMMITTEE

 

  

The Compensation Committee consists solely of members that are independent under our Corporate Governance Guidelines and the rules of the New York Stock Exchange. The Compensation Committee is responsible for:

 

  approving our stated compensation strategies, goals and purposes.

 

  ensuring that there is a strong link between the economic interests of management and shareholders.

 

  ensuring that members of management are rewarded appropriately for their contributions to Company growth and profitability.

 

  ensuring that the executive compensation strategy supports both our objectives and shareholder interests.

 

  ensuring that the incentive compensation arrangements for the Company do not encourage employees to take risks that are beyond our ability to manage effectively.

 

  making recoupment decisions with respect to executive officers under the Company’s Recoupment Policy relating to incentive compensation.

 

 

MEMBERS:

 

Mr. Garcia, Chair

Mr. Ivester2

Ms. Morea

Mr. Ratcliffe

Mr. Scruggs

Mr. Voorhees

 

NUMBER OF MEETINGS
HELD IN 2018: 6

 

 

 

 

 

 

EXECUTIVE COMMITTEE

 

  

The Executive Committee:

 

  reviews certain capital matters, including quarterly dividends.

 

  reviews and approves certain merger and acquisition activity.

 

  handles other matters assigned to it from time to time by the Chairman or the Lead Director.

 

MEMBERS:

 

Mr. Rogers, Chair

Mr. Clement

Mr. Garcia

Mr. Ivester2

Ms. Morea

Mr. Ratcliffe

 

NUMBER OF MEETINGS
HELD IN 2018: 9

 

 

 

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Nominees for Directorship (Item 1)

 

 

 

GOVERNANCE AND
NOMINATING COMMITTEE

 

  

The Governance and Nominating Committee consists solely of members that are independent under our Corporate Governance Guidelines and the rules of the New York Stock Exchange. The Governance and Nominating Committee:

 

  makes recommendations to the Board regarding the size and composition of the Board.

 

  reviews the qualifications of candidates to the Board, and recommends nominees to the Board.

 

  takes a leadership role in shaping our corporate governance and corporate responsibility efforts.

 

  develops and recommends to the Board a set of corporate governance guidelines, periodically reviews and assesses the adequacy of those principles, and recommends any proposed changes to the Board for approval.

 

  leads the Board in its annual review of the Board’s performance.

 

  addresses committee structure and operations, determines member qualifications and makes committee member appointment recommendations.

 

  oversees the Corporate Responsibility efforts of the Company and receives reports from the Director of Corporate Responsibility and others with respect to such efforts.

 

The Governance and Nominating Committee has sole authority for retaining or terminating any search firm used to identify director candidates and determining such firm’s fees.

 

 

MEMBERS:

 

Mr. Ratcliffe, Chair

Ms. Bundy Scanlan

Mr. Clement

Mr. Ivester2

Mr. Tanner

Mr. Watjen1

 

NUMBER OF MEETINGS
HELD IN 2018: 6

 

      

 

 

RISK COMMITTEE

 

  

Our Risk Committee consists solely of members that are independent under our Corporate Governance Guidelines and the rules of the New York Stock Exchange and Federal Reserve Board. The Risk Committee:

 

  reports to and assists the Board of Directors in overseeing enterprise risk management such as credit, operational, technology, compliance, market, liquidity, strategic, legal and reputational risk; enterprise capital adequacy; liquidity adequacy; and material regulatory matters.

 

  oversees and reviews significant policies and practices employed to manage and assess credit, liquidity, market, operational (including technology and third party), compliance, legal, strategic and reputational risk.

 

  oversees enterprise risk management appetite and tolerances, risk frameworks and policies that reflect the Board’s risk management philosophies and principles or for which management oversight is mandated by law or regulation.

 

  oversees liquidity risk management activities, including the structure and adequacy of liquidity in light of current or planned business activities, and in light of the requirements or expectations of statutes, regulations, management and the Board.

 

  oversees capital management activities, including the structure and adequacy of capital in light of current or planned business activities, and management, Board and regulatory requirements or expectations.

 

 

 

MEMBERS:

 

Ms. Morea, Chair

Ms. Bundy Scanlan

Mr. Scruggs

Mr. Tanner

 

NUMBER OF MEETINGS
HELD IN 2018: 13

 

 

 

      

 

1 

Mr. Watjen has indicated a preference to not be nominated for reelection at our 2019 annual meeting of shareholders and will retire from the Board at the meeting.

2 

Mr. Ivester will reach our mandatory retirement age of 72 prior to our 2019 annual meeting of shareholders and will retire from the Board at the meeting.

 

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2018 DIRECTOR COMPENSATION

The Governance and Nominating Committee determines the amount and form of director compensation. In November 2018, the Governance and Nominating Committee conducted its annual evaluation of our director compensation program based upon a review of market and peer group practices with the assistance of an independent compensation consultant. Based on this review, the Governance and Nominating Committee determined that, while our overall director compensation program was generally aligned with SunTrust’s peer group and broader market practice, a few adjustments to the program were appropriate. In light of the fact that fewer of our peers continue to pay individual meeting fees and because such fees could serve as a deterrent to calling special meetings of committees, the Governance and Nominating Committee eliminated the practice of paying a fee of $1,500 for each committee meeting attended. In lieu of these meeting fees, the Governance and Nominating Committee increased the annual cash retainer by $15,000 to $90,000 and the value at the time of grant of the annual equity award to non-employee directors by $15,000 to a total of $140,000. The Governance and Nominating Committee’s review also indicated that the additional annual retainer paid to the Compensation Committee Chair trailed our peer group median. As a result, the Governance and Nominating Committee increased this retainer by $5,000 to a total of $25,000 per year. All of these changes were effective as of January 1, 2019.

In 2018, we paid each non-employee director an annual retainer of $75,000 in four installments. As noted above, this retainer will increase to $90,000 per year beginning in 2019. The Chairs of each of the Audit Committee and Risk Committee receive an additional retainer of $30,000. The Chair of the Compensation Committee received an additional retainer of $20,000 in 2018, and this retainer will increase to $25,000 in 2019. The Chair of the Governance and Nominating Committee receives an additional retainer of $20,000. The Lead Director receives an additional retainer of $45,000. As discussed above, beginning in 2019, we no longer pay each non-employee director a fee of $1,500 for each committee meeting attended. Non-employee directors serving on the Board following our annual meeting of shareholders receive a grant of either restricted stock or restricted stock units, at their election. The grant vests upon the earlier of one year from the date of grant or the next annual meeting. In 2018, this grant had a value of $125,000 on the date of the grant. Beginning in 2019, the grant will have a value of $140,000 on the date of the grant.

The table below sets forth the compensation paid to all non-employee directors who served during the year ended December 31, 2018. Except as noted above, all of our non-employee directors are paid at the same rate. Directors who are also our employees are not compensated for their service as directors. In 2018, one of our directors, William H. Rogers, Jr., was also an employee, serving as Chairman and Chief Executive Officer. We discuss his compensation below beginning at “Executive Compensation.”

Directors may defer either or both of their meeting and retainer fees under our Directors Deferred Compensation Plan. We determine the return on deferred amounts as if the funds had been invested in our common stock.

 

  Name   

Fees

Earned
or Paid

In Cash

     Stock1
Awards
     NQDC
Earnings
     All Other
Compensation2
    Total

  Agnes Bundy Scanlan

   $ 102,000      $ 125,000      $ 0      $ 5,000 3     $ 232,000   

  Dallas S. Clement

   $ 102,000      $ 125,000      $ 0      $ 5,000 3     $ 232,000  

  Paul R. Garcia

   $ 103,500      $ 125,000      $ 0      $ 5,000 3     $ 233,500  

  M. Douglas Ivester

   $ 151,500      $ 125,000      $ 0      $ 11,000 3, 4     $ 287,500  

  Kyle Prechtl Legg5

   $ 38,500      $ 0      $ 0      $ 0     $ 38,500  

  Donna S. Morea

   $ 134,000      $ 125,000      $ 0      $ 5,000 3     $ 264,000  

  David M. Ratcliffe

   $ 151,500      $ 125,000      $ 0      $ 5,000 3     $ 281,500  

  Frank P. Scruggs, Jr.

   $ 106,500      $ 125,000      $ 0      $ 5,000 3     $ 236,500  

  Bruce L. Tanner

   $ 103,500      $ 125,000      $ 0      $ 5,000 3     $ 233,500  

  Steven C. Voorhees

   $ 99,000      $ 125,000      $ 0      $ 5,000 3     $ 229,000  

  Thomas R. Watjen

   $ 144,000      $ 125,000      $ 0      $ 5,000 3     $ 274,000  

  Phail Wynn, Jr.6

   $ 100,250      $ 125,000      $ 0      $ 5,000 3     $ 230,250  

 

1 

We made an annual equity grant with a grant date fair value of approximately $125,000 to each person who was serving as a director following our 2018 annual meeting of shareholders. In accordance with SEC regulations, we report in this column the aggregate grant date fair value of stock awards computed in accordance with FASB ASC Topic 718, but (pursuant to SEC regulations) without reduction for estimated forfeitures. Please refer to note 17 to our financial statements in our annual report for the year ended December 31, 2018 for a discussion of the assumptions related to the calculation of such value. As of December 31, 2018, each of our then sitting directors held 1,851 shares of restricted stock or restricted stock units which vest on April 23, 2019, and none of our directors held any unexercised stock options (vested or unvested). Ms. Legg retired from the Board at our 2018 annual meeting of shareholders and did not receive an annual equity grant in 2018. Dr. Wynn passed away on July 24, 2018, which resulted in his annual equity award vesting on that date.

 

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2 

No director received perquisites or personal benefits in 2018 in excess of $10,000.

 

3 

Reflects matching contributions paid to a charity identified by the director.

 

4 

Reflects $6,000 fee for service on a local advisory board of one of our subsidiaries.

 

5 

Ms. Legg retired from the Board at our 2018 annual meeting of shareholders, which was held on April 24, 2018.

 

6 

Dr. Wynn passed away on July 24, 2018.

 

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Corporate Governance

 

Corporate Governance

 

Majority Voting

Our Bylaws provide for the annual election of all directors. The Bylaws further provide that, in an election of directors in which the only nominees for election are persons nominated by the Board (an “uncontested election”), in order to be elected, each nominee must receive more votes cast for such nominee’s election than against such nominee’s election. If the director election is not an uncontested election, then directors are elected by a plurality of the votes cast. In uncontested director elections, votes cast exclude abstentions with respect to a director’s election.

If a nominee who presently serves as a director does not receive the required vote for reelection in an uncontested election, Georgia law provides that such director will continue to serve on the Board as a “holdover” director. Georgia corporate law generally gives such unelected “holdover” directors all of the same powers as directors elected by a majority vote until such holdover-director’s successor is elected and qualified. A successor cannot be elected until there is another meeting of shareholders, and these typically occur only once a year unless we incur the time and expense of holding a special meeting of shareholders. To prevent holdover directors from remaining on our Board, and to better effectuate the intentions of our shareholders, our Corporate Governance Guidelines require such a director to tender his or her written resignation to the Chairman of the Board for consideration by the Governance and Nominating Committee (which we refer to in this section as the “Committee”) within five days following certification of the shareholder vote.

However, the resignation of a director may adversely affect us. For this reason, we do not make resignations tendered in such context automatically effective. Rather, after the director submits his or her mandatory resignation, the Committee will then consider the resignation and, within 45 days following the shareholders’ meeting at which the election occurred, make a recommendation to the Board concerning whether to accept or reject the resignation. In determining its recommendation, the Committee will consider all factors deemed relevant by the Committee members including, without limitation, any stated reason or reasons why shareholders did not vote for the director’s reelection, the qualifications of the director (including, for example, whether the director serves on the Audit Committee as an “audit committee financial expert” and whether there are one or more other directors qualified, eligible and available to serve on the Audit Committee in such capacity), and whether the director’s resignation from the Board would be in the best interest of SunTrust and our shareholders. The Committee will also consider a range of possible alternatives concerning the director’s tendered resignation as the members of the Committee deem appropriate, including, without limitation, acceptance of the resignation, rejection of the resignation, or rejection of the resignation coupled with a commitment to seek to address and cure the underlying reasons reasonably believed by the

 


Committee to have substantially resulted in the failure of the director to receive the necessary votes for reelection.

To constrain the Board’s discretion in considering such resignations, we have adopted specific procedural requirements in our Corporate Governance Guidelines. In addition to the 45-day deadline above, our Corporate Governance Guidelines require the Board to take formal action on the Committee’s recommendation no later than 75 days following the shareholders’ meeting at which the election occurred. In considering the Committee’s recommendation, the Board will consider the information, factors and alternatives considered by the Committee and such additional information, factors and alternatives as the Board deems relevant.

No director who is required to tender his or her resignation may participate in the Committee’s deliberations or recommendation, and the Corporate Governance Guidelines contain provisions addressing how the determination of whether to accept or reject a resignation is made if a majority of the members of the Committee fails to receive the necessary vote for reelection. Generally, in such case, the determination will be made by independent directors who received the necessary vote for election or reelection. If the Board accepts a director’s resignation, then any resulting vacancy may be filled by the Board in accordance with the Bylaws, or the Board in its discretion may decrease the size of the Board as permitted by the Bylaws.

Corporate Governance and Director Independence

The Board has determined that all of our directors are independent, except for Mr. Rogers, who is our Chairman and CEO. Specifically, the Board determined that the following current directors or nominees are independent after applying the guidelines described below: Agnes Bundy Scanlan, Dallas S. Clement, Paul D. Donahue, Paul R. Garcia, M. Douglas Ivester, Donna S. Morea, David M. Ratcliffe, Frank P. Scruggs, Jr., Bruce L. Tanner, Steven C. Voorhees, and Thomas R. Watjen. Additionally, each member of our Audit Committee, Compensation Committee, Governance and Nominating Committee, and Risk Committee is independent. There are no family relationships between any director, executive officer, or person nominated or chosen by us to become a director or executive officer.

We include our independence standards in our Corporate Governance Guidelines. You can view these on our Investor Relations website, investors.suntrust.com, under the heading “Governance.” An independent director is one who is free of any relationship with SunTrust or its management that may impair the director’s ability to make independent judgments. In determining director independence, the Board broadly considers all relevant facts and circumstances, including the rules of the New York Stock Exchange. The Board considers the issue not merely from the standpoint of a director individually, but also from that of persons or

 

 

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organizations with which the director has an affiliation. The Board pays particular attention to whether a director is independent from management and to any credit or other business relationships that may exist with a director or a related interest. In doing so, the Board considers, among other things, all extensions of credit and other business transactions between the Company and its affiliates, on the one hand, and the director and his or her related interests, on the other hand.

Generally, we do not consider independent any director who is an executive officer of a company that makes payments to us, or receives payments from us, for property or services in an amount which, in any of the last three fiscal years, is greater than $1 million or 2% of such other company’s consolidated gross revenues. We also do not consider independent any director to whom we have extended credit, or who is also an executive officer of a company to which we have extended credit, unless such credit meets the substantive requirements of Federal Reserve Regulation O. Regulation O requires that, when making loans to our executive officers and directors, we do so on substantially the same terms, including interest rates and collateral, and follow credit-underwriting procedures that are no less stringent than those prevailing at the time for comparable transactions by SunTrust with other persons not related to SunTrust. Such loans also may not involve more than the normal risk of collectability or present other unfavorable features. Additionally, no event of default may have occurred (that is, such loans are not rated as non-accrual, past due, restructured or potential problems). Our Board reviews any credit to a director or his or her related interests that has become impaired or criticized in order to determine the impact that such classification has on the director’s independence.

Codes of Ethics and Committee Charters

We have a Senior Financial Officers Code of Ethical Conduct that applies to our senior financial officers, including our principal executive officer, principal financial officer and principal accounting officer. We also have a Code of Business Conduct and Ethics that applies to all employees and a Code of Business Conduct and Ethics for members of the Board. In 2017 we created an Enterprise Ethics Office that aims to ensure that our business practices and risk management culture align with our purpose and vision. This office is led by an Enterprise Ethics Officer, who provides periodic reports to the Risk Committee of the Board. These three Codes of Conduct, as well as our Corporate Governance Guidelines and the charters for each of the Audit, Compensation, Executive, Governance and Nominating, and Risk Committees of the Board, can be found on our Investor Relations website, investors.suntrust.com, under the heading “Governance.

