DEF 14A 1 d106859ddef14a.htm DEF 14A DEF 14A
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

SCHEDULE 14A INFORMATION

 

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.    )

 

Filed by the Registrant  x                             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))
x    Definitive Proxy Statement
¨    Definitive Additional Materials
¨    Soliciting Material Pursuant to §240.14a-12

 

BB&T Corporation

(Name of Registrant as Specified In Its Charter)

 

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

 

Payment of Filing Fee (Check the appropriate box):

 

x   No fee required

 

¨   Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

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  (4)   Proposed maximum aggregate value of transaction:

 

 

 

  (5)   Total fee paid:

 

 

 

¨   Fee paid previously with preliminary materials.

 

¨   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.

 

  (1)   Amount Previously Paid:

 

 

 

  (2)   Form, Schedule or Registration Statement No.:

 

 

 

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  (4)   Date Filed:

 

 


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LOGO

 

DEAR FELLOW SHAREHOLDER:

 

You are cordially invited to attend the Annual Meeting of Shareholders of BB&T Corporation at 11:00 a.m. (EDT) on Tuesday, April 26, 2016, at the Embassy Suites, 460 North Cherry Street, Winston-Salem, NC 27101. The matters scheduled for consideration at the meeting are described in detail in the 2016 Proxy Statement. Shareholders as of the record date of February 17, 2016 are invited to attend.

 

We are providing proxy materials to our common stock shareholders primarily through the Internet. We have found this process significantly lowers the cost of our annual proxy campaign. We urge you to read this year’s proxy materials, which include our 2016 Proxy Statement and our Annual Report on Form 10-K that was filed with the Securities and Exchange Commission on February 25, 2016. Also included is a copy of the 2015 Annual Report that contains financial highlights, our letter to shareholders, and additional information about BB&T.

 

We encourage you to vote through the Internet or by telephone as soon as possible. If you received the proxy materials by mail you may complete, sign, and return the enclosed proxy card. Even if you plan to attend the meeting we strongly recommend that you vote your shares in advance.

 

The agenda for this year’s Annual Meeting includes the following items:

 

   

Agenda Item

    Board Recommendation   
    Election of 18 Directors named in the proxy statement     FOR EACH NOMINEE   
    Ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2016     FOR   
    Advisory vote to approve BB&T’s executive compensation program     FOR   

 

Please refer to the proxy statement for further details on the proposals to be voted on at the Annual Meeting. We trust that this presentation will satisfy your informational needs, and, at the same time, provide you with a better understanding of both the financial performance and strategic direction of BB&T.

 

Sincerely,

 

LOGO       LOGO   

LOGO

      LOGO   
Kelly S. King       Jennifer S. Banner   
Chairman and Chief Executive Officer       Independent Lead Director   


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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS OF

BB&T CORPORATION

 

 

      Date:

  

 

Time:

  

 

Place:

      April 26, 2016

   11:00 a.m. EDT   

Embassy Suites

460 North Cherry Street

Winston-Salem, NC 27101

 

 

AGENDA:

  ·  

Election of the 18 directors named in the proxy statement, each for a one-year term expiring at the 2017 Annual Meeting of Shareholders

  ·  

Ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2016

  ·  

Advisory vote to approve BB&T’s executive compensation program, commonly referred to as a “say on pay” vote

 

 

Record date: You can vote if you were a shareholder of record on February 17, 2016.

 

If you are attending the meeting, you will be asked to present your admission ticket and valid photo identification, such as a driver’s license, as described in the proxy statement.

 

 

 

   

By Order of the Board of Directors,

    LOGO
   

LOGO

    Kelly S. King
    Chairman and Chief Executive Officer

 

March 16, 2016

 

 

Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting To Be Held on April 26, 2016

 

A copy of this proxy statement is available at http://www.edocumentview.com/BBT. Also available at this website is the 2015 Annual Report, which highlights summary financial information about BB&T, and our Annual Report on Form 10-K for the year ended December 31, 2015.