Board’s Role in the Risk Management Process

The Board oversees and monitors the Company’s risk management processes. The Board’s Risk Committee outlines our risk principles and management framework and sets high level strategy and risk tolerances. Our risk profile is managed by our Chief Risk Officer. The Chief Risk Officer is an executive

 


officer appointed by and reporting to the Risk Committee and the CEO. The Chief Risk Officer meets at least quarterly with the Risk Committee of the Board. The Chair of the Risk Committee makes a full report of each Risk Committee meeting to the full Board at each Board meeting. In addition, the Chief Risk Officer also meets with the full Board at each meeting. The Board also meets regularly in executive session without management to discuss a variety of topics, including risk. In these ways, the full Board is able to monitor our risk profile and risk management activities on an on-going basis. Additionally, the Company has other risk-monitoring processes. For example, certain financial risks are also monitored by officers who report to the Chief Financial Officer. In turn, the Chief Financial Officer and appropriate financial risk personnel attend the meetings of the Audit and Risk Committees of the Board. As with the Risk Committee, the Chair of the Audit Committee makes a full report of each Audit Committee meeting to the full Board at each Board meeting and, when circumstances warrant, the Chief Financial Officer and other financial risk personnel meet with the full Board to discuss financial risk matters.

Management of Cyber and Operational Risk

We face ongoing and emerging risks and regulations related to the activities that surround the delivery of banking and financial products and services. Coupled with external influences, such as market conditions, fraudulent activities, natural disasters, vendor risk, and cyber attacks and other security risks, the potential for operational and reputational loss remains elevated.

Our operations rely on computer systems, networks, the internet, digital applications, and the telecommunications and computer systems of third parties to perform business activities. The use of digital technologies introduces cybersecurity risk that can manifest in the form of information theft, physical disruptions, criminal acts by individuals (including employees), groups or nation states, and a client’s inability to access online services. We use a wide array of techniques that are intended to secure our operations and proprietary information, such as Board approved policies and programs, network monitoring, access controls, dedicated security personnel, and defined insurance instruments, as well as consultations with third-party data security experts.

To control cybersecurity risk, we maintain an active information security program that is designed to conform to Federal Financial Institutions Examination Council guidance. This information security program is aligned to mitigate operational risks and is overseen by executive management, the Board, and our independent audit function. It continually monitors and evaluates threats, events, and the performance of our business operations and continually adapts and modifies its risk reduction activities accordingly. We also have a cyber liability insurance policy that provides us with coverage against certain losses, expenses, and damages associated with cyber risk.

Further, we recognize our role in the overall national payments system, and we have adopted the National Institute of Standards and Technology Cybersecurity Framework. We perform periodic assessments against this

 

 

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framework to measure cybersecurity maturity. We also fully participate in the federally recognized financial sector information sharing organization structure, known as the Financial Services Information Sharing and Analysis Center.

In addition, our Board devotes significant time and attention to oversight of cybersecurity risk. In connection with each regular Board meeting, we also hold a joint meeting of the Audit and Risk Committees. The Audit and Risk Committees include all of our non-employee directors. At each of the five joint meetings of the Audit and Risk Committees in 2018, senior executives in our Enterprise Information Services (“EIS”) function, such as the Chief Information Officer and the Chief Information Security Officer, provided an update to the joint committees on EIS matters, including business continuity and cybersecurity. In June 2018, the joint committees created the Technology Management Committee comprised of senior executive officers who meet monthly to discuss and review the technology strategy and investment of the Company. The Technology Management Committee also works to provide alignment on execution of the Company’s technology strategy and operates under the authority of, and reports to, the Audit and Risk Committees of the Board. In March 2018, our Chief Information Officer began providing written updates to the Board on at least a quarterly basis with respect to our cybersecurity program. These updates include progress reports and statuses with respect to significant cyber projects and initiatives. Also, our Risk Committee reviews and approves policies relating to enterprise technology risk, business continuity management, information security and enterprise data quality governance. The Risk Committee also reviews key technology risks and associated action plans.

Digital technology is constantly evolving, and new and unforeseen threats and actions by others may disrupt operations or result in losses beyond our risk control thresholds. Although we invest substantial time and resources to manage and reduce cyber risk, it is not possible to completely eliminate this risk.

Our exposure to cyber risk remains heightened because of, among other things, the evolving nature of these threats, our prominent size and scale, our role in the financial services industry, our plans to continue to implement our internet, mobile and digital banking channel strategies and develop additional remote connectivity solutions to serve our clients, our expanded geographic footprint, the outsourcing of some of our business operations, and the continued uncertain global economic and political environment. As a result, cybersecurity and the continued development and enhancement of our controls, processes, and practices designed to protect our systems, computers, software, data and networks from attack, damage, or unauthorized access remain a focus for us. As threats continue to evolve, we may be required to expend additional resources to continue to modify or enhance our protective measures or to investigate and remediate information security vulnerabilities. There can be no assurance that we will not suffer material losses relating to cyber attacks or other information security breaches or thefts in the future.

We believe that effective management of operational risk, defined as the risk of loss resulting from inadequate or failed

 


internal processes, people or systems, or from external events, plays a major role in both the level and the stability of our profitability. Our Operational Risk Management function oversees an enterprise-wide framework intended to identify, assess, control, monitor, and report on operational risks Company-wide. These processes support our goals to minimize future operational losses and strengthen our performance by maintaining sufficient capital to absorb operational losses that are incurred.

The operational risk governance structure includes an operational risk manager and support staff within each business segment and corporate function. These risk managers are responsible for execution of risk management within their areas in compliance with our policies and procedures. The Risk Committee of our Board oversees our enterprise risk management framework and receives regular reports from the Chief Risk Officer and others.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires our directors, executive officers and any persons who own beneficially more than 10% of our common stock to file reports of ownership and changes in ownership with the Securities and Exchange Commission. To our knowledge, based solely on a review of the reports furnished to us and written representations from reporting persons that all reportable transactions were reported, we believe that during the fiscal year ended December 31, 2018, our officers, directors and greater than 10% owners timely filed all reports they were required to file under Section 16(a). However, the Initial Statement of Beneficial Ownership of Securities on Form 3 that was filed on behalf of Hugh S. Cummins III, our Co-Chief Operating Officer and Wholesale Segment Executive, on April 4, 2017 inadvertently omitted his holdings of options to acquire SunTrust common stock. An amended Form 3 disclosing these holdings of stock options was filed on June 19, 2018.

Compensation Committee Interlocks and Insider Participation

We have no compensation committee interlocks. Messrs. Garcia, Ivester, Ratcliffe, Scruggs and Voorhees, and Ms. Morea and former director Kyle P. Legg constitute all of the directors who served on our Compensation Committee at any time during 2018. Each is (or was) an independent, outside director, and none is a current or former officer or employee of SunTrust.

During 2018, our bank subsidiary, SunTrust Bank, engaged in customary financial transactions and had outstanding loans to certain of our directors, executive officers, members of the immediate families of certain directors and executive officers, and their associates. These transactions and loans were made in the ordinary course of business and were made on substantially the same terms, including, with respect to loans, interest rates and collateral, as those prevailing at the time for comparable transactions with persons not related to SunTrust. In addition, any loans to these insiders during 2018

 

 

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do not involve more than the normal risk of collectability or present other unfavorable features.

Policies and Procedures for Approval of Related Party Transactions

We recognize that related party transactions have the potential to create conflicts of interest and the appearance that Company decisions are based on considerations other than the best interests of the Company and our shareholders. Therefore, our Board has adopted a formal, written policy with respect to related party transactions.

For purposes of this policy, a “related party transaction” is a transaction in which we participate and in which any related party has a direct or indirect material interest, other than (1) transactions available to all employees or customers generally, (2) transactions involving less than $120,000 when aggregated with all similar transactions occurring in a single fiscal year, or (3) loans made by SunTrust 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 loans with persons not related to SunTrust Bank, and not involving more than the normal risk of collectability or presenting other unfavorable features.

Under the policy, any related party transaction must be reported to the General Counsel and may be consummated or may continue only if the Governance and Nominating Committee approves or ratifies such transaction and if the transaction is on terms comparable to those that could be obtained in arm’s-length dealings with an unrelated third party. The Governance and Nominating Committee may approve or ratify the related party transaction only if the Committee determines that, under all of the circumstances, the transaction is in, or is not inconsistent with, the best interests of SunTrust.

Transactions with Related Persons, Promoters, and Certain Control Persons

We have no transactions with related parties other than normal, arm’s-length banking and other credit transactions that comply with Federal Reserve Regulation O. Our Board reviews these relationships, but for the reasons below, we do not view them as impairing a director’s independence.

We generally consider credit relationships with directors or their affiliates to be immaterial and as not impairing the director’s independence so long as the terms of the credit relationship are similar to those offered to other comparable borrowers. We use the following guidelines to determine the impact of a credit relationship on a director’s independence. We presume that extensions of credit which comply with Federal Reserve Regulation O are consistent with director independence. In other words, we do not consider normal, arm’s-length credit relationships entered into in the ordinary course of business to negate a director’s independence.

Regulation O requires such loans to be made on substantially the same terms, including interest rates and collateral, and to follow credit underwriting procedures that are no less stringent than those prevailing at the time for comparable transactions

 


by SunTrust with other persons not related to SunTrust. Such loans also may not involve more than the normal risk of collectability or present other unfavorable features. Additionally, no event of default may have occurred (that is, such loans are not rated as non-accrual, past due, restructured or potential problems). Our Board must review any credit to a director or his or her related interests that has become impaired or criticized in order to determine the impact that such classification has on the director’s independence. Please refer to “Corporate Governance and Director Independence” above for additional information on director independence.

Executive Sessions

Each committee and Board meeting generally includes a meeting of the independent directors in executive session, and with respect to full Board meetings, such sessions are presided over by a Lead Director selected by a majority of independent directors. David M. Ratcliffe presently serves as the Lead Director.

CEO and Management Succession

The Board of Directors considers management evaluation and succession planning to be one of its most important responsibilities. Our Corporate Governance Guidelines specify that our Board and the Governance and Nominating Committee are responsible for developing a succession plan for our CEO and other senior executive officers. Annually, the independent directors of the Board meet with the CEO to discuss his potential successors and related issues. After these meetings, the Board may update its CEO succession plan as appropriate. The CEO also periodically reviews with the independent directors the performance and any succession issues of other key members of the Company’s senior management team.

Board Leadership Structure

Our Board is led by a Chairman selected by the Board from time to time. Presently, William H. Rogers, Jr., our CEO, is also Chairman of the Board. All of our other directors are independent. The Board has determined that selecting our CEO as Chairman is in our best interests because it promotes unity of vision for the Company and avoids potential conflict among directors. The Board is aware of the potential issues that may arise when an insider chairs the Board but believes these are more than offset by existing safeguards, which include the designation of a Lead Director who is independent, regular meetings of the independent directors in executive session without the presence of insiders, the Board’s succession plan for incumbent management, the fact that management compensation is determined by a committee of independent directors who make extensive use of peer benchmarking, and the fact that much of our operations are highly regulated.

Lead Director

In 2009, the Board established the position of Lead Director. The responsibilities and duties of the Lead Director include (i) presiding at meetings of the Board in the absence of the Chairman, including the executive sessions of the

 

 

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independent members of the Board; (ii) serving as a liaison between the independent directors and the Chairman of the Board; (iii) advising the Chairman as to an appropriate schedule of Board meetings; (iv) advising the Chairman on the agenda for meetings of the Board and its committees; (v) calling meetings of the independent directors and developing the agendas for and serving as Chairman of the executive sessions of the Board’s independent directors; and (vi) discussing with the Governance and Nominating Committee and with the Chairman the membership of the various Board committees, as well as the selection of committee chairs. A more complete description of this role is included in our Corporate Governance Guidelines, which we provide on our Investor Relations website, investors.suntrust.com, under the heading “Governance.” The Lead Director is appointed by a majority vote of the independent directors for a one-year term, subject to renewal for a maximum of five additional one-year terms, and will serve until the expiration of his or her term and until his or her successor is appointed or until such Lead Director’s earlier resignation or retirement from the Board. M. Douglas Ivester served as Lead Director from the establishment of the position through the end of 2018 (with the Corporate Governance Guidelines being amended to allow for such continued service). Because Mr. Ivester will reach our mandatory retirement age of 72 prior to our 2019 annual meeting of shareholders and will retire from the Board at the meeting, the Board appointed David M. Ratcliffe to serve as the Lead Director effective January 1, 2019.

Board Self-Assessment

Annually, the Board conducts a self-assessment, which our Governance and Nominating Committee reviews and discusses with the Board. In addition, each of the Audit, Compensation, Governance and Nominating, and Risk Committees conducts an annual self-assessment of its performance. These assessments include both an evaluation of the effectiveness of the Board, each such committee of the Board, and the annual assessment process itself.

As part of this process, each director completes a questionnaire with respect to the full Board and each committee of which the director is a member. In 2018, we updated all of the questionnaires to create a uniform approach for use with the full Board and each committee, with supplemental sections for the committee questionnaires to address topics particular to each committee. After completion of the evaluations, results of the committee evaluations are sent to the committee Chairs who report the results to their committees at the next meeting. Each committee Chair also reports the results of their evaluations to the Governance and Nominating Committee for review and discussion. The Chair of the Governance and Nominating Committee then provides a report to the full Board with respect to the Board and committee evaluations. Following completion of the evaluation process, follow-up items are discussed with management and implemented as appropriate, including feedback on the evaluation process itself.

 


Board Renewal

We believe it is important to continually refresh the composition of the Board. We have a policy requiring directors who change the principal occupation, position or responsibility they held when they were elected to the Board to submit a letter of resignation to the Board. We also have a policy requiring directors to retire from the Board upon the first annual meeting of shareholders following their 72nd birthday (65th birthday for employee-directors). If the director desires to continue to serve after he or she tenders his or her resignation pursuant to these policies, he or she may do so only after the Board, through its Governance and Nominating Committee, has made a determination that continued Board membership is appropriate. These policies have meaningfully contributed to the refreshment of a significant number of our independent directors in recent years.

Long-Term Business Strategy

Each year, the Board reviews management’s long-term business strategy. In November 2018, over the course of three days, the Board reviewed and approved the 2019-2021 strategic plan. In addition, the Board reviews management’s progress against key elements of its strategic plan at its regularly scheduled meetings throughout the year.

 

 

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Corporate Governance

 

Director Qualifications and Selection Process

We maintain a standing Governance and Nominating Committee comprised solely of independent directors who are responsible for identifying individuals qualified to become Board members and recommending director nominees to the Board. The Governance and Nominating Committee periodically reviews the size and composition of the Board and determines whether to add or replace directors. Under our Corporate Governance Guidelines, the Governance and Nominating Committee also periodically reviews with the Board the appropriate skills and characteristics required of Board members. You may access the Governance and Nominating Committee’s charter and our Corporate Governance Guidelines on our Investor Relations website, investors.suntrust.com, under the heading “Governance.

The Governance and Nominating Committee and the Board consider a variety of sources in evaluating candidates as potential Board members. The Governance and Nominating Committee has for the last several years used search firms to identify additional qualified nominees. Evaluations of potential candidates to serve as directors generally involve a review of the candidate’s background and credentials by the Governance and Nominating Committee, interviews with members of the Governance and Nominating Committee, the Governance and Nominating Committee as a whole, or one or more other Board members, and discussions by the Governance and Nominating Committee and the Board. The Governance and Nominating Committee then recommends director candidates to the full Board which, in turn, selects candidates to be nominated for election by the shareholders or to be appointed by the Board to fill a vacancy. Paul D. Donahue was identified by a search firm retained by the Governance and Nominating Committee and was considered by the Governance and Nominating Committee and the Board in accordance with these procedures prior to being nominated for election to the Board.

 

 

DIRECTOR QUALIFICATIONS

 

Directors are responsible for overseeing the Company’s business consistent with their fiduciary duty to shareholders. This significant responsibility requires highly-skilled individuals with various qualifications, attributes and professional experience. The Board believes that there are general requirements for service on the Board that are applicable to all directors and that there are other skills and experience that should be represented on the Board as a whole but not necessarily by each director. The Board and the Governance and Nominating Committee consider the qualifications of directors and nominees individually and in the broader context of the Board’s overall composition and the Company’s current and future needs.

 

 

 

QUALIFICATIONS FOR ALL DIRECTORS

 

In its assessment of each potential candidate, including those recommended by shareholders, the Governance and Nominating Committee requires that each director be a person of recognized high integrity with broad experience and demonstrated evidence of extraordinary business acumen and outstanding achievement in their careers. The Board believes that each director should have, and expects nominees to have, the capacity to obtain an understanding of complex business issues; our principal operational and financial objectives, plans and strategies; our results of operations and financial condition; and our relative standing and that of our business segments in relation to our competitors. Further, each director and nominee should have the ability to make independent, analytical inquiries, possess an understanding of the business environment, and have the ability to devote the time and effort necessary to fulfill his or her responsibilities to the Company.

 

 

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Corporate Governance

 

 

 

SPECIFIC QUALIFICATIONS, ATTRIBUTES, SKILLS AND EXPERIENCE TO BE REPRESENTED ON THE BOARD

 

The Board has identified the following particular qualifications, attributes, skills and experience that are important to be represented on the Board as a whole:

 

 

Independence

 

  

 determined in accordance with our Corporate Governance Guidelines.

 

Financial industry knowledge

  

 which is vital in understanding and reviewing our strategy, which could involve the acquisition of businesses that offer complementary products or services. This attribute may include significant leadership roles at financial institutions, service on relevant boards of directors, as well as related experience at other companies as current or former executives, that gives directors specific insight into, and expertise that will foster active participation in, the development and implementation of our operating plan and business strategy.

 

 

Executive leadership experience

  

 which gives directors who have served in significant leadership positions strong abilities to motivate and manage others and to identify, evaluate and develop leadership qualities in others. Current or recent experience as Chairman, CEO, President or another high level executive at a significant business are strong indicators of value and expertise in this category.

 

 

Accounting and financial expertise

  

 which enables directors to analyze our financial statements, capital structure and complex financial transactions and oversee our accounting and financial reporting processes; further, the Governance and Nominating Committee considers it essential that the Audit Committee have at least one member who qualifies as an “audit committee financial expert”.

 

 

Regulatory and enterprise risk management experience

  

 which contributes to our identification and management of possible areas of risk and helps to maintain an efficient and productive company; further, the Governance and Nominating Committee considers it essential that the Risk Committee have at least one member who qualifies as a “risk management expert”.

 

 

Public company board and corporate governance experience

  

 which provides directors a solid understanding of their extensive and complex oversight responsibilities and furthers our goals of greater transparency, accountability for management and the Board, and protection of our shareholders’ interests.

 

 

Other specific areas of operational experience

  

 which provides demonstrated achievement and expertise in other areas directly relevant to SunTrust, including mergers and acquisitions, e-commerce, information technology, marketing, legal, public affairs and governmental relations.

 

 

Diversity

  

 which provides a variety of points of view and which contributes to a more effective decision-making process; the Board does not have a specific diversity policy but considers diversity of race, ethnicity, gender, age, cultural background and professional experiences in evaluating candidates for Board membership.

 

 

Leadership experience in industries addressing transformation, innovation, and disruption

  

 which provides insights regarding organizational agility and resiliency to address emerging needs and challenges for the Company’s business going forward.

 

 

Expertise in client and consumer interfaces and trends

  

 which enhances our focus on capabilities and functionalities delivering differentiated client experiences.

 

 

Expertise in cybersecurity, technology and digital evolution

  

 which contributes to our understanding of technology as both a challenge and an opportunity driving security and growth, and helps address emerging risks, innovation and competitiveness in the digital age.

 

 

 

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Corporate Governance

 

We highlight each director’s or nominee’s specific skills, knowledge, and experience that the Governance and Nominating Committee and Board relied upon when determining whether to nominate the individual for election in the biographies at pages 3-7. A particular nominee may possess other skills, knowledge or experience even though they are not indicated in the biographies at pages 3-7.

The Board believes that all of the director nominees are highly qualified. The director nominees have significant leadership experience, knowledge and skills that qualify them for service on our Board, and, as a group, represent diverse views, experiences and backgrounds. All director nominees satisfy the criteria set forth in our Corporate Governance Guidelines and possess the personal and professional characteristics that are essential for the proper and effective functioning of the Board. Each nominee’s biography at pages 3-7 contains additional information regarding his or her experiences, qualifications and skills.

Shareholder Recommendations and Nominations for Election to the Board

Any shareholder may recommend persons for election to the Board. The Governance and Nominating Committee will evaluate candidates proposed by shareholders by evaluating such candidates in the same manner and using the criteria described above. The recommendation should state how the proposed candidate meets the criteria described above and should include the information required by our Bylaws.

In October 2018, SunTrust’s Board of Directors adopted Article II, Section 4 of our Bylaws implementing “proxy access” (the “Proxy Access Bylaw”). The Proxy Access Bylaw permits a shareholder, or a group of up to 20 shareholders, owning three percent or more of the outstanding shares of our common stock continuously for at least three years, to nominate and include in our proxy materials director nominees constituting up to the greater of two individuals or twenty percent of the Board, provided that the shareholder(s) and the nominee(s) satisfy the requirements specified in the Proxy Access Bylaw.

In accordance with the Proxy Access Bylaw, shareholder nominations of a director must be delivered to or mailed to and received by our Corporate Secretary not more than 150 days and not less than 120 days prior to the first anniversary of the date on which we first mailed our proxy materials for the preceding year’s annual meeting of shareholders (the “Anniversary”). This Proxy Statement and the enclosed proxy are being first mailed to our shareholders on or about March 8, 2019. Therefore, to be timely for inclusion in our proxy materials for our 2020 annual meeting of shareholders, our Corporate Secretary must receive the notice to nominate one or more individuals for election using our proxy materials no later than the close of business on November 9, 2019 and not before October 10, 2019. The notice must contain the information required by the Proxy Access Bylaw, and the shareholder(s) and nominee(s) must comply with the information and other requirements in the Proxy Access Bylaw.

Our Bylaws also allow shareholders to submit nominations for directors to be considered at a meeting of shareholders where

 


such nominees will not be included in our proxy materials. These provisions are separate from the requirements that a shareholder must meet in order to have a director nomination included in the proxy statement under the Proxy Access Bylaw.

Under these “advance notice” provisions of our Bylaws, nominations for director to be addressed at our next annual meeting of shareholders may be made by a shareholder entitled to vote who has delivered a written notice to the Corporate Secretary not more than 150 days and not less than 120 days prior to the Anniversary. Accordingly, director nominations pursuant to the advance notice provisions of our Bylaws for our 2020 annual meeting of shareholders must be received by the Corporate Secretary no later than the close of business on November 9, 2019 and not before October 10, 2019. The submission should include the information required by Article II, Section 3 of our Bylaws.

Shareholder nominations of directors pursuant to either the Proxy Access Bylaw or the advance notice provisions of our Bylaws should be addressed to SunTrust Banks, Inc., Attention: Corporate Secretary, Post Office Box 4418, Mail Code 645, Atlanta, Georgia 30302-4418.

Communications with Directors

The Board has adopted a process to facilitate written correspondence by shareholders or other interested parties to the Board. Persons wishing to write to the Board or a specified director, including the Lead Director, the independent directors as a group, the Chair of a Board committee, or a committee of the Board, should send correspondence to the Corporate Secretary at SunTrust Banks, Inc., P.O. Box 4418, Mail Code 645, Atlanta, Georgia 30302-4418. All communications so received from shareholders or other interested parties will be forwarded to the members of the Board or to the applicable director or directors if so designated by such person.

Communication with IR Department

Shareholders who wish to speak to a SunTrust representative regarding their investment in SunTrust may call 877-930-8971, write to SunTrust Banks, Inc., Attention: Investor Relations, P.O. Box 4418, Mail Code 645, Atlanta, Georgia 30302-4418, or email ankur.vyas@suntrust.com. You can also view information and request documents at investors.suntrust.com.

Investor Outreach

We began a formal, annual shareholder outreach program in 2012. Since that time, members of our Investor Relations and Legal departments have spoken with most of our thirty-five largest shareholders, and many of them multiple times. From October 2018 to January 2019, we offered to schedule calls with all, and had discussions with several, of our 35 largest shareholders. Topics included board composition and refreshment, executive management, corporate governance, executive compensation, and environmental and social issues.

 

 

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Corporate Governance

 

In September 2018, we established a Corporate Responsibility (CR) Office and hired a Director of Corporate Responsibility to lead our overall CR efforts. In our most recent shareholder engagement discussions, our Director of Corporate Responsibility participated to describe our key CR initiatives.

 


This shareholder outreach process provides important information to us, and investor feedback is shared with our Board of Directors.

 

 

 

 

 


 

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Executive Officers

 

Executive Officers

The Board elects executive officers annually following the annual meeting of shareholders to serve until the meeting of the Board following the next annual meeting. The following table sets forth the name of each executive officer and the principal positions and offices he or she holds with SunTrust.

 

  Name    Age      Officers

  William H. Rogers, Jr.

     61     

Chairman of the Board and Chief Executive Officer

  Jorge Arrieta

     64     

Corporate Executive Vice President and General Auditor

  Margaret Callihan

     63     

Corporate Executive Vice President and Chief Human Resources Officer

  Scott E. Case

     48     

Corporate Executive Vice President and Chief Information Officer

  Mark A. Chancy

     54     

Vice Chairman, Co-Chief Operating Officer and Consumer Segment Executive

  Hugh S. Cummins III

     56     

Co-Chief Operating Officer and Wholesale Segment Executive

  L. Allison Dukes

     44     

Corporate Executive Vice President and Chief Financial Officer

  Ellen M. Fitzsimmons

     58     

Corporate Executive Vice President, General Counsel and Corporate Secretary

  Ellen C. Koebler

     49     

Corporate Executive Vice President and Chief Risk Officer

 

William H. Rogers, Jr. Chairman and Chief Executive Officer. Mr. Rogers was named Chairman of the Board in 2012. He became Chief Executive Officer in 2011 after having served as Chief Operating Officer in 2010 and President since 2008. Mr. Rogers began his career with SunTrust in 1980. He has held roles reflecting an increasing set of responsibilities across all lines of business of SunTrust. He presently serves on the Federal Reserve Board of Governors’ Federal Advisory Council as a representative of the Federal Reserve Bank of Atlanta and is an active member of the business and philanthropic communities.

Jorge Arrieta. Corporate Executive Vice President and General Auditor. Mr. Arrieta has served as the General Auditor and overseen the Company’s internal audit function since 2010. Mr. Arrieta joined SunTrust in 1991 and has held various positions in the Company, including Regulatory Liaison, Chief Financial Risk Officer and Controller, and Chief Accounting Officer.

Margaret Callihan. Corporate Executive Vice President and Chief Human Resources Officer. Ms. Callihan has served as Chief Human Resources Officer since 2016. In this role, she oversees human resources strategy, organizational design, total rewards, talent acquisition, human resources operations, teammate relations, the diversity and inclusion program office, and teammate learning and development. Ms. Callihan previously served in a variety of commercial banking, retail banking, and geographic leadership roles with SunTrust. She previously led the South Florida, Southwest Florida, and Chattanooga regions, and served as retail line of business manager in Tennessee and Alabama. She serves on the board of Beall’s, Inc.

Scott E. Case. Corporate Executive Vice President and Chief Information Officer. Mr. Case has served as Chief Information Officer since February 2018. He is responsible for SunTrust’s Enterprise Information Services (EIS) division, the organizational unit that provides the Company’s overall technology and information-related support. Prior to re-joining SunTrust in 2018, Mr. Case was Chief Information Officer at Ciox Health.

From 2015 to 2017, he served as the chief technology officer for the Consumer Segment of SunTrust. Before that, Mr. Case worked at Bank of America as a Senior Technology Executive where he was responsible for corporate functions technology platforms.

Mark A. Chancy. Vice Chairman, Co-Chief Operating Officer and Consumer Segment Executive. Mr. Chancy was named Co-Chief Operating Officer and Consumer Segment Executive in February 2018. From 2017 to February 2018, he was Vice Chairman and Consumer Segment Executive. He is responsible for SunTrust’s Consumer Banking, Consumer Lending, Private Wealth Management, and Mortgage businesses and our Consumer Operations, Marketing, and Data and Analytics functions. From 2011 to 2017, he served as Corporate Executive Vice President and Wholesale Banking Executive responsible for the Corporate & Investment Banking, Commercial and Business Banking, Treasury & Payment Solutions, and Commercial Real Estate Banking lines of business. Prior to serving as Wholesale Banking Executive, Mr. Chancy served as SunTrust’s Chief Financial Officer for seven years. A 30-year financial services industry veteran, he joined SunTrust in 2001 as Corporate Treasurer through the Company’s acquisition of The Robinson-Humphrey Company, LLC, where he had served as Chief Financial Officer beginning in 1997. Mr. Chancy is a member of the board of SunTrust Robinson Humphrey, Inc. (“STRH”), the corporate and investment banking subsidiary of SunTrust Banks, Inc.

Hugh S. (“Beau”) Cummins III. Co-Chief Operating Officer and Wholesale Segment Executive. Mr. Cummins has served as Co-Chief Operating Officer and Wholesale Segment Executive since February 2018. From 2017 to February 2018, he was Corporate Executive Vice President and Wholesale Segment Executive. He is responsible for the Corporate & Investment Banking, Commercial Banking, Treasury & Payment Solutions, and Commercial Real Estate Banking lines of business as well as our Wholesale Operations, the SunTrust Efficiency Office, and Procurement functions. From 2013 to

 

 

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Executive Officers

 

2017, he served as Commercial and Business Banking Executive responsible for managing SunTrust’s division and region presidents. From 2007 to 2013, he served as Chairman, President & Chief Executive Officer of STRH and continues to serve on its board.

L. Allison Dukes. Corporate Executive Vice President and Chief Financial Officer. Ms. Dukes has served as Chief Financial Officer since March 31, 2018. As CFO, Ms. Dukes is responsible for SunTrust’s corporate finance functions, including Corporate Development, Corporate Tax, Corporate Controller, Corporate Real Estate and Workplace, Strategic Planning, Investor Relations and Corporate Treasury. From April 2017 until her appointment as CFO, she served as the head of Commercial & Business Banking for SunTrust, leading the line of business across all geographic divisions and overseeing the delivery of targeted industry specialties. From 2015 to April 2017, Ms. Dukes served as President and CEO of the Atlanta Division of SunTrust. From 2013 to 2014, she was Executive Vice President and Private Wealth Management Line of Business Executive where she oversaw the Company’s wealth management operations. Ms. Dukes serves on the board of Haverty Furniture Companies, Inc.

Ellen M. Fitzsimmons. Corporate Executive Vice President and General Counsel. Ms. Fitzsimmons joined SunTrust in January 2018 and is responsible for our legal affairs, government relations and corporate communications functions. She also serves as Chair of the Disclosure Committee and as Corporate

 


Secretary. Prior to joining SunTrust, Ms. Fitzsimmons was executive vice president of law and public affairs, general counsel and corporate secretary of CSX Corporation, a transportation company with 26,000 employees headquartered in Jacksonville, FL, from 2003 to 2017 where she directed the company’s legal affairs, government relations, corporate communications, security, environmental, audit, and corporate social responsibility functions. She also serves on the board of Ameren Corporation, a publicly traded power company.

Ellen C. Koebler. Corporate Executive Vice President and Chief Risk Officer. Ms. Koebler has served as Chief Risk Officer since January 1, 2019. She is responsible for the Company’s risk management, including credit, market, operational, technology and compliance risk, and oversees the risk review assurance function and portfolio risk analytics and modeling. From 2016 to 2018, she served as the consumer lending and deposit solutions executive for SunTrust with responsibility for development and ongoing portfolio management of SunTrust’s consumer lending products, as well as responsibility for the deposit, checking, and payment solutions of SunTrust. Prior to that, she served as the chief risk officer for E*TRADE. She originally joined SunTrust in May 2004 as managing director for corporate investment bank portfolio strategies. Since that time, Ms. Koebler held numerous roles in corporate risk management for SunTrust, including chief market risk and corporate analytics officer from 2014-2016 and chief market risk officer from 2013-2014.

 

 


 

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Executive Compensation

 

Executive Compensation

 

COMPENSATION DISCUSSION AND ANALYSIS

Executive Summary

We welcome the opportunity to discuss in this Compensation Discussion and Analysis (CD&A) the material components of our executive compensation program. We also provide an overview of our executive compensation philosophy, compensation decisions, and the factors we considered in making those decisions. This CD&A focuses on our Named Executive Officers (NEOs) for 2018 which included our CEO, our CFO, our former CFO, and our next three most highly-compensated executive officers:

 

 

William H. Rogers, Jr., Chairman and CEO,

 

 

L. Allison Dukes, Chief Financial Officer,

 

 

Aleem Gillani, our former Chief Financial Officer1,

 

 

Mark A. Chancy, Vice Chairman, Co-Chief Operating Officer and Consumer Segment Executive,

 

 

Hugh S. (“Beau”) Cummins III, Co-Chief Operating Officer and Wholesale Segment Executive, and

 

 

Scott E. Case, Chief Information Officer.