 


Table of Contents
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TABLE OF CONTENTS

 

PROXY STATEMENT SUMMARY      1   
PROPOSAL 1 – ELECTION OF DIRECTORS      5   
CORPORATE GOVERNANCE MATTERS      17   

CORPORATE GOVERNANCE GUIDELINES

     17   

DIRECTOR INDEPENDENCE

     17   

BOARD COMPOSITION

     18   

BOARD LEADERSHIP STRUCTURE

     18   

STRATEGIC DIRECTION AND PLANNING

     19   

BOARD COMMITTEES, MEMBERSHIP AND ATTENDANCE

     19   

MAJORITY VOTING AND DIRECTOR RESIGNATION POLICY

     22   

BB&T’S CULTURE

     22   

ETHICS AT BB&T

     23   

COMMUNICATIONS WITH THE BOARD OF DIRECTORS

     23   

SHAREHOLDER ENGAGEMENT PROGRAM

     23   

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE REPORT

     24   

STATEMENT OF POLITICAL ACTIVITY

     24   

BOARD SKILLS AND TRAINING PROGRAM

     24   

POLICY FOR ACCOUNTING AND LEGAL COMPLAINTS

     24   

DIRECTOR NOMINATIONS

     25   

RISK OVERSIGHT

     26   

MANAGEMENT SUCCESSION PLANNING

     28   

CORPORATE GOVERNANCE MATERIALS

     28   
STOCK OWNERSHIP INFORMATION      29   

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     30   
PROPOSAL 2 – RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2016      31   

FEES TO AUDITORS

     31   

AUDIT COMMITTEE PRE-APPROVAL POLICY

     32   

AUDIT COMMITTEE REPORT

     33   
PROPOSAL 3 – VOTE ON AN ADVISORY RESOLUTION TO APPROVE BB&T’S EXECUTIVE COMPENSATION PROGRAM      34   


Table of Contents
  

 

 

COMPENSATION DISCUSSION AND ANALYSIS      35   

SECTION 1 – EXECUTIVE SUMMARY

     35   

SECTION 2 – 2015 EXECUTIVE COMPENSATION PROGRAM AND PAY DECISIONS

     42   

SECTION 3 – BB&T’S EXECUTIVE COMPENSATION PROCESS

     58   

SECTION 4 – OTHER ASPECTS OF BB&T’S EXECUTIVE COMPENSATION PROGRAM

     62   

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

     67   

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

     67   
COMPENSATION OF EXECUTIVE OFFICERS      68   

2015 SUMMARY COMPENSATION TABLE

     68   

2015 GRANTS OF PLAN-BASED AWARDS

     72   

2015 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR -END

     73   

OPTION EXERCISES AND STOCK VESTED IN 2015

     74   

2015 PENSION BENEFITS

     75   

2015 NON-QUALIFIED DEFERRED COMPENSATION

     76   

POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL

     77   
COMPENSATION OF DIRECTORS      81   

2015 DIRECTOR COMPENSATION TABLE

     81   
TRANSACTIONS WITH EXECUTIVE OFFICERS AND DIRECTORS      84   

LOANS TO EXECUTIVE OFFICERS AND DIRECTORS

     84   

RELATED PERSON TRANSACTIONS

     84   
VOTING AND OTHER INFORMATION      85   

VOTING AND QUORUM REQUIREMENTS

     85   

VOTING PROCEDURES

     85   

NON-VOTES, ABSTENTIONS, AND REVOCATIONS

     86   

DELIVERING PROXY MATERIALS

     86   

PROXY COSTS

     86   

PROPOSALS FOR 2017 ANNUAL MEETING OF SHAREHOLDERS

     87   

HOW WILL VOTING RESULTS BE REPORTED ?

     87   

OTHER BUSINESS

     88   
ANNEX A – NON-GAAP FINANCIAL MEASURES      A-1   
ATTENDING THE ANNUAL MEETING            


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Proxy Statement Summary    LOGO

 

 

PROXY STATEMENT SUMMARY

 

This summary highlights information contained elsewhere in this proxy statement for BB&T Corporation, which we sometimes refer to as the “Corporation” or “BB&T.” This summary does not contain all the information that you should consider, and you should read this entire proxy statement carefully before you vote. Additional information regarding our 2015 performance can be found in our Annual Report on Form 10-K.