2018 Business Highlights

We delivered strong performance in 2018, as we grew earnings per share, improved efficiency and delivered higher capital return to our shareholders. These accomplishments reflect the consistency of our strategy and the diversity of our business model, as each operating segment made strong contributions to the Company’s overall financial performance. Specifically:

 

 

SunTrust increased earnings per share, earning $5.74 in 2018 compared to $4.47 on a GAAP basis, and $4.09 on an adjusted basis2, in 2017.

 

 

We achieved our goal of improving our efficiency ratio and ended the year with an efficiency ratio of 61.6% and an adjusted tangible efficiency ratio (FTE)2 of 59.6%, an improvement of 250 and 140 basis points, respectively, from 2017.

 

 

SunTrust increased its total payout ratio3 from 89% to 103%.

 


Earnings Per Share2

 

LOGO

Efficiency Ratio2

 

LOGO

Total Payout Ratio3

 

LOGO

 

1Mr. Gillani retired from his position as CFO on March 31, 2018. He then continued as an employee of SunTrust until June 30, 2018 to assist with the transition of his responsibilities.

 

2 We provide a reconciliation from GAAP amounts to adjusted amounts in Appendix A on pages 57-58. GAAP EPS is the same as adjusted EPS except for 2012, 2013 and 2017.

 

3 Total Payout Ratio = (Common Stock Dividends and Share Repurchases) / Net Income Available to Common Shareholders.

 

 


 

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Executive Compensation

 

Executive Compensation Principles and 2018 Highlights

Compensation Principle 1. Pay Should Be Competitive With the Market. Our executive compensation programs target compensation at competitive levels based primarily on benchmarking among a defined group of peer organizations. See “Market Competitiveness” below for more information on this practice. The elements of these 2018 programs, which include both fixed and variable compensation, are described below at “Components of Our Executive Compensation Program.”

Compensation Principle 2. A Substantial Portion of Pay Should Align With Performance. For 2018, 66% of target total direct compensation and 70% of our target long-term incentives for our NEOs were performance-based.

Our Annual Incentive Plan (AIP) is a performance-based plan that provides a potential payout based on achievement of performance goals for earnings per share (EPS), tangible efficiency ratio, and pre-provision net revenue (PPNR). Long-term incentives include (i) performance-vested restricted stock units tied to both return on tangible common equity (ROTCE) relative to Company goals and peer companies with a potential adjustment based on total shareholder return (TSR) relative to peers, and (ii) time-vested restricted stock units.

Compensation Principle 3. A Substantial Portion of Pay Should Be at Risk to Align With Risk Taken By Our Shareholders. Our long-term incentive plans are aligned with the risk taken by our shareholders as award values vary with our stock price and corporate performance over time. The level of awards under the performance-based restricted stock unit plan is based on our (i) ROTCE on both an absolute basis and a relative basis compared to peer companies, and (ii) TSR relative to our peers. Our Share Ownership and Retention Policy requires our CEO to own stock with a value equal to at least six times his base salary, and our Co-Chief Operating Officers and Corporate Executive Vice Presidents to own stock with a value equal to at least three times their base salary. These executives are also required to retain 50% of net shares received under plan-based awards for a minimum of one year, ensuring longer-term alignment with shareholder risk. The one year retention requirement applies to vested restricted stock and vested restricted stock units, as well as shares obtained upon exercise of stock options. See “Share Ownership and Share Retention Requirements” below.

Compensation Principle 4. Compensation Must Comply With Regulatory Guidance. In 2010, the Federal Reserve published final guidelines on incentive compensation that apply to all U.S. financial institutions. In response to these guidelines, we made a number of enhancements to our executive and other incentive plans to reduce risk or to further risk-adjust the payouts, as well as strengthen our controls and governance processes, including the following:

 

 

implemented an anti-hedging and anti-pledging policy,

 

 

expanded our use of clawbacks,

 


 

expanded our use of performance metrics that incorporate risk measures,

 

 

intensified our risk review of incentive compensation features and limits in relation to the business risk environment, and

 

 

eliminated our use of stock options.

We discuss these enhancements in the section below at “Compensation Policies that Affect Risk Management” and in this CD&A at “Recoupment of Incentive Compensation (Clawbacks).”

2018 Compensation Governance Summary

We continuously review our compensation programs and practices to ensure a balance between the interests of shareholders, regulators, and other interested parties, and also to ensure that we compensate executives and key management effectively and in a manner consistent with our stated compensation philosophy and objectives. Under the guidance of the Compensation Committee, we have taken the following actions in recent years to further strengthen governance of our compensation structure and practices:

 

 

Enhanced our existing policy governing our incentive compensation plans, including elevating that policy to one that is reviewed and approved annually by the Compensation Committee.

 

 

Adopted a formal, stand-alone recoupment policy which covers all incentive plans and strengthened clawbacks to include detrimental conduct features. See “Recoupment of Incentive Compensation (Clawbacks).”

 

 

Implemented an anti-hedging and anti-pledging policy. See “Executive Compensation Decision-Making Processes—Anti-Hedging and Anti-Pledging Policies.”

 

 

Terminated grandfathered change-in-control agreements that included excise tax gross-up provisions, and committed to not providing tax gross-ups in future agreements.

 

 

Increased share ownership and retention requirements for executive officers.

 

 

Included double-triggers on change in control payments.

 

 

Eliminated most perquisites.

 

 

Reviewed all of our incentive plans to ensure that the plans’ features and business controls met the Federal Reserve’s incentive compensation guidelines.

 

 

Refrained from providing employment agreements to NEOs and from guaranteeing NEOs employment for a specified term.

 

 

Institutionalized a periodic, comprehensive risk-review of all incentive plans. This review process is described in greater detail at “Compensation Policies that Affect Risk Management” in the section which follows this CD&A.

 

 

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Executive Compensation

 

Components of Our Executive Compensation Program

The principal components of our NEO compensation program and a summary of 2018 actions with respect to each component are described in the following table:

 

Component

  Description       Summary of 2018 Actions    
   

Base Salary

 

Fixed cash component. Recognizes level of responsibility, experience and individual performance. Reviewed annually and adjusted if and when appropriate.

     

Increased salaries of Messrs. Chancy and Cummins and Ms. Dukes based on expansion of roles and responsibilities, level of experience, and individual performance, and to better align with market practice. Also increased salary of Mr. Rogers based on individual performance and changes in market compensation.

 
   
         

Annual Incentive Plan

(AIP)

 

Variable cash compensation component. The AIP is a performance-based award opportunity paid in cash. Rewards the achievement of annual performance goals.

     

Awards were based on achievement of earnings per share (EPS), tangible efficiency ratio, and pre-provision net revenue (PPNR) goals. Increased target opportunity for Messrs. Chancy and Cummins based on expansion of roles and responsibilities, experience, and individual performance, and to better align with market practice. Decreased target opportunity for Ms. Dukes as part of an adjustment to her overall pay mix relative to market practice based on the change in her position.

   
   
   

Long-Term Incentives

(LTI)

 

Variable compensation component. Amount earned will vary based on stock price and corporate performance. LTI focuses attention on long-range objectives and future returns to shareholders.

     

The LTI grants consisted of performance-based restricted stock units (RSUs) and time-vested RSUs. Increased target opportunity for Messrs. Chancy and Cummins and Ms. Dukes based on expansion of roles and responsibilities, level of experience, individual performance, and to better align with market practice. Also increased target opportunity for Mr. Rogers based on individual performance and changes in market compensation, and made a special one-time award to Mr. Gillani.

 
   
         
   

 70% Performance-based RSUs—payouts based on a return on tangible common equity (ROTCE) matrix, measuring both absolute ROTCE and ROTCE relative to peer companies, and a potential adjustment to the payout depending on our total shareholder return (TSR) relative to our peer group.

     

ROTCE maintains an overall profitability focus and a focus on building shareholder value. TSR aligns interests of executives with our shareholders by modifying awards based on an increase or decrease in our TSR relative to a banking industry peer group.

   
   
   
 

 30% Time-vested RSUs

     

For retention and to align executives’ interests with those of shareholders.

 
   
         

Retirement Plans

 

Intended to assist in attaining financial security during retirement.

     

Fixed compensation component. Plans were frozen after 2011.

   
   
   

401(k) Plan and Deferred Compensation

 

Fixed component of compensation. Qualified and nonqualified plans provide tax advantaged savings vehicles.

     

The Company matched employee 401(k) contributions up to 6%. The Company also paid an additional 1% discretionary contribution to employees in 2018.

   
   
   

Perquisites

 

Most perquisites were eliminated in 2008.

     

No change.

 
   

 

Pay for Performance

Our executive compensation programs are designed to align a substantial portion of pay to Company performance. The table and charts below outline the percent of value for each element of target total direct compensation.

 


 

   Element

 

  

 

CEO

 

   

 

Other

NEOs

 

 

Base Salary

     13     18

Annual Incentive

     26     26

LTI—Performance Vested RSUs

     43     39

LTI—Time-Vested RSUs

     18     17

Total Performance-Based

     69     65

Total At-Risk

     87     82

Performance-based compensation includes the AIP and performance-based RSUs. At-risk compensation consists of the AIP, performance-based RSUs and time-vested RSUs.

 

 

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Executive Compensation

 

2018 Chairman and CEO Compensation Mix

 

LOGO

2018 Other NEOs Compensation Mix

 

LOGO

 


Below we explain how our 2018 annual incentive awards and long-term incentive grants are tied to current year and future performance.

Annual Incentive Plan (AIP). Payments to NEOs under our AIP generally are based on the achievement of corporate performance objectives, as well as individual performance. NEO AIP award levels in 2018 were based on annual results for earnings per share (EPS, 50% weighting), tangible efficiency ratio (25% weighting), and pre-provision net revenue (PPNR, 25% weighting).

Long-Term Incentives (LTI). Our 2018 annual grants of LTI consisted of 70% performance-based RSUs and 30% time-based RSUs. The performance-based RSUs will be earned based on the achievement of an absolute earnings per share hurdle, then based upon a matrix which combines performance goals for our ROTCE relative to a peer group and absolute ROTCE, in both cases measured over the three years 2018-2020, with potential adjustment to the payout based on total shareholder return (TSR) relative to our peer group.

 

 


  Grant
  Value
   Grant Description    Performance
Period
   Performance Goals    Vesting1

  70%

   Performance-based RSUs    2018–2020   

 Minimum EPS hurdle

 

 SunTrust ROTCE measured against pre-set goals and relative to peer companies

 

 SunTrust TSR rank compared to peer group

  

Earned awards vest on February 13, 2021.

 

The Company imposes a mandatory one-year deferral on awards earned in excess of 130% of the target level.

  30%

   Time-vested RSUs    N/A    N/A    Vest ratably over 3 years on each anniversary of the grant date.

 

1 

NEOs are required to retain 50% of the net shares that vest for a minimum of one year as required by our Share Ownership and Share Retention Requirements.

Analysis of 2018 Compensation Compared to 2017 Compensation

In 2018, we maintained our policy to deliver total direct compensation at competitive levels based primarily on benchmarking among a defined group of peer organizations.

In February 2018, the Company announced that Messrs. Chancy and Cummins would be taking on expanded roles and responsibilities with Mr. Chancy becoming Vice Chairman,

 


Co-Chief Operating Officer, and Consumer Segment Executive and Mr. Cummins becoming Co-Chief Operating Officer and Wholesale Segment Executive. In addition, the Company announced that Ms. Dukes would succeed Mr. Gillani as Corporate Executive Vice President and Chief Financial Officer on March 31, 2018. As a result, the Compensation Committee made various changes to their compensation as described below.

 

 


 

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The Compensation Committee increased salaries in 2018 for Messrs. Chancy and Cummins and Ms. Dukes relative to 2017 to reflect the scope of their additional responsibilities, their experience and their individual performance, as well as to better align with market practices. Mr. Rogers’ salary was also increased based on his performance and changes in market compensation. Salaries for the other NEOs were not adjusted.

Additionally, based on market practices relative to their new roles and responsibilities, in 2018 the Compensation Committee increased the target award percentages for Messrs. Chancy and Cummins, and decreased the target award percentage for Ms. Dukes, under our AIP. Funding of 2018 non-equity incentive compensation delivered through our AIP reflects a decrease compared to 2017 due largely to the Company’s performance relative to the 2018 AIP targets, although actual awards for certain NEOs remained stable on account of increases in their salaries or target award percentages. The AIP payments for our NEOs were determined based on Company performance and the Compensation Committee’s assessment of their individual contributions. We discuss AIP in greater detail below under “2. Annual Incentives.”

Long-term equity award targets for Messrs. Chancy and Cummins and Ms. Dukes were increased in 2018 based on their expanded responsibilities and market practice. The award target for Mr. Rogers was also increased based on his performance and changes in market compensation. In addition, the Compensation Committee made a special one-time award to Mr. Gillani, which we discuss in greater detail below.

Mr. Case re-joined the Company on January 29, 2018 and in connection with his hiring was awarded special cash bonuses of $850,000 paid at the time of his hiring and another $600,000 to be paid in February 2019 primarily due to foregone cash and equity incentive opportunities at his previous employer as well as to recognize differences in the pay mix structure from his prior job, namely more extensive use by the Company of equity-based long-term incentives with multi-year vesting requirements.

Finally, the change in net present value of future pension benefits for the NEOs decreased in 2018 compared to 2017. This comparison is driven by the fact that in 2018 the present value of pension benefits decreased due to increases in discount rates. We discuss pension benefits in greater detail below in “4. Benefits” and “2018 Pension Benefits Table.”

Executive Compensation Program Overview

Our current executive compensation program has four parts:

1. Salary.

2. Annual Incentives.

3. Long-Term Incentives, and

4. Benefits.

 


The various components of our 2018 NEO compensation program are described below.

1. Salary

We pay salaries to attract and retain talented executives. We target competitive levels of salary largely based on the salaries paid for comparable positions among our peer group.

The Compensation Committee generally considers annual increases to base salary after considering an individual’s performance, changes in market compensation, experience level, and/or changed responsibilities. In light of these factors, in 2018 the Compensation Committee increased (i) the salary of Mr. Rogers from $1,000,000 to $1,100,000, (ii) Mr. Chancy’s salary from $700,000 to $750,000, (iii) the salary of Mr. Cummins from $675,000 to $725,000, and (iv) the salary of Ms. Dukes to $600,000. The base salaries of the other NEOs were not adjusted in 2018.

The size of the base salary indirectly affects the size of the potential payment under the Annual Incentive Plan and under the Executive Severance Plan, which are discussed below under “2. Annual Incentives” and “4. Benefits”, respectively.

2. Annual Incentives

The AIP is a short-term cash incentive program which rewards the achievement of annual performance goals, primarily annual financial goals. We designed the AIP to:

 

 

Support our strategic business objectives.

 

 

Promote the attainment of specific financial goals.

 

 

Reward achievement of specific performance objectives.

 

 

Reinforce a culture of risk awareness, risk management, and risk mitigation.

 

 

Encourage teamwork.

All NEOs participate in the AIP. The amount paid to an executive under the AIP is a function of:

 

 

A target award amount expressed as a percentage of base salary.

 

 

The level of achievement of Company financial goals which were established by the Compensation Committee.

 

 

Payout amounts approved by the Compensation Committee which correspond to the Company’s actual level of performance as well as the executive’s influence on that performance.

We target our AIP opportunity at market competitive levels primarily based on benchmarking among a defined group of peer organizations. See “Market Competitiveness” below for more information on our peer organizations. In February of each year, the Compensation Committee determines the performance metrics which best support achievement of annual operating objectives and financial goals and

 

 

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establishes target performance goals based largely on management’s confidential business plan and corresponding budget for that year. The Compensation Committee considers multiple financial metrics with emphasis on revenue growth, expense management, and profit improvement.

For the 2018 AIP, we used the same three corporate performance measures as in 2017: tangible efficiency ratio (25% weight), pre-provision net revenue (PPNR, 25% weight), and earnings per share (EPS, 50% weight). Our tangible efficiency ratio is the ratio of our noninterest expense, excluding amortization expense, to our revenue. The Compensation Committee chose the tangible efficiency ratio because it is an important measure used by investors to evaluate how well we are managing our organization. The lower the efficiency ratio, the better for our shareholders, as it means that a greater percentage of each dollar of revenue is converted to profit. PPNR is the sum of net interest income and noninterest income (excluding securities gains or losses), less noninterest expense. The Compensation Committee selected this performance measure in order to drive growth in PPNR, which will allow us to increase operating leverage by focusing on quality revenue. PPNR is also a measure used by our primary federal banking regulator in the capital planning process. The Compensation Committee selected EPS as the third component of the AIP to better align pay with performance and to promote the interests of our shareholders.

The Compensation Committee also sets minimum and maximum performance levels for each performance measure. Actual payouts under the AIP depend on the level at which we achieve each of the performance measures. The Compensation Committee approved the following performance targets for 2018:

 

   

 

2018 Annual Incentive Plan
Objectives

 
    Minimum     Target     Maximum  

 Earnings Per Share (50% weight)

  $ 4.80     $ 5.10     $ 5.25  

 Tangible Efficiency Ratio* (25% weight)

    61.0 %      60.0 %      59.5 % 

 Pre-Provision Net Revenue* (25% weight)

  $

 

3.45

Billion


 

  $

 

3.65

Billion


 

  $

 

3.75

Billion


 

 Payout % of Target

    0 %      100 %      150

 

*

We provide a reconciliation from GAAP measures to adjusted financial measures in our 2018 Annual Report on Form 10-K in Table 29, which begins on page 73.

 


These goals reflected a robust plan to grow the business and progress towards our previously disclosed tangible efficiency ratio target of below 60%.

For the NEOs, AIP payments generally are based on corporate, rather than individual, performance objectives because NEOs hold positions that have a substantial impact on the achievement of those measures. This approach also reflects an expectation that collective performance will result in improved business execution and favorably impact shareholder value. However, the Compensation Committee retains the discretion to adjust (up or down) actual awards to individual NEOs based upon individual performance.

The Compensation Committee reviews actual performance relative to the pre-set goals which were established by reference to the Company’s confidential business plan and forecast. When evaluating whether those goals were achieved and determining final awards, the Compensation Committee has the discretion, pursuant to the terms of the AIP, to adjust GAAP earnings per share, tangible efficiency ratio, and PPNR for extraordinary, unusual or non-recurring items, including charges or costs associated with restructurings of the Company, discontinued operations and the cumulative effects of accounting changes. The Compensation Committee does this when actual results are affected by factors outside of management’s control or which were materially different from the assumptions underlying the Company’s business plan. The Compensation Committee may make such adjustments to both increase and decrease the performance measures of the AIP. The Compensation Committee did not make any adjustments to 2018 results.

The 2018 AIP for our NEOs was funded as follows:

 

    Weight     Results    

Measure

Funding

Level

   

Blended

Corporate

Funding

Level

 

 

   Earnings Per Share

 

 

 

 

 

 

50.0

 

 

 

 

 

$

 

 

5.74

 

 

 

 

 

 

 

 

 

150.0

 

 

 

    107.0 % 

 

   Tangible Efficiency Ratio

 

 

 

 

25.0

 

 

 

 

 

60.2

 

 

 

 

 

83.0

 

 

   Pre-Provision Net Revenue

 

   

 

25.0

 

 

 

 

$

 

 

 

3.539

Billion

 

 

 

 

   

 

47.0

 

 

 

 

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Based on market practices and expansions in their roles during 2018, the Compensation Committee reviewed the overall pay mix and made adjustments to the target awards as a percent of base salary for Messrs. Chancy and Cummins, whose target opportunities were each increased to 165%, and for Ms. Dukes, whose target opportunity was decreased to 110%. For more information on adjustments to the overall pay mix for Messrs. Chancy and Cummins and Ms. Dukes, see “Analysis of 2018 Compensation Compared to 2017 Compensation” above. Also, for 2018, the Compensation Committee considered a number of factors in determining AIP awards for our NEOs, including activities during the year, financial performance of the Company, recommendations of our CEO, and other circumstances, but the Compensation Committee did not make any adjustments to the actual AIP awards for our NEOs from their funded amounts, except for the award to Mr. Gillani, which was paid at the target amount. The target, funded and actual 2018 AIP awards for our NEOs are set forth in the table below:

 

   

 

Target
as a %
of Base
Salary

    Target
Award
    Funded
Award
   

Actual

Award

 

 Mr. Rogers

    200   $ 2,200,000     $ 2,354,000     $ 2,354,000  

 Mr. Gillani1

    110   $ 346,379     $ 370,623     $ 346,379  

 Ms. Dukes2

    110   $ 667,562     $ 714,291     $ 714,291  

 Mr. Chancy

    165   $ 1,237,500     $ 1,324,125     $ 1,324,125  

 Mr. Cummins

    165   $ 1,196,250     $ 1,279,988     $ 1,279,988  

 Mr. Case3

    100   $ 461,644     $ 493,959     $ 493,959  

 

 


1

Mr. Gillani’s prorated award reflects that his employment with SunTrust ended on June 30, 2018.

 

2

The Compensation Committee adjusted the target AIP percentage for Ms. Dukes on a prorated basis effective February 16, 2018.

 

3

Mr. Case’s AIP award was prorated based on his re-joining SunTrust on January 29, 2018.

3. Long-Term Incentives

A key objective of our long-term incentives is to reward management for effective long-term decision-making. These incentives focus attention on long-range objectives and future returns to shareholders. Long-term incentives also help achieve our objective of retaining top talent. The Compensation Committee ties the value of the long-term incentives for our NEOs entirely to corporate performance or stock price rather than to individual performance because of the role these executives play in the Company’s success. Since 2008, the long-term incentives for NEOs have been paid entirely in equity with no cash component. We determine the amount of long-term incentives based primarily on a review of market practices.

In 2018, consistent with prior practice, we split the long term incentive into two types of awards. This allows us to measure and reward performance differently. Those awards were:

 

 

  Award

 

 

 

2018

 

 

 

2019

 

 

 

2020

 

 

 

2021

 

 

 

2022

 

RSUs–ROTCE and TSR (70%)

 

3-Year Performance Period

 

Hurdle: Minimum EPS

 

A determination of SunTrust ROTCE compared to pre-set absolute ROTCE goals as well as ROTCE relative to peers, then potentially adjusted based on relative TSR

  If earned, vests after the determination of results on Feb. 13, 2021  

Hold 50% of Net Shares for 1 Year Minimum

 

Additional one-year holding period to the extent any earned awards exceed 130% of target

RSUs–Time Vested (30%)

 

Time vested

 

Equity ownership aligns executives with shareholders

  One-third vests
Feb. 13, 2019
  One-third vests
Feb. 13, 2020
  One-third vests
Feb. 13, 2021
  Hold 50% of Net Shares for 1 Year Minimum

 

Changes from Prior Year. In 2018, we continued to use performance-based RSUs and time-vested RSUs. For our performance-based RSUs, we again used a minimum EPS hurdle and combined ROTCE in a matrix structure in order to balance both absolute and relative ROTCE performance, with a potential adjustment to the payout based on TSR relative to peers. In addition to meeting performance and service requirements, half of the net shares which vest under all awards are subject to a 1-year holding period under our Share Ownership and Share Retention Requirements. In addition, on February 13, 2018, the Compensation Committee made a special long-term award of time-vested RSUs to retiring CFO Aleem Gillani in consideration of the significant contributions he

made during his tenure with the Company, as well as his commitment to a smooth transition of his responsibilities. The award had a value as of the grant date of $1,500,000 with 50% of the award vesting on the first anniversary of the grant date and the remaining 50% of the award vesting on the second anniversary of the grant date. Each RSU when vested will be settled in one share of SunTrust common stock. The award will continue to vest after Mr. Gillani’s retirement, and vesting is not contingent on his employment with SunTrust. This award is subject to our expanded recoupment (clawback) policy. Refer to “Recoupment of Incentive Compensation (Clawbacks)” below. No other special retention or long-term awards to our NEOs were made in 2018.

 

 

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2018 Performance-based RSUs—ROTCE and TSR. 70% of the annual long-term incentive was delivered via performance-based RSUs which require (1) the achievement of an earnings-per-share hurdle, (2) a determination of SunTrust absolute ROTCE, as well as ROTCE relative to a peer group, and (3) a determination of TSR performance relative to peers.

First, an EPS hurdle must be achieved to ensure that awards are consistent with banking safety and soundness. Second, provided that a cumulative $3.00 per share EPS target is achieved, a preliminary number of shares are earned based on a determination of SunTrust’s absolute ROTCE, as well as relative ROTCE rank among peer banks measured over the 3-year performance period and based on a matrix, and then modified by TSR performance relative to the peer group, as follows:

 

    

Payout Percentage

 

 

  SunTrust’s

  ROTCE rank

  

SunTrust Absolute ROTCE

 

 
   A%     B%     C%     D%  

  Within top 3

     100     120     140     150%   

  Second 3

     75     100     120     140%   

  Third 3

     50     75     100     120%   

  Bottom 3

     0     50     75     100%   

There are three steps when determining the payout. First, SunTrust’s relative ROTCE rank among the peer group is determined and the appropriate row is selected. Next, the column corresponding to SunTrust’s absolute ROTCE is determined. The column headings “A%”, “B%”, “C%” and “D%” correspond to specific, absolute ROTCE targets set by the Compensation Committee based on the Company’s confidential business plan for the three-year performance period. Because these targets are based on the Company’s confidential business plan, the Company will not publicly disclose the actual target levels until the completion of the performance period.

Third, the payout determined under the ROTCE matrix is further adjusted, if applicable, based on relative TSR as indicated below:

 

SunTrust TSR Rank—Percentile    Payout Adjustment

Above 75th

   + 20%

Between 25th and 75th

   No Adjustment

 

Below 25th

  

 

- 20%

Awards are capped—a combination of ROTCE and TSR performance may never exceed 150% of target.

These performance levels were established by the Compensation Committee with the involvement of management after review of the Company’s business plan and multi-year forecasts, current operating results, and peer performance.

Finally, we impose an additional one-year holding period to the extent any earned award exceeds 130% of target.

 


Dividends will not be paid on unvested awards but instead will be accrued and reinvested in equivalent shares of common stock and then paid only if the underlying award vests. These awards are subject to our expanded recoupment (clawback) policy. Refer to “Recoupment of Incentive Compensation (Clawbacks)” below.

Time-Vested RSUs. 30% of the annual LTI awards was delivered in time-vested RSUs, which vest annually over three years (i.e., one-third each year). We use time-vested RSUs instead of stock options to reduce the leverage to operating results, thereby reducing potential compensation risk, while continuing to align executives’ interests with shareholders through equity ownership.

Executives are required to retain 50% of net shares under both awards for a minimum of one year, ensuring longer-term alignment with shareholder risk. Time-vested awards are also subject to our expanded recoupment (clawback) policy. Refer to “Recoupment of Incentive Compensation (Clawbacks)” below.

Performance-Based Awards Granted in Prior Years.

Performance targets and actual results for the completed performance period for awards made in February 2016, which vested in February 2019, are described below. The underlying units were earned based on actual performance over the three-year measurement period compared to pre-established performance criteria.

2016 Performance-based Restricted Stock Units—Return on Tangible Common Equity (ROTCE) and Total Shareholder Return (TSR). In 2016, 70% of the long-term incentive was delivered via performance-based RSUs which required (1) the achievement of an earnings-per-share hurdle, (2) a determination of ROTCE performance relative to pre-set goals, as well as relative to a peer group, and (3) a determination of TSR performance relative to a peer group.

First, an EPS hurdle had to be achieved. Provided that a cumulative $3.00 per share EPS target was realized, a preliminary number of shares were earned based on SunTrust’s absolute ROTCE, as well as SunTrust’s ROTCE rank among peer banks, measured over the 3-year performance period, as follows:

 

    

 

Payout Percentage

 

 

  SunTrust’s

  ROTCE rank

  

 

SunTrust Absolute ROTCE

 

 
   £9.5%     10.5%     11.0%     ³12%  

  Within top 3

     120     130     140     150%   

  Second 3

     100     120     130     140%   

  Third 3

     50     100     120     130%   

  Bottom 2

     0     50     100     120%   
 

 

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Next, this preliminary number of earned shares was adjusted, if applicable, based on SunTrust’s relative TSR among peer banks measured over the 3-year performance period as follows:

 

SunTrust TSR Rank—Percentile    Payout Adjustment

 

Above 75th

 

  

 

+ 20%

 

 

Between 25th and 75th

  

 

No Adjustment

 

Below 25th

 

  

 

- 20%

 

Awards were further subject to the following conditions. First, awards were capped such that a combination of ROTCE and TSR performance could never result in a payout in excess of 150% of target. Second, we would impose a mandatory one-year deferral to the extent any earned award exceeded 130% of target.

When evaluating whether these goals were achieved and determining final awards, the Compensation Committee has the discretion, pursuant to the terms of our 2009 Stock Plan under which the 2016 awards were made, to adjust GAAP ROTCE for SunTrust or its peers for extraordinary, unusual or non-recurring items. The Compensation Committee does this when actual results are affected by factors outside of management’s control, materially impact core operating performance, or were materially different from the assumptions underlying the Company’s business plan. The Compensation Committee may make such adjustments to both increase and decrease the performance measures with respect to the LTI awards.

The Compensation Committee reviewed a number of potential adjustments related to the performance of SunTrust and its peers over the three-year performance period. The Compensation Committee exercised the discretion allowed under the 2009 Stock Plan to adjust for purposes of relative ROTCE the ROTCE of SunTrust and its peers to remove the financial impacts of the following items: (i) the fourth quarter of 2017 adoption of tax reform regulations arising from the Tax Cuts and Jobs Act of 2017, (ii) extraordinarily large gains from the sale of a business unit recognized in two quarters by one member of the peer group, and (iii) the settlement charge recognized by SunTrust in the fourth quarter of 2018 related to the termination of a legacy pension plan. The Compensation Committee would have made corresponding adjustments to SunTrust’s absolute ROTCE for these items but elected not to because the adjustments would not have impacted the absolute ROTCE payout level.

After making the adjustments described above, the Compensation Committee determined that the 3-year cumulative EPS of $13.81 exceeded the $3.00 hurdle, and that our 3-year adjusted ROTCE was 13.4%, which was sixth among peers, and that 140% of the grant was earned based on these results. Further, the Compensation Committee determined that our TSR for the 3-year performance period was 32.7%, which was between the 25th and 75th percentiles, resulting in no adjustment to the award. Combining these results, the Compensation Committee determined that 140% of the award vested on February 9, 2019.

4. Benefits

401(k) Plan and Deferred Compensation Plan. We offer a qualified 401(k) Plan and a nonqualified deferred compensation

 


plan to provide tax-advantaged savings vehicles. We make matching contributions to the 401(k) Plan and the Deferred Compensation Plan to encourage employees to save money for their retirement. These plans, and our contributions to them, enhance the range of benefits we offer to executives and enhance our ability to attract and retain employees.

Under the 401(k) Plan for 2018, employees may defer from 1% to 50% of their eligible pay (subject to Internal Revenue Service limits). We match the first 6% of eligible pay. We may also provide an annual discretionary contribution to all employees equal to a certain percentage of eligible pay. Company contributions are deposited into investment funds based on participants’ directions.

We also maintain a nonqualified deferred compensation plan in order to further assist NEOs and certain other executives in saving for retirement. Under the Deferred Compensation Plan, participants may defer from 6% to 50% of base salary and from 6% to 90% of incentive compensation. The Deferred Compensation Plan also provides for a Company matching contribution equal to 6% of the participant’s eligible earnings in excess of the IRS qualified plan compensation limit. For NEOs who did not participate in the SunTrust SERP or the SunTrust Restoration Plan, the Company matching contribution of 6% is limited to the participant’s eligible earnings in excess of the IRS qualified plan compensation limit but not exceeding eligible earnings in excess of twice that limit. The Company contribution in respect of any participant (not including any discretionary contribution) may not be greater than the participant’s actual deferrals under the Deferred Compensation Plan. Because the Deferred Compensation Plan is unfunded, we account for all participants’ deferrals plus our matching contributions in phantom investment units which are converted to cash upon payment of benefits. Participants’ investment choices in the Deferred Compensation Plan are essentially the same investment options offered in the 401(k) Plan.

Perquisites and Other Benefits. We eliminated most perquisites and personal benefits on January 1, 2008 with the exception of limited personal use of corporate aircraft. The Company recognizes that permitting limited personal use of corporate aircraft for the CEO supports his ability to perform his duties throughout the Company’s service territory in a safe, secure environment and maximizes use of his time. Personal use of our corporate aircraft may constitute a personal benefit, and we disclose this benefit when the incremental cost of providing this benefit, together with the aggregate incremental cost of all other perquisites and personal benefits, is at least $10,000. In 2018, perquisites and other benefits for each NEO were less than $10,000.