 

2016 Annual Meeting of Shareholders

 

 

Time and Date

  

Location

  

Record Date

April 26, 2016, at 11:00 a.m. EDT

  

Embassy Suites

460 North Cherry Street

Winston-Salem, NC 27101

  

February 17, 2016

 

Proposals and Voting

 

 

Shareholders of record will vote on the following three proposals:

 

Proposals    Votes Required    Board
Recommendation
   More
Information
Election of 18 Directors named in the proxy statement    Majority of votes cast for each nominee    FOR EACH NOMINEE    Page 5
Ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2016    Majority of votes cast    FOR    Page 31
Advisory vote to approve BB&T’s executive compensation program, commonly referred to as a “say on pay” vote    Majority of votes cast    FOR    Page 34

 

A proxy that is signed and dated, but which does not contain voting instructions will be voted as recommended by our board of directors for each proposal.

 

There are four ways to vote:

 

 

LOGO Internet: You may access the proxy materials on the Internet at http://www.envisionreports.com/BBT and follow the instructions on the proxy card or on the Notice of Internet Availability. Shareholders who hold shares in “street name,” should follow the instructions provided by their broker or bank.

  

 

LOGO Telephone: You may call toll-free 1-800-652-VOTE (8683), and follow the instructions on the proxy card or on the Notice of Internet Availability.

 

LOGO Mail: If you received your proxy materials by mail, you may vote by signing, dating and mailing the enclosed proxy card in the postage-paid envelope provided.

  

 

LOGO In person: A shareholder may vote in person at the Annual Meeting by filling out a ballot.

 

BB&T Corporation | 2016 Proxy Statement    1


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Proxy Statement Summary   

 

 

 

2015 Executive Compensation Overview

 

 

Strategic Accomplishments

      Significant M&A activity, including the Susquehanna merger, drove meaningful growth in 2015

 

      Obtained regulatory approvals and completed transactions at a time when there was limited bank M&A activity due to regulatory uncertainty

      Announced and received regulatory approval for National Penn acquisition (expected to close April 1, 2016)

 

      Efficient use of capital by investing in strategic M&A transactions that will enhance future earnings

 

      Continued to improve risk governance framework, including capital and liquidity management

 

      Continued to invest in critical infrastructure projects, including cyber-security preparedness and new general ledger and commercial lending systems

 

 

 

LOGO

 

 Corporate Performance

We’ve been able to grow as a company without sacrificing our vision, mission and values. We remain dedicated to creating superior long-term economic rewards for our shareholders. This can be seen in our peer-leading dividend yields and net interest margins. We remain committed to paying healthy dividends to our shareholders, while net interest income constitutes the primary source of our revenue.

 

LOGO

 

 Compensation Highlights

Our executive compensation philosophy is based upon providing performance incentives to executive management to generate returns while maintaining a prudent risk management culture. Features of our compensation program include:

 

      Compensation and reward systems that are designed to support and drive our long-term strategic goals and produce positive business results;

      A pay-for-performance culture that, for target compensation in 2015, tied more than 86% of our CEO’s compensation and more than 79% of our other NEOs’ compensation directly to our performance, resulting in only a small percentage of compensation being fixed from year to year;

     Objective performance metrics (EPS, ROA and ROCE) that tie to the financial health and stability of our company;

     Prudent oversight by our Compensation Committee, which may adjust payouts downward for negative risk outcomes, based upon a risk scorecard analysis; and

      Awards that feature a broad-reaching clawback policy.

 

Assuring that we appropriately match executive compensation to our performance and to the long-term interests of our shareholders is extremely important to our CEO, Compensation Committee and the entire Board of Directors at BB&T. We encourage you to read our Compensation Discussion and Analysis, beginning on page 35 to learn more about out compensation programs.

 

2    BB&T Corporation | 2016 Proxy Statement


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Proxy Statement Summary    LOGO

 

 

 

 Notable Awards and Achievements

We are extremely proud of our accomplishments over the past year. Our associates work hard to build a “best in class” organization and in 2015 their efforts were recognized in the following ways:

 

      American Banker magazine named CEO Kelly S. King banker of the year for 2015 and SNL Financial named him one of its “Most Influential” in banking in 2015 & 2014.