Post-Termination Compensation—Retirement Plans. We previously provided teammates with certain pension benefits. However, at the end of 2011, the Compensation Committee froze the Company’s retirement plans, including (i) our qualified defined benefit pension plan, (ii) the SunTrust Banks, Inc. Supplemental Executive Retirement Plan (“SERP”), and (iii) the SunTrust Banks, Inc. ERISA Excess Plan (“Excess Plan”). As a result, the benefits provided under these plans were fixed and do not reflect subsequent salary increases or service credit.

 

 

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Additionally, pay credits under the cash balance formula provided by these plans (where applicable) ceased as of December 31, 2011. However, we continue to recognize service for vesting and eligibility requirements for early retirement, and interest credits under the cash balance formula will continue to accrue until benefits are distributed. Actual benefits vary for each NEO based on years of service, years remaining until retirement and compensation history. In lieu of traditional pension benefits, we increased the Company matching contribution opportunity under our defined contribution plans.

Post-Termination Compensation—Executive Severance Plan. None of our NEOs has an employment agreement which requires us to pay their salary or severance for any period of time. Instead, the Company has an Executive Severance Plan which replaced all legacy change in control (CIC) agreements. The Executive Severance Plan enhances our ability to attract and retain talented executives by providing severance benefits. The Executive Severance Plan also allows us to better standardize benefits among executives and to terminate all grandfathered CIC agreements, which included tax gross-up provisions. All remaining CIC Agreements were terminated effective in 2016.

Under the Executive Severance Plan, executives will receive benefits upon termination of employment in connection with a change in control, and lesser severance benefits in connection with certain other terminations, such as a reduction in force. Specifically, NEOs other than the CEO will receive an amount equal to 1.5 times their base salary, and the CEO will receive an amount equal to two times his base salary, in connection with their involuntary termination of employment in connection with a reduction in force, job elimination, divestiture, or changes to the NEO’s existing position where it is no longer an “equivalent position.” Also, NEOs including the CEO will receive an amount equal to two times their base salary and target bonus and a pro-rated portion of the annual bonus earned in the year of termination upon a termination of employment in connection with a change in control where the NEO’s employment is terminated without cause, or where the NEO resigns for good reason, during the 2-year period following a change in control. Vesting of long-term incentives may also accelerate upon termination of employment in connection with a change in control and certain other terminations in accordance with the plans and award agreements governing those incentives. Accelerated vesting of long-term incentives is discussed in more detail below at “2018 Potential Payments upon Termination or Change in Control.”

Executive Compensation Decision-Making Processes

Participants in Decision-Making

The Compensation Committee of the Board makes decisions regarding the compensation of our executives. Specifically, the Compensation Committee has strategic and administrative responsibility for a broad range of issues. These include ensuring that we compensate executives and key management effectively and in a manner consistent with our stated compensation philosophy and objectives and the requirements of the appropriate regulatory bodies. The Compensation Committee also oversees the administration of executive compensation plans, including the design of, performance

 


measures and targets for, and award opportunities under, the executive incentive programs and certain employee benefits.

The Compensation Committee reviews executive officer compensation at least annually to ensure that senior management compensation is consistent with our compensation philosophy, Company and individual performance, changes in market practices, and changes in an individual’s responsibilities. The Compensation Committee has continued to consider individual performance, long-term potential, and other individual factors in making promotions and setting base salaries. Among the elements of individual performance considered by the Compensation Committee are leadership, talent management, risk management, and individual contributions to our improvement in financial performance, including growing the business, efficiency, and productivity.

At the Compensation Committee’s February meeting, the Compensation Committee conducts a more specific review which focuses on performance relative to annual and long-term incentive award targets for the most recently-completed fiscal year or performance period. This review considers corporate and individual performance, changes in an NEO’s responsibilities, data regarding peer practices, and other factors.

The Compensation Committee reviews and approves the compensation of the CEO, as well as the Co-Chief Operating Officers and the Corporate Executive Vice Presidents, which constitute the CEO and his direct reports and include the other NEOs. The CEO and members of our Human Resources function assist in the reviews of such direct reports. The Compensation Committee’s compensation consultant supports such reviews by providing data regarding market practices and making specific recommendations for changes to plan designs and policies consistent with our compensation philosophies and objectives. The CEO may also make recommendations to the Compensation Committee to adjust the amount paid to his direct reports based on performance relative to individual goals. With regard to senior officers other than the CEO, the Co-Chief Operating Officers and the Corporate Executive Vice Presidents, compensation is determined in part on market data, and the Compensation Committee annually reviews the general components of such compensation programs.

Compensation Consultant

To assist in efforts to meet the objectives outlined above, the Compensation Committee engages an independent executive compensation consulting firm to advise it on a regular basis on our executive compensation and benefit programs. The Compensation Committee engaged the consultant to provide general executive compensation consulting services and to respond to any Compensation Committee member’s questions and to management’s need for advice and counsel. In addition, the consultant performs special executive compensation projects and consulting services from time to time as directed by the Compensation Committee. The consultant reports to the Compensation Committee Chair. Pursuant to the Compensation Committee’s charter, the Compensation Committee has the power to hire and terminate such consultant and engage other advisors.

 

 

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The engagement of a compensation consultant raises the potential for conflicts of interest. To minimize the potential for conflicts of interest, we limit the use of the Compensation Committee’s consultant to only teammate compensation and benefits and non-employee director compensation matters. Also, we report to the Compensation Committee the amount of fees paid to the compensation consultant and the types of matters on which the consultant advised. In 2018, Frederic W. Cook & Co., Inc. (“FW Cook”) performed services solely for the Compensation Committee or other committees of our Board of Directors (including advising the Governance and Nominating Committee with respect to the compensation of our directors). The Compensation Committee determined that the work of FW Cook in 2018 did not raise any actual conflict of interest. Additionally, at its February 2019 meeting, the Compensation Committee determined that FW Cook was independent of management after considering several factors, including (1) whether FW Cook provided any other services to the Company; (2) the amount of fees received from the Company by FW Cook as a percentage of its total revenue; (3) FW Cook’s policies and procedures that are designed to prevent conflicts of interest; (4) any business or personal relationship of the compensation consultant with a member of the Compensation Committee; (5) the amount of SunTrust stock owned by FW Cook and its employees who advise the Compensation Committee or other committees of our Board; and (6) any business or personal relationships between the executive officers of the Company and FW Cook and its employees who advise the Compensation Committee or other committees of our Board.

Market Competitiveness

To ensure that we continue to offer competitive total compensation to our NEOs, annually the Compensation Committee reviews the marketplace in which we compete directly for executive talent. The Compensation Committee looks at the market primarily based on a select group of peer banking companies representing our direct competitors for business and talent and, when applicable, as a broader financial services industry. From this review, the Compensation Committee positions target total compensation—salary, short-term incentives, and long-term incentives—at competitive levels within this market. Total compensation, as well as each component of total compensation, is benchmarked separately.

The Compensation Committee did not change the peer group for compensation decisions in 2018, and the peer group continues to consist of:

 

 Bank of America Corporation

 BB&T Corporation

 Citizens Financial Group, Inc.

 Fifth Third Bancorp

 Huntington Bancshares, Inc.

 KeyCorp

 

  

 M&T Bank Corporation

 PNC Financial Services Group Incorporated

 Regions Financial Corporation

 U.S. Bancorp

 Wells Fargo & Company

 

The Compensation Committee reviews other peer data occasionally and monitors compensation actions occurring within our industry. This is important as we strive to attract, retain and motivate our

 


executive talent. We review financial services industry compensation data from published third-party surveys of financial services companies of approximately the same asset size. The Compensation Committee uses this data, in addition to the peer group data, largely in its review of base salaries, but the Compensation Committee also uses it when making short-term and long-term incentive decisions. We do this because in some cases, the availability of relevant peer information is limited for specific executive positions. We also do this because we may compete for the same executive talent with all financial services companies. Additionally, we believe that the integrity of our executive compensation decisions improves with additional information.

Other Data

Members of our Human Resources function regularly provide the Compensation Committee with information regarding the value of prior equity grants made to the CEO, the Co-Chief Operating Officers, and the Corporate Executive Vice Presidents. This information includes accumulated gains, both realized and unrealized, under restricted stock, stock option and other equity grants. Additionally, we provide the Compensation Committee with information regarding potential payments to our NEOs under various termination events, including retirement, termination for cause and not for cause, and upon a change in control. We provide the Compensation Committee with both the dollar value of benefits that are enhanced as a result of the termination event and the total accumulated benefit. We provide similar information in the “2018 Potential Payments Upon Termination or Change in Control Table” below, except that in that table we report only the amount that is enhanced as a result of the termination event in order to not double-count compensation that we reported in previous years. By having this information, the Compensation Committee is informed of possible scenarios that involve compensation.

Investor Outreach and Say-on-Pay

We began a formal, annual shareholder outreach program in 2012. Since that time, members of our Investor Relations and Legal departments have spoken with most of our thirty-five largest shareholders. These discussions have included providing an overview of, and updates with respect to, our executive compensation programs. We provide more information about these discussions in this Proxy Statement at “Investor Outreach” above in the “Corporate Governance” section.

The Compensation Committee attempts to balance the interests of shareholders, regulators and other interested parties.

 

 

 90% 

 

 

In each of the last nine years, more than 90% of the votes cast were in favor of our executive compensation programs, including over 97% in favor last year.

 

We are proud of these results and believe our shareholders support our compensation policies and programs. Due to this

 

 

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consistent strong support, we did not make any material changes to our 2018 compensation policies as a result of the advisory vote on executive compensation.

Other Guidelines and Procedures Affecting Executive Compensation

Grants of Stock-Based Compensation. The Compensation Committee approves all grants of stock-based compensation to each executive officer. The Compensation Committee also approves the size of the pool of stock-based awards to be granted to other employees and delegates to the CEO the authority to make and approve specific grants to employees other than the Co-Chief Operating Officers and the Corporate Executive Vice Presidents. The Compensation Committee reviews such grants and oversees the administration of the program.

Stock-Based Compensation—Procedures Regarding Timing and Pricing of Grants. Our policy is to make grants of equity-based compensation only at current market prices (which may include an average of closing prices over a specified number of days ending on or about the date that a grant is made). Absent special circumstances, it is our policy to make most equity grants at the February meeting of our Board. However, we make a small percentage of grants at other times throughout the year, mostly on the date of regularly-scheduled meetings of the full Board in connection with specific circumstances, such as the hiring or promotion of a teammate or special retention circumstances.

We try to make annual stock-based grants at approximately the same time each year and when they will not be influenced by scheduled releases of information. We do not otherwise time or plan the release of material, non-public information for the purpose of affecting the value of executive compensation. Instead, these awards primarily have grant dates corresponding to the date of the February Board meeting. We chose the February meeting of our Board because it is the first meeting of the Board after we have publicly announced financial results for the completed year. This date also allows time for performance reviews following the determination of corporate financial performance for the previous year. This permits us to make grants at a time when our financial results have already become public. We believe we minimize the influence of our disclosures of non-public information on these long-term incentives by selecting dates well in advance and which fall several days or weeks after we report our financial results, and by setting the vesting period at one year or longer. We follow the same procedures regarding the timing of grants to our executive officers as we do for all other participants.

Recoupment of Incentive Compensation (Clawbacks)

For several years, the Compensation Committee has made all of our incentive award agreements, both long and short-term, subject to stringent recoupment provisions. These provisions allow the Company to recoup or cause the forfeiture of compensation in the event of certain business unit or line of

 


business losses, detrimental conduct, or financial statement restatements, after taking into account the magnitude of the loss, the employee’s involvement in the loss, the employee’s performance, and any other factors deemed appropriate.

SunTrust and the Board are committed to pursuing recoupment actions and other sanctions (including termination of employment) against current and former teammates believed to have acted unethically. We have a standing committee comprised of internal leaders who track significant events for possible recoupment and other appropriate sanctions. At least quarterly, the Compensation Committee reviews the status of matters tracked by this committee.

In July 2015, the SEC published proposed rules regarding the disclosure and administration of clawback policies. In November 2015, SunTrust early-adopted a formal, written recoupment policy that meets or exceeds the proposed SEC requirements. In addition, our policy memorializes SunTrust’s existing practice of including provisions authorizing the Company to clawback incentive compensation in essentially every incentive award agreement for essentially every employee. This includes both performance-vested and time-vested compensation. You can view the policy on our Investor Relations website, investors.suntrust.com, under the heading “Governance.

Share Ownership and Share Retention Requirements

We have adopted share ownership and share retention requirements for non-employee directors and for executive management to formalize these important principles. A summary of the requirements is provided below.

 

Position

   Stock
Ownership
Requirement
   Share Retention
Requirement

CEO

   6X Base
Salary
   50% retention requirement for one year and until ownership requirement is met

Co-Chief Operating Officers and Corporate Executive Vice Presidents

   3X Base
Salary
   50% retention requirement for one year and until ownership requirement is met

Executives are required to retain 50% of net shares (as defined below) for a minimum of one year, and thereafter such shares may be sold only to the extent they exceed the ownership requirement. This ensures longer-term alignment with shareholder risk. Net shares means shares acquired from Company-sponsored incentive compensation plans after payment of transaction costs, including exercise prices and income taxes, whether or not shares are actually sold to pay these exercise costs.

We allow these officers five years to meet the ownership requirement from the date they became an executive officer. We count unvested time-based restricted stock and our common stock or its equivalent held in the 401(k) Plan and phantom shares held in nonqualified plans. We do not count

 

 

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unvested performance shares, or vested or unvested stock options. The CEO, our Co-Chief Operating Officers and each Corporate Executive Vice President met the requirements of this policy in 2018 as it applied to him or her.

Our Share Ownership and Retention Policy was recently amended with respect to our non-employee directors. Previously, this policy required non-employee members of our Board to own at least 15,000 shares of our common stock. As our share price increased in recent years, this resulted in our directors receiving fewer shares in connection with their annual equity grants, which are now valued at $140,000 on the date of the grant. In addition, this fixed share requirement resulted in a minimum ownership level that was approximately three times greater than the median of our peer group based on a review performed for our Governance and Nominating Committee by FW Cook. As a result, the Governance and Nominating Committee recommended that the policy be changed, and the Compensation Committee amended the policy in February 2019, to require non-employee directors to own shares of our stock with a value equal to at least five times the amount of their annual cash retainer (currently, $90,000 for a share ownership requirement of $450,000). We count unvested time-based restricted stock and restricted stock units and deferred or phantom stock towards this requirement. We allow members of the Board five years in which to meet this requirement. Presently, all Board members are in compliance with this requirement as it applies to them.

Anti-Hedging and Anti-Pledging Policies

We prohibit our executive officers and directors from hedging the risk of ownership of SunTrust stock. We also prohibit directors and executive officers from pledging shares of SunTrust stock. None of our executive officers or directors have hedged or pledged any of their SunTrust shares.

Tax Considerations

We consider the tax treatment of various forms of compensation and the potential for excise taxes to be imposed on our NEOs which might have the effect of hindering the purpose of such compensation. While we do not design our compensation programs solely for tax purposes, we design our plans to be tax efficient for us where possible and where the design does not add undue complexity to the plans or their administration. This requires us to consider several provisions of the Internal Revenue Code. While we endeavor to use tax-efficient compensation structures when feasible, the Compensation Committee has the discretion to deliver non-deductible forms of compensation.

Compensation Policies that Affect Risk Management

We maintain incentive compensation plans for a large number of teammates in addition to our executive officers. In this section, we describe some of our policies regarding our use and management of our incentive compensation plans and how we manage risks arising from our use of incentive

 


compensation. We do not believe that the risks which may arise from our compensation policies and practices are reasonably likely to have a material adverse effect on the Company.

We Use Incentives Differently Based on Job Type. We have two primary annual incentive plans. Our NEOs, executive officers, most managers and certain key teammates participate in the AIP. These are teammates with broader, company-wide and/or strategic responsibilities. This includes headquarters executives as well as leaders in various functions, such as Finance, Enterprise Risk, Legal, and Human Resources. The AIP provides an annual payout if performance exceeds pre-established corporate goals and/or if pre-established divisional and individual goals are achieved. For the CEO and his direct reports, funding of these awards is based entirely on corporate performance. For other enterprise level officers, these awards are funded based 50% on corporate performance and 50% on the performance of the officer’s line of business or functional area (e.g., the Finance Department). Awards for other employees generally are funded based 25% on corporate performance, 25% on line of business or functional area performance, and 50% on an individual funding component that is triggered by meeting a minimum threshold of net income available to common shareholders. In 2018, we used earnings per share (EPS), tangible efficiency ratio and pre-provision net revenue (PPNR) as the metrics for corporate performance. Regardless of the level of funding for the AIP, each individual award is 100% discretionary, and actual awards may be more or less than the funded amount.

Other executives and groups of teammates participate in annual incentive plans designed to support the objectives of the line of business in which they reside. We refer to these as Functional Incentive Plans (FIPs). The primary purpose of FIPs is to drive teammate behavior in a direction consistent with the business objectives of the unit, line of business, and the Company. These incentive plans are generally used to encourage production consistent with effective sales and business practices and are a focal point for setting and measuring individual performance.

We Create Different Incentive Plans for Different Jobs. We use FIPs to link teammate compensation to the successful achievement of client facing related goals. We structure FIPs to drive behaviors that directly affect revenue or productivity and use FIPs as the method for determining payouts to individuals based on identified performance measures. In 2018, we used 33 separate FIPs. While our FIPs have many common features and plan terms, generally they are either a commission plan, incentive plan or a bonus plan. Commission plans pay incentives based on production less a monthly draw. Incentive plans pay awards based on formulas tied to sales and revenue growth above a threshold. Bonus plans provide annual discretionary awards from a pool of dollars funded through business unit profit and/or revenue performance.

How We Manage Risks Arising From Incentive Compensation. We manage risks that may arise from our incentive compensation in several ways:

Balanced Risk-Taking Incentives. We balance incentive compensation arrangements with our financial results. We

 

 

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review our incentive plans regularly to ensure that they do not provide incentives to take excessive or unnecessary risks.

Controls and Risk Management. We use risk-management processes and internal controls to reinforce and support the development and maintenance of our incentive compensation arrangements.

Strong Corporate Governance. We reinforce our compensation practices with strong corporate governance. We describe the active role of the Compensation Committee of our Board in the “Board Committees and Attendance” section above and in this “Compensation Discussion and Analysis” section of this Proxy Statement. Compensation Committee governance includes a report by the Chief Risk Officer on the management of risk in our incentive plans. Additionally, senior leaders (Chief Executive Officer, Chief Financial Officer, Chief Risk Officer, Chief Human Resources Officer and Director of Total Rewards) review the effectiveness of our incentive plans.

Use of Performance Measures that Include or Adjust for Risk. We assess the effect of risk on our incentives in numerous ways. Under the AIP, we use performance metrics which are closely correlated to shareholder return. These implicitly include an important risk focus. Under our FIPs, we use a variety of methods that either directly or indirectly include risk measures, including the use of discretion in determining awards.

Management of Risk Realization. We also utilize a variety of techniques to address risks that we may realize.

Clawbacks and Forfeitures. We have expanded our clawback and forfeiture provisions for incentive compensation plans. We discuss these in greater detail in “Recoupment of Incentive Compensation (Clawbacks)” above.

Deferred Compensation. We standardized long-term mandatory deferred cash compensation arrangements, which are subject to forfeiture provisions, for certain employee populations. We continue to monitor the use of deferred compensation from a competitive market perspective.

Qualified Production. Our incentive plans include language that reinforces our compliance and control policies. Examples include the exclusion of certain types of transactions or sales

 


from commission calculations due to exceptions, the reduction in qualified production for certain types of higher risk products, and the potential to forfeit awards as a result of realized losses.

Other Measures. We began conducting comprehensive annual reviews of all of our incentive compensation plans, with an emphasis on risk-adjusted pay for performance, following the finalization by the Federal Reserve in 2010 of its “Guidance on Sound Incentive Compensation Policies.” As a result of these reviews, over the previous several years, we implemented a number of additional risk mitigation measures in our incentive compensation plans, the most significant of which were:

Reduced Sensitivity to Short-Term Performance. We “de-leveraged” total compensation in select positions by increasing base pay and reducing short-term incentives.

Senior Management Differentiation. We created a focus to distinguish senior leaders’ responsibility for profitability and influence on risk-taking, rather than on new production.

Expanded Use of Plan Limits. We expanded our use of plan features to limit compensation that otherwise might have been paid in inappropriate situations. These include the increased use of clawback and forfeiture provisions for incentive compensation plans, mandatory long-term deferrals and limiting payouts to qualified production.

Additionally, we added process enhancements which included:

Monitoring and Validation. For certain FIPs, we compare the incentives paid in recent years relative to specific financial performance metrics.

Integration of Risk and Finance Functions. Risk and Finance representatives partner with FIP developers in the ongoing planning, design and implementation of FIPs to incorporate risk measures.

Business and Sales Practices. We have established Enterprise and Segment business and sales practices committees that review the design of our incentive plans and implement governance initiatives that mitigate the risk of client harm and excessive risk taking.

 

Compensation Committee Report

The Compensation Committee reviewed and discussed the Compensation Discussion and Analysis included in this Proxy Statement with management. Based on such review and discussion, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.

Submitted by the Compensation Committee of the Board of Directors.

 

Paul R. Garcia, Chair

 

M. Douglas Ivester

 

Donna S. Morea

David M. Ratcliffe

 

Frank P. Scruggs, Jr.

 

Steven C. Voorhees

February 26, 2019

   

 

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2018 SUMMARY COMPENSATION TABLE

 

  Name and
  Principal Position
  Year     Salary     Bonus    

Stock1, 2

Awards

   

Option1

Awards

   

Non-

Equity

Incentive

Plan

Comp.

   

Changes in

Pension Value
and

Nonqualified

Deferred

Compensation

Earnings

   

All3

Other

Comp.

    Total  

 

  William H. Rogers, Jr.

 

   

 

2018

 

 

 

  $

 

1,100,000

 

 

 

   

 

 

 

 

  $

 

5,246,044

 

 

 

   

 

 

 

 

  $

 

2,354,000

 

 

 

   

 

 

 

 

  $

 

115,870

 

 

 

  $

 

8,815,914

 

 

 

Chairman and

 

   

 

2017

 

 

 

  $

 

1,000,000

 

 

 

   

 

 

 

 

  $

 

4,621,673

 

 

 

   

 

 

 

 

  $

 

3,000,000

 

 

 

  $

 

822,174

 

 

 

  $

 

148,215

 

 

 

  $

 

9,592,062

 

 

 

Chief Executive Officer

 

   

 

2016

 

 

 

  $

 

1,000,000

 

 

 

   

 

 

 

 

  $

 

4,392,043

 

 

 

   

 

 

 

 

  $

 

2,086,245

 

 

 

  $

 

474,942

 

 

 

  $

 

220,177

 

 

 

  $

 

8,173,407

 

 

 

  L. Allison Dukes

 

   

 

2018

 

 

 

  $

 

574,795

 

8 

 

 
   

 

50,000

 

9 

 

 
  $

 

1,261,079

 

 

 

   

 

 

 

 

  $

 

714,291

 

 

 

   

 

 

 

 

  $

 

38,788

 

 

 

  $

 

2,638,953

 

 

 

Corporate Executive V.P.

 

                 

and Chief Financial Officer4

 

                 

  Aleem Gillani

 

   

 

2018

 

 

 

  $

 

313,151

 

 

 

   

 

 

 

 

  $

 

1,500,013

 

 

 

   

 

 

 

 

  $

 

346,379

 

 

 

   

 

 

 

 

  $

 

101,631

 

 

 

  $

 

2,261,174

 

 

 

Former Corporate Executive V.P.

 

   

 

2017

 

 

 

  $

 

635,000

 

 

 

   

 

 

 

 

  $

 

1,176,508

 

 

 

   

 

 

 

 

  $

 

1,113,213

 

 

 

  $

 

11,266

 

 

 

  $

 

91,771

 

 

 

  $

 

3,027,758

 

 

 

and Chief Financial Officer5

 

   

 

2016

 

 

 

  $

 

611,667

 

 

 

   

 

 

 

 

  $

 

1,173,922

 

 

 

   

 

 

 

 

  $

 

817,513

 

 

 

  $

 

9,995

 

 

 

  $

 

102,634

 

 

 

  $

 

2,715,731

 

 

 

  Mark A. Chancy

 

   

 

2018

 

 

 

  $

 

750,000

 

 

 

   

 

 

 

 

  $

 

3,026,617

 

 

 

   

 

 

 

 

  $

 

1,324,125

 

 

 

   

 

 

 

 

  $

 

147,523

 

 

 

  $

 

5,248,265

 

 

 

Vice Chairman, Co-Chief

 

   

 

2017

 

 

 

  $

 

693,750

 

 

 

   

 

 

 

 

  $

 

1,661,880

 

 

 

   

 

 

 

 

  $

 

1,388,229

 

 

 

  $

 

203,076

 

 

 

  $

 

106,826

 

 

 

  $

 

4,053,761

 

 

 

Operating Officer and
Consumer Segment Executive

 

    2016     $ 658,333           $ 4,579,288           $ 976,119     $ 108,268     $ 112,903     $ 6,434,911  

  Hugh S. Cummins III

 

   

 

2018

 

 

 

  $

 

725,000

 

 

 

   

 

 

 

 

  $

 

2,774,387

 

 

 

   

 

 

 

 

  $

 

1,279,988

 

 

 

   

 

 

 

 

  $

 

40,792

 

 

 

  $

 

4,820,167

 

 

 

Co-Chief Operating Officer

 

   

 

2017

 

 

 

  $

 

668,750

 

 

 

   

 

 

 

 

  $

 

1,200,227

 

 

 

   

 

 

 

 

  $

 

1,339,566

 

 

 

  $

 

15,826

 

 

 

  $

 

20,820

 

 

 

  $

 

3,245,189

 

 

 

and Wholesale Segment Executive6

 

                 

  Scott E. Case

 

   

 

2018

 

 

 

  $

 

461,644

 

 

 

   

 

900,000

 

10 

 

 
  $

 

907,985

 

 

 

   

 

 

 

 

  $

 

493,959

 

 

 

   

 

 

 

 

  $

 

16,976

 

 

 

  $

 

2,780,564

 

 

 

Corporate Executive V.P. and
Chief Information Officer7

 

                                                                       

 

1

We report all equity awards at the full grant date fair value of each award calculated in accordance with FASB ASC Topic 718. Please refer to Note 17 to our financial statements in our Annual Report on Form 10-K for the year ended December 31, 2018, and Note 15 to our financial statements in our Annual Report on Form 10-K for the years ended December 31, 2017 and 2016, respectively, for a discussion of the assumptions related to the calculation of such values.

 

2

For awards that are subject to performance conditions, we report the value at the grant date based upon the probable outcome of such conditions consistent with our estimate of aggregate compensation cost to be recognized over the service period determined under FASB ASC Topic 718, excluding the effect of estimated forfeitures. The maximum number of 2018 performance-based RSU (ROTCE/TSR) awards that may be earned multiplied by the per unit accounting value for the grant of $68.78, are as follows: Mr. Rogers—$5,529,087; Ms. Dukes—$1,329,140; Mr. Chancy—$3,189,914; Mr. Cummins—$2,924,045; and Mr. Case—$957,005.

 

3

Total perquisites and other personal benefits for each NEO were less than $10,000 in 2018. The amount shown as “All Other Compensation” for 2018 includes the following: (a) 401(k) Company contributions (includes Company matching and discretionary contributions to both the 401(k) Plan and the Deferred Compensation Plan) for Mr. Rogers—$112,305; Ms. Dukes—$37,027; Mr. Gillani—$100,198; Mr. Chancy—$144,271; Mr. Cummins—$38,400; and Mr. Case—$16,500; and (b) supplemental disability insurance premiums for Mr. Rogers—$3,565; Ms. Dukes—$1,762; Mr. Gillani—$1,433; Mr. Chancy—$3,251; Mr. Cummins—$2,392; and Mr. Case—$476.

 

4

This is the first year that Ms. Dukes is a NEO.

 

5

Mr. Gillani retired from his position as CFO on March 31, 2018. He then continued as an employee of SunTrust until June 30, 2018 to assist with the transition of his responsibilities.

 

6

This is the second year that Mr. Cummins is a NEO.

 

7

This is the first year that Mr. Case is a NEO.

 

8

Reflects base salary adjustment for Ms. Dukes which took effect February 16, 2018.

 

9

Reflects one-time payment related to transition of responsibilities to a Corporate Executive Vice President position.

 

10

Reflects 2018 signing bonus discussed in “Analysis of 2018 Compensation Compared to 2017 Compensation” above as well as additional one-time payment related to responsibilities as a Corporate Executive Vice President.

 

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2018 GRANTS OF PLAN-BASED AWARDS

In this table, we provide information concerning each grant of an award made to an NEO in the most recently completed year. This includes awards under the Annual Incentive Plan and performance-vested and time-vested restricted stock unit awards granted under the SunTrust Banks, Inc. 2009 Stock Plan or 2018 Omnibus Incentive Compensation Plan, all of which are discussed in greater detail in this Proxy Statement at “Compensation Discussion and Analysis.” Half of the vested net shares awarded under the RSUs are subject to an additional one-year holding period under the Share Ownership and Share Retention Requirements, which ensures longer-term alignment with shareholder risk. These awards are also subject to our recoupment (clawback) policy. Refer to “Recoupment of Incentive Compensation (Clawbacks)” above.

 

             

 

Estimated Future Payouts

Under Non-Equity

Incentive Plan Awards

 

         

 

Estimated Future Payouts

Under Equity

Incentive Plan Awards

 

   

All other stock
awards: Number
of shares of
stock or units(#)

 

   

Grant Date

Fair Value of

Stock Award

 

 

  Name

 

     

Grant

Date

 

   

 

Threshold

($)

 

   

 

Target

($)

 

   

 

Maximum

($)

 

         

 

Threshold
(#)

 

   

 

Target

(#)

 

   

 

Maximum
(#)

 

 

 

  Rogers

 

 

 

AIP1

 

 

 

 

 

 

1/1/2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,200,000

 

 

 

 

 

 

 

 

 

4,400,000

 

 

 

 

           
 

 

RSU2

 

 

 

 

 

 

2/13/2018

 

 

 

 

         

 

 

 

 

 

 

 

 

 

 

 

 

 

53,592

 

 

 

 

 

 

 

 

 

80,388

 

 

 

 

   

 

 

 

 

3,686,058

 

 

 

 

   

 

RSU3

 

 

 

 

 

 

2/13/2018

 

 

 

 

                                                         

 

 

 

 

22,968

 

 

 

 

 

 

 

 

 

1,559,986

 

 

 

 

 

  Dukes

 

 

 

AIP1

 

 

 

 

 

 

1/1/2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

667,562

 

 

 

 

 

 

 

 

 

1,335,123

 

 

 

 

           
 

 

RSU2

 

 

 

 

 

 

2/13/2018

 

 

 

 

         

 

 

 

 

 

 

 

 

 

 

 

 

 

12,883

 

 

 

 

 

 

 

 

 

19,325

 

 

 

 

   

 

 

 

 

886,093

 

 

 

 

   

 

RSU3

 

 

 

 

 

 

2/13/2018

 

 

 

 

                                                            5,521    

 

 

 

 

374,986

 

 

 

 

 

  Gillani

 

 

 

AIP1

 

 

 

 

 

 

1/1/2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

346,379

 

 

 

 

 

 

 

 

 

692,758

 

 

 

 

           
 

 

RSU2

 

 

 

 

 

 

2/13/2018

 

 

 

 

                 
   

 

RSU3

 

 

 

 

 

 

2/13/2018

 

 

 

 

                                                         

 

 

 

 

22,085

 

 

 

 

 

 

 

 

 

1,500,013

 

 

 

 

 

  Chancy

 

 

 

AIP1

 

 

 

 

 

 

1/1/2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,237,500

 

 

 

 

 

 

 

 

 

2,475,000

 

 

 

 

           
 

 

RSU2

 

 

 

 

 

 

2/13/2018

 

 

 

 

         

 

 

 

 

 

 

 

 

 

 

 

 

 

30,919

 

 

 

 

 

 

 

 

 

46,379

 

 

 

 

   

 

 

 

 

2,126,609

 

 

 

 

   

 

RSU3

 

 

 

 

 

 

2/13/2018

 

 

 

 

                                                         

 

 

 

 

13,251

 

 

 

 

 

 

 

 

 

900,008

 

 

 

 

 

  Cummins

 

 

 

AIP1

 

 

 

 

 

 

1/1/2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,196,250

 

 

 

 

 

 

 

 

 

2,392,500

 

 

 

 

           
 

 

RSU2

 

 

 

 

 

 

2/13/2018

 

 

 

 

         

 

 

 

 

 

 

 

 

 

 

 

 

 

28,342

 

 

 

 

 

 

 

 

 

42,513

 

 

 

 

   

 

 

 

 

1,949,363

 

 

 

 

   

 

RSU3

 

 

 

 

 

 

2/13/2018

 

 

 

 

                                                         

 

 

 

 

12,147

 

 

 

 

 

 

 

 

 

825,024

 

 

 

 

 

  Case

 

 

 

AIP1

 

 

 

 

 

 

1/1/2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

461,644

 

 

 

 

 

 

 

 

 

923,288

 

 

 

 

           
 

 

RSU2

 

 

 

 

 

 

2/13/2018

 

 

 

 

         

 

 

 

 

 

 

 

 

 

 

 

 

 

9,276

 

 

 

 

 

 

 

 

 

13,914

 

 

 

 

   

 

 

 

 

638,003

 

 

 

 

   

 

RSU3

 

 

 

 

 

 

2/13/2018

 

 

 

 

                                                         

 

 

 

 

3,975

 

 

 

 

 

 

 

 

 

269,982

 

 

 

 

 

1

Annual Incentive Plan. Represents award opportunity under the Annual Incentive Plan (AIP). Subject to minimum performance. Maximum awards are limited to 200% of target amount. Amounts actually earned for 2018 are reported in the Summary Compensation Table in the column, “Non-Equity Incentive Plan Compensation.”