      Bloomberg Markets magazine rated BB&T as one of the top 15 strongest banks in the world and one of the three strongest in the United States.

      Our merger with Susquehanna Bancshares was named the “M&A Deal of the Year (over $1B to $5B)” by The M&A Advisor.

      In our 7th annual Lighthouse Project in 2015, BB&T associates completed more than 1,000 community service projects, provided 57,000 volunteer hours, and helped change the lives of more than 1.7 million people.

 

 Corporate Governance Highlights

 

Our Board of Directors believes that maintaining a strong corporate governance framework is essential to the continuing growth and success of BB&T. Below are several notable features of our corporate governance framework:

 

   

Active, Independent Board of Directors. Sixteen of our eighteen directors are independent, and our directors attended 99% of the Board and committee meetings held last year.

 

   

Independent Lead Director. Our Lead Director serves an important governance function by providing strong leadership for the non-management and independent directors.

 

   

Strategic Direction and Planning. Annually, the Board receives a detailed report on BB&T’s strategic plan, goals and initiatives for the upcoming year and beyond with a view towards providing oversight, guidance and direction as to BB&T’s long-term strategy.

 

   

New Compensation Consultant. As part of its responsibilities in maintaining strong governance practices in managing our compensation program, last year the Compensation Committee retained a new independent compensation consultant, Meridian Compensation Partners, to obtain a fresh perspective on our program.

 

   

Stock Ownership Guidelines. By requiring our CEO and directors to own stock equal to 5x their salary or annual retainer, as applicable, we effectively align their interests to those of our shareholders.

 

   

Pledging/Hedging of Shares. To reduce conflicts of interest, we have strong restrictions against pledging and hedging of our common stock by directors and Executive Management members.

 

   

Risk Oversight, Risk Aware Culture. We have developed a robust risk management organization with the purpose of providing independent oversight of our risk-taking activities.

 

   

Majority Voting for Director Elections. All director nominees in uncontested elections must be elected by an affirmative vote of the majority of votes cast.

 

   

Clawbacks and Executive Risk Scorecard. We make all awards (cash and equity) subject to recoupment and also may utilize our executive risk scorecard to adjust incentive compensation for negative risk outcomes.

 

   

Statement of Political Activity. We publish on our website a Statement of Political Activity, which describes our oversight process for political contributions and political activity.

 

   

Board Committees. We have five board committees, as indicated in the table below. Each committee has a written charter adopted by the Board that can be found on our website at www.bbt.com.

 

BB&T Corporation | 2016 Proxy Statement    3


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Proxy Statement Summary   

 

 

 

BB&T BOARD OF DIRECTORS AND COMMITTEES

 

     Independent   Audit   Compensation  

Nominating

and

Corporate

Governance

  Executive   Risk

Jennifer S. Banner±

  LOGO           LOGO     LOGO  

K. David Boyer, Jr.

  LOGO           LOGO     LOGO  

Anna R. Cablik**

  LOGO       LOGO     LOGO        

James A. Faulkner***

  LOGO     LOGO            

I. Patricia Henry

  LOGO     LOGO            

Eric C. Kendrick**

  LOGO       LOGO     LOGO        

Kelly S. King†

          LOGO     LOGO  

Louis B. Lynn, Ph.D.

  LOGO       LOGO     LOGO        

Edward C. Milligan**

  LOGO     LOGO            

Charles A. Patton

  LOGO           LOGO     LOGO  

Nido R. Qubein

          LOGO     LOGO  

William J. Reuter

  LOGO           LOGO     LOGO  

Tollie W. Rich, Jr.**

  LOGO     LOGO            

Christine Sears

  LOGO     LOGO            

Thomas E. Skains

  LOGO           LOGO     LOGO  

Thomas N. Thompson

  LOGO       LOGO     LOGO        

Edwin H. Welch, Ph.D.