 

2

Performance-Vested RSUs-ROTCE and TSR. Performance-vested restricted stock units granted under the SunTrust Banks, Inc. 2009 Stock Plan or 2018 Omnibus Incentive Compensation Plan. The grant cliff-vests after three years (performance period is 2018-2020; i.e., award does not vest at all until after three years) provided that (1) an earnings-per-share hurdle is achieved, and then to the extent of (2) ROTCE both on an absolute basis and relative to our peer group, and (3) potentially further modified by TSR performance relative to our peer group. Depending on performance, 0% to 150% of the target number of restricted stock units can vest. Awards will be denominated in and settled in shares of SunTrust common stock. Dividends will not be paid on unvested awards but instead will be accrued and reinvested in equivalent shares of SunTrust common stock and paid if and when the underlying award vests.

 

3

Time-Vested RSUs. Time-vested restricted stock units granted under the SunTrust Banks, Inc. 2009 Stock Plan or 2018 Omnibus Incentive Compensation Plan. Awards vest pro rata annually over three years (i.e., one-third each year). Awards will be denominated in and settled in shares of SunTrust common stock. Dividends will not be paid on unvested awards but instead will be accrued and reinvested in equivalent shares of SunTrust common stock and paid if and when the underlying award vests.

 

40           SunTrust Banks, Inc. - 2019 Proxy Statement


Table of Contents

Executive Compensation

 

OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2018

 

   

 

Option Awards

 

         

 

Stock Awards

 

 
  Name  

Number of

Securities

Underlying

Unexercised

Options

(#)

Exercisable

   

Number of

Securities

Underlying

Unexercised

Options

(#)

Unexercisable

   

Option

Exercise

Price

   

Option

Expiration

Date

          

Vesting

Date

   

Number

of Shares
of

Stock
That

Have Not

Vested

   

Market1

Value

of Shares

of Stock

That

Have Not

Vested

   

 

Equity

Incentive

Plan

Awards:

Number of

Unearned

Shares of

Stock That

Have Not

Vested

   

 

Equity1

Incentive Plan

Awards:

Market

Value of

Unearned

Shares of

Stock That

Have Not

Vested

 

 

  William H. Rogers, Jr.

 

 

 

 

 

 

84,439

 

 

 

 

   

 

$

 

 

29.20

 

 

 

 

 

 

 

 

 

4/1/2021

 

 

 

 

           
 

 

 

 

 

136,200

 

 

 

 

   

 

$

 

 

21.67

 

 

 

 

 

 

 

 

 

2/14/2022

 

 

 

 

           
 

 

 

 

 

110,121

 

 

 

 

   

 

$

 

 

27.41

 

 

 

 

 

 

 

 

 

2/26/2023

 

 

 

 

           
           

 

 

 

 

2/9/2019

 

 

 

 

 

 

 

 

 

108,690

 

 

 

 

 

 

$

 

 

5,842,324

 

 

 

 

   
           

 

 

 

 

2/13/2019

 

 

 

 

 

 

 

 

 

7,656

 

 

 

 

 

 

$

 

 

386,169

 

 

 

 

   
           

 

 

 

 

2/14/2019

 

 

 

 

 

 

 

 

 

7,560

 

 

 

 

 

 

$

 

 

381,326

 

 

 

 

   
           

 

 

 

 

2/13/2020

 

 

 

 

 

 

 

 

 

7,656

 

 

 

 

 

 

$

 

 

386,169

 

 

 

 

   
           

 

 

 

 

2/14/2020

 

 

 

 

 

 

 

 

 

7,561

 

 

 

 

 

 

$

 

 

381,377

 

 

 

 

 

 

 

 

 

52,923

 

 

 

 

 

 

$

 

 

2,669,436

 

 

 

 

                                           

 

 

 

 

2/13/2021

 

 

 

 

 

 

 

 

 

7,656

 

 

 

 

 

 

$

 

 

386,169

 

 

 

 

 

 

 

 

 

53,592

 

 

 

 

 

 

$

 

 

2,703,180

 

 

 

 

 

  L. Allison Dukes

 

 

 

 

 

 

5,061

 

 

 

 

   

 

$

 

 

27.41

 

 

 

 

 

 

 

 

 

2/26/2023

 

 

 

 

           
           

 

 

 

 

2/9/2019

 

 

 

 

 

 

 

 

 

2,172

 

 

 

 

 

 

$

 

 

109,556

 

 

 

 

   
           

 

 

 

 

2/13/2019

 

 

 

 

 

 

 

 

 

1,840

 

 

 

 

 

 

$

 

 

92,810

 

 

 

 

   
           

 

 

 

 

2/14/2019

 

 

 

 

 

 

 

 

 

1,450

 

 

 

 

 

 

$

 

 

73,138

 

 

 

 

   
           

 

 

 

 

8/9/2019

 

 

 

 

 

 

 

 

 

23,485

 

 

 

 

 

 

$

 

 

1,184,583

 

 

 

 

   
           

 

 

 

 

2/13/2020

 

 

 

 

 

 

 

 

 

1,840

 

 

 

 

 

 

$

 

 

92,810

 

 

 

 

   
           

 

 

 

 

2/14/2020

 

 

 

 

 

 

 

 

 

1,450

 

 

 

 

 

 

$

 

 

73,138

 

 

 

 

   
                                           

 

 

 

 

2/13/2021

 

 

 

 

 

 

 

 

 

1,841

 

 

 

 

 

 

$

 

 

92,860

 

 

 

 

 

 

 

 

 

12,883

 

 

 

 

 

 

$

 

 

649,819

 

 

 

 

 

  Aleem Gillani2

 

           

 

 

 

 

2/9/2019

 

 

 

 

 

 

 

 

 

28,531

 

 

 

 

 

 

$

 

 

1,439,104

 

 

 

 

   
           

 

 

 

 

2/13/2019

 

 

 

 

 

 

 

 

 

11,042

 

 

 

 

 

 

$

 

 

556,958

 

 

 

 

   
           

 

 

 

 

2/14/2019

 

 

 

 

 

 

 

 

 

1,925

 

 

 

 

 

 

$

 

 

97,097

 

 

 

 

   
           

 

 

 

 

2/13/2020

 

 

 

 

 

 

 

 

 

11,043

 

 

 

 

 

 

$

 

 

557,009

 

 

 

 

   
                                           

 

 

 

 

2/14/2020

 

 

 

 

 

 

 

 

 

1,925

 

 

 

 

 

 

$

 

 

97,097

 

 

 

 

 

 

 

 

 

13,472

 

 

 

 

 

 

$

 

 

679,528

 

 

 

 

 

  Mark A. Chancy

 

 

 

 

 

 

27,716

 

 

 

 

   

 

$

 

 

29.20

 

 

 

 

 

 

 

 

 

4/1/2021

 

 

 

 

           
 

 

 

 

 

55,400

 

 

 

 

   

 

$

 

 

21.67

 

 

 

 

 

 

 

 

 

2/14/2022

 

 

 

 

           
 

 

 

 

 

44,846

 

 

 

 

   

 

$

 

 

27.41

 

 

 

 

 

 

 

 

 

2/26/2023

 

 

 

 

           
           

 

 

 

 

2/9/2019

 

 

 

 

 

 

 

 

 

84,318

 

 

 

 

 

 

$

 

 

4,253,000

 

 

 

 

   
           

 

 

 

 

2/13/2019

 

 

 

 

 

 

 

 

 

4,417

 

 

 

 

 

 

$

 

 

222,793

 

 

 

 

   
           

 

 

 

 

2/14/2019

 

 

 

 

 

 

 

 

 

2,719

 

 

 

 

 

 

$

 

 

137,146

 

 

 

 

   
           

 

 

 

 

2/9/2020

 

 

 

 

 

 

 

 

 

45,235

 

 

 

 

 

 

$

 

 

2,281,653

 

 

 

 

   
           

 

 

 

 

2/13/2020

 

 

 

 

 

 

 

 

 

4,417

 

 

 

 

 

 

$

 

 

222,793

 

 

 

 

   
           

 

 

 

 

2/14/2020

 

 

 

 

 

 

 

 

 

2,718

 

 

 

 

 

 

$

 

 

137,146

 

 

 

 

 

 

 

 

 

19,030

 

 

 

 

 

 

$

 

 

959,873

 

 

 

 

                                           

 

 

 

 

2/13/2021

 

 

 

 

 

 

 

 

 

4,417

 

 

 

 

 

 

$

 

 

222,793

 

 

 

 

 

 

 

 

 

30,919

 

 

 

 

 

 

$

 

 

1,559,554

 

 

 

 

 

  Hugh S. Cummins III

 

 

 

 

 

 

45,600

 

 

 

 

   

 

$

 

 

21.67

 

 

 

 

 

 

 

 

 

2/14/2022

 

 

 

 

           
 

 

 

 

 

43,185

 

 

 

 

   

 

$

 

 

27.41

 

 

 

 

 

 

 

 

 

2/26/2023

 

 

 

 

           
           

 

 

 

 

2/9/2019

 

 

 

 

 

 

 

 

 

73,461

 

 

 

 

 

 

$

 

 

3,705,373

 

 

 

 

   
           

 

 

 

 

2/13/2019

 

 

 

 

 

 

 

 

 

4,049

 

 

 

 

 

 

$

 

 

204,232

 

 

 

 

   
           

 

 

 

 

2/14/2019

 

 

 

 

 

 

 

 

 

1,963

 

 

 

 

 

 

$

 

 

99,014

 

 

 

 

   
           

 

 

 

 

2/9/2020

 

 

 

 

 

 

 

 

 

45,235

 

 

 

 

 

 

$

 

 

2,281,653

 

 

 

 

   
           

 

 

 

 

2/13/2020

 

 

 

 

 

 

 

 

 

4,049

 

 

 

 

 

 

$

 

 

204,232

 

 

 

 

   
           

 

 

 

 

2/14/2020

 

 

 

 

 

 

 

 

 

1,964

 

 

 

 

 

 

$

 

 

99,064

 

 

 

 

 

 

 

 

 

13,744

 

 

 

 

 

 

$

 

 

693,247

 

 

 

 

                                           

 

 

 

 

2/13/2021

 

 

 

 

 

 

 

 

 

4,049

 

 

 

 

 

 

$

 

 

204,232

 

 

 

 

 

 

 

 

 

28,342

 

 

 

 

 

 

$

 

 

1,429,570

 

 

 

 

 

  Scott E. Case

 

           

 

 

 

 

2/13/2019

 

 

 

 

 

 

 

 

 

1,325

 

 

 

 

 

 

$

 

 

66,833

 

 

 

 

   
           

 

 

 

 

2/13/2020

 

 

 

 

 

 

 

 

 

1,325

 

 

 

 

 

 

$

 

 

66,833

 

 

 

 

   
                                           

 

 

 

 

2/13/2021

 

 

 

 

 

 

 

 

 

1,325

 

 

 

 

 

 

$

 

 

66,833

 

 

 

 

 

 

 

 

 

9,276

 

 

 

 

 

 

$

 

 

467,881

 

 

 

 

 

1

Market value of unearned shares that have not vested is based on the closing market price of SunTrust common stock on December 31, 2018 ($50.44 per share).

 

2

Mr. Gillani retired from his position as CFO on March 31, 2018 and then continued as an employee of SunTrust until June 30, 2018 to assist with the transition of his responsibilities. Mr. Gillani’s awards continue to vest into his retirement in accordance with the terms of the awards subject to Mr. Gillani’s performance of certain non-competition, non-solicitation, non-disclosure and non-disparagement covenants following his retirement through the end of the respective vesting periods.

 

SunTrust Banks, Inc. - 2019 Proxy Statement           41


Table of Contents

Executive Compensation

 

 

2018 PENSION BENEFITS TABLE

SunTrust previously provided its teammates with certain pension benefits. These benefits were frozen at the end of 2011. As a result, beginning on January 1, 2012, pension benefits do not increase to reflect salary increases or service after December 31, 2011. Service will continue to be recognized only for the purposes of vesting and eligibility requirements for early retirement, and unvested participants may continue to accumulate service towards vesting in their frozen benefits. The net present value of the frozen benefit changes from year to year as a result of increased age and changed mortality assumptions, changed interest rates and, with respect to cash balance plans, interest credits.

Personal Pension Accounts. We amended pension benefits to provide for a cash-balance formula effective January 1, 2008. Participants with at least 20 years of service elected either (i) to continue to accrue benefits under a traditional pension formula at a lower accrual rate, or (ii) to participate in a new cash balance personal pension account (“PPA”). The only NEO who met these criteria was Mr. Rogers. Participants with less than 20 years of service will receive their frozen accrued benefit under the traditional pension formula as of December 31, 2007 plus their account balance under the PPA. New participants after 2007 participated only in the PPA. On January 1, 2012, compensation credits under the PPAs ceased, although balances under the PPAs continue to accrue interest until benefits are distributed, and service will continue to be recognized for vesting and eligibility requirements for early retirement.

Policies on Age and Service Credit. Because our plans are frozen, age and service have less relevance. In the past, as a general rule, we did not grant extra years of service under our qualified or nonqualified plans, and we did not grant any NEO extra years of service under our qualified or nonqualified plans. However, our Supplemental Executive Retirement Plan (“SERP”), which normally has cliff vesting after attainment of

 


 

age 60 with at least 10 years of service, provides automatic vesting (regardless of age or service) following a change of control and upon a participant’s termination of employment for good reason or our or our successor’s termination of the executive’s employment without cause following a change in control (double trigger).

Benefits Available Upon Early Retirement. Most of our pension plans provide for a reduced benefit upon early retirement (retirement prior to “normal retirement age”). Normal retirement age under the SunTrust Retirement Plan and the SunTrust ERISA Excess Plan is age 65 with at least five years of service. Normal retirement age under the SunTrust SERP is age 65 with at least ten years of service. These early retirement reductions apply to accrued benefits that were frozen as of December 31, 2007 in connection with the retirement plan changes and to those who were eligible to continue accruing benefits under a traditional pension formula. Benefits under the SunTrust Retirement Plan, the SunTrust ERISA Excess Plan and the SunTrust SERP are reduced 5% per year for each year that an individual retires prior to age 65 (unless the teammate was hired by SunTrust prior to July 1, 1990, in which case the reduction applies only for retirement prior to age 60).

Form of Benefits. The normal form of benefit under the SunTrust Retirement Plan is a life annuity for an unmarried participant and a 50% joint and survivor annuity for a married participant, and a lump sum under the nonqualified plans (i.e., the SunTrust ERISA Excess Plan and the SunTrust SERP). Payment of benefits accrued and vested after 2004 from the nonqualified retirement plans may be delayed for up to six months after a participant’s separation from service because of restrictions under Section 409A of the Internal Revenue Code.

 

42           SunTrust Banks, Inc. - 2019 Proxy Statement
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Table of Contents

Executive Compensation

 

 

Name

   Plan Name    Status    Number of
Years
Credited
Service
     Present  Value1
of
Accumulated
Benefit
     Payments
During
Last
Fiscal
Year
 

  William H. Rogers, Jr.

  

SunTrust Retirement Plan2

  

vested

  

 

31.5

 

  

$

1,217,572

 

  

 

 

 

  

SunTrust ERISA Excess Plan3

  

vested

  

 

31.5

 

  

$

1,082,753

 

  

 

 

 

 

  

 

SunTrust SERP4

  

 

vested