  LOGO       LOGO     LOGO        

Stephen T. WilliamsA

  LOGO     LOGO                  

 

  Chairman of the Board of Directors
±   Independent Lead Director
LOGO   Member
LOGO   Chair
A   

Designated as the “Audit Committee Financial Expert”

**   Serves on the Trust Committee of Branch Banking and Trust Company
***   Chairman of the Trust Committee of Branch Banking and Trust Company

 

4    BB&T Corporation | 2016 Proxy Statement


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Proposal 1—Election of Directors    LOGO

 

 

PROPOSAL 1—ELECTION OF DIRECTORS

 

We are asking you to reelect each of the eighteen director nominees listed below to continue serving on our Board of Directors for a one-year term expiring at the Annual Meeting of Shareholders in 2017. Each director nominee will require the affirmative vote of the majority of votes cast to be elected.

 

A properly executed proxy marked “FOR” any one of the eighteen nominees for director will be voted for each nominee indicated. A properly executed proxy marked ‘AGAINST” a nominee will be voted against that nominee for director. Marking the proxy card “ABSTAIN” for any of the nominees will have no effect on the vote.

 

Although our Board of Directors expects that each of the nominees will be available for election, if a vacancy in the slate of nominees occurs, it is intended that shares of BB&T common stock represented by proxies will be voted for the election of a substitute nominee, designated by the Board, or the Board may reduce the number of persons to be elected by the number of persons unable to serve. Holders of our common stock do not have cumulative voting rights in the election of directors.

 

The membership of our Board of Directors includes all of the board members of Branch Banking and Trust Company (our banking subsidiary), and vice-versa, resulting in the two boards having identical memberships. Matching the membership of these two boards provides for transparency and information sharing between both boards, which allows for better risk management, provides for administrative efficiencies, and takes advantage of the talent and experience provided by the members of each board. This structure is also in line with that of many of the financial services companies found in our Peer Group.

 

A candidate for election as a director of BB&T is nominated based on his or her professional experience, recognized achievement in his or her respective field, an ability to contribute to our business, his or her experience in risk management, and the willingness to make the commitment of time and effort required of a BB&T director over an extended period of time. Sound judgment and community leadership are important characteristics that members of our Board of Directors should possess. Each of our nominees has been identified as possessing good business acumen, strength of character, and an independent mind, as well as a reputation for integrity and the highest personal and professional ethics. Each nominee also brings a strong and unique background and set of skills to our Board of Directors, providing our Board with competence and experience in a wide variety of areas.

 

A Word of Appreciation

 

 

We would like to offer a word of thanks to directors Ronald E. Deal and John P. Howe III, M.D., who retired from our Board of Directors effective December 31, 2015. Mr. Deal has been a BB&T director since 1986, guiding BB&T through its transformation from a local North Carolina bank into one of the largest financial services institutions in the nation. Dr. Howe has been a BB&T director since 2005, and his leadership has been instrumental in executing the company’s vision and mission in the face of meaningful obstacles during one of the most pivotal periods of the company’s history.

 

We thank Mr. Deal and Dr. Howe for their many valuable contributions to BB&T, and we wish them well in their future endeavors.

 

BB&T Corporation | 2016 Proxy Statement    5


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Proposal 1—Election of Directors   

 

 

 

Director Commitment and Skills

 

 

COMMITMENT TO BB&T

 

We are proud of our directors’ devotion to BB&T. Our Board invests a substantial amount of time, effort, and energy in planning and executing our vision, mission and values. While each Board member has other professional commitments, no Board member is part of more than one other publicly-traded company Board. We believe that this commitment to BB&T helps promote our vision to become “the Best of the Best.” The following skills matrix shows the diverse range of expertise our directors provide to BB&T.

 

      DIRECTOR SKILLS            
     Qualifications       Experience
    

LOGO

 

Executive

Leadership

 

LOGO

 

Public

Company

Director

 

LOGO

 

Audit

Committee

Financial

Expert

Qualified(1)

     

LOGO

 

Accounting

 

LOGO

 

Academia

 

LOGO

 

Corporate

Governance

and

Supervision

 

LOGO

 

Financial

Services

Jennifer S. Banner

   LOGO     LOGO     LOGO         LOGO         LOGO     LOGO

K. David Boyer, Jr.

   LOGO                 LOGO         LOGO      

Anna R. Cablik

   LOGO     LOGO             LOGO         LOGO      

James A. Faulkner

   LOGO         LOGO                 LOGO     LOGO

I. Patricia Henry

   LOGO                         LOGO      

Eric C. Kendrick

   LOGO                         LOGO     LOGO

Kelly S. King

   LOGO                 LOGO         LOGO     LOGO

Louis B. Lynn, Ph.D.

   LOGO                     LOGO     LOGO      

Edward C. Milligan

   LOGO         LOGO                 LOGO     LOGO

Charles A. Patton

   LOGO                         LOGO     LOGO

Nido R. Qubein

   LOGO     LOGO                 LOGO     LOGO      

William J. Reuter

   LOGO                         LOGO     LOGO

Tollie W. Rich, Jr.

   LOGO                         LOGO     LOGO

Christine Sears

   LOGO         LOGO         LOGO         LOGO     LOGO

Thomas E. Skains

   LOGO     LOGO                     LOGO      

Thomas N. Thompson

   LOGO                         LOGO     LOGO

Edwin H. Welch, Ph.D.

   LOGO                     LOGO     LOGO      

Stephen T. Williams

   LOGO         LOGO                 LOGO      

 

(1)   Indicates directors who meet the criteria as an “Audit Committee Financial Expert’’ under applicable SEC rules. Stephen T. Williams has been designated by the Board of Directors as its Audit Committee Financial Expert.

 

6    BB&T Corporation | 2016 Proxy Statement


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Proposal 1—Election of Directors    LOGO

 

 

Nominees for Election as Directors for a One-Year Term Expiring in 2017

 

The names of the nominees for election to our Board of Directors, their principal occupations, and certain other information with respect to each nominee is set forth below.

 

 

Jennifer S. Banner

Knoxville, TN

      

LOGO    LOGO    LOGO    LOGO    LOGO    LOGO

LOGO

 

Lead Director

Age: 56

Tenure:

BB&T since 2003

Branch Bank since 2013

Board Committees:

Executive

Risk

Public Company Directorship:

Communications Sales & Leasing, Inc.

 

      

Ms. Banner has served as President and Chief Executive Officer of SchaadSource, LLC (a financial and administrative services company) since 2006, Chief Executive Officer of Schaad Companies, LLC (a diversified holding company) since 2008 and Chief Executive Officer of Schaad Family Office, LLC (a diversified holding company) since 2012.

 

Ms. Banner brings to BB&T experience as a Chief Executive Officer and skills in public accounting, as well as financial services, corporate governance and risk management experience from her prior service on the boards of directors of First Vantage Bank and First Virginia Banks, Inc. She has served for the past six years as a director of the Federal Reserve Bank of Atlanta (Nashville Branch) where she received formal training in monetary policy, the banking system and macroeconomics. In addition, Ms. Banner has experience with community-oriented organizations, construction, real estate development, and serves as a director and chair of the audit committee of Communications Sales & Leasing, Inc., a real estate investment trust in the communications infrastructure space. Ms. Banner qualifies as an “audit committee financial expert” under SEC guidelines.

 

Qualifications and Experience:

Executive leadership, public company director, audit committee financial expert qualified, accounting, corporate governance and supervision, financial services

 

    

 

K. David Boyer, Jr.

Oakton, VA

      

LOGO    LOGO    LOGO

LOGO

 

Age: 64

Tenure:

BB&T since 2009

Branch Bank since 2013

Board Committees:

Executive

Risk

      

Mr. Boyer has served as Chief Executive Officer of GlobalWatch Technologies, Inc. (a business intelligence, cybersecurity, information assurance, governance and compliance firm) since 2004. Mr. Boyer also has served as a director of Virginia Community Development Corporation (a tax credit fund manager supporting economic development in Richmond) since 2009 and as a Treasury Board Member for the Commonwealth of Virginia from 2002-2013.

 

Prior to his election to the BB&T Board, Mr. Boyer served for over 11 years on Branch Bank’s local advisory board in Washington, D.C. This experience provided Mr. Boyer with a thorough understanding of BB&T’s banking organization and its values and culture. Mr. Boyer has extensive experience with risk management, accounting and finance, as well as information technology services, information management, information assurance and anti-terrorism assistance services, and brings skills related to this experience to the BB&T Board.

 

Qualifications and Experience:

Executive leadership, accounting, corporate governance and supervision

 

 

BB&T Corporation | 2016 Proxy Statement    7


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Proposal 1—Election of Directors   

 

 

 

Anna R. Cablik

Marietta, GA

      

LOGO    LOGO    LOGO    LOGO

LOGO

 

Age: 63

Tenure:

BB&T since 2004

Branch Bank since 2013

Board Committees:

Nominating and Corporate

Governance (Chair)

Compensation

Public Company Directorship:

Georgia Power Company

 

      

Ms. Cablik has served as the President of Anasteel & Supply Company, LLC (a reinforcing steel fabricator) since 1994 and as President of Anatek, Inc. (a general contractor) since 1982. She is also a member of the Trust Committee for the Branch Bank board.

 

Ms. Cablik brings entrepreneurial and business-building skills and experience to BB&T, having successfully founded and grown several businesses. Her extensive career managing a diverse portfolio of projects provides risk assessment skills and experience to the BB&T Board. Additionally, as the owner and operator of a company, Ms. Cablik has over 30 years of experience overseeing the preparation of financial statements and the review of accounting matters.

 

Qualifications and Experience:

Executive leadership, public company director, accounting, corporate governance and supervision

    

 

James A. Faulkner

Dahlonega, GA

      

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Age: 71

Tenure:

BB&T since 2013

Branch Bank since 2000

Board Committees:

Audit

 

      

Mr. Faulkner is currently retired and previously served as a consultant to Branch Bank from 2000 through 2011.

 

Mr. Faulkner brings to BB&T significant financial services leadership, oversight and expertise stemming from his distinguished 49-year career in commercial banking, including serving as the top executive of Century South Banks from 1997 until it merged with BB&T in 2000. He has served as a director of four different public companies over a 25+ year period, providing him with meaningful corporate governance perspective and experience. Mr. Faulkner’s long tenure on the Branch Bank board, where he is the Chairman of the Trust Committee, and his extensive service as a bank executive affords him valuable insight as to BB&T’s banking operations and its vision, mission, values and culture. Mr. Faulkner qualifies as an “audit committee financial expert” under SEC guidelines.

 

Qualifications and Experience:

Executive leadership, audit committee financial expert qualified, corporate governance and supervision, financial services

 

 

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I. Patricia Henry

Stone Mountain, GA

      

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Age: 68

Tenure:

BB&T since 2013

Branch Bank since 1999

Board Committees:

Audit

 

      

Ms. Henry is currently retired and previously was the Director of Strategic Projects for Miller Brewing from 2005 to 2008.

 

Ms. Henry brings extensive risk management, strategic planning and organizational development experience and skills to the BB&T Board. At Miller Brewing, Ms. Henry became the first woman to hold a lead management position at a major U.S. brewery when she was named Plant Manager of the Eden, North Carolina facility in 1995. In addition, Ms. Henry’s operational business background allows her to bring the perspective of a commercial client into BB&T’s boardroom. Her institutional knowledge and longstanding Branch Bank board service further qualify her to serve as a member of the BB&T Board.

 

Qualifications and Experience:

Executive leadership, corporate governance and supervision

    

 

Eric C. Kendrick

Arlington, VA

      

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Age: 69

Tenure:

BB&T since 2013

Branch Bank since 2003

Board Committees:

Compensation

Nominating and Corporate

Governance

      

Mr. Kendrick has served as the President of Mereck Associates, Inc. (a real estate management and development firm) since 1989. He is also President of Old Dominion Warehouse Corporation (a warehouse leasing and development firm) since 1991, President of Upton Corporation (a commercial property development company) since 1991, and President of Murteck Construction Company, Inc. (a general contractor) since 1991.

 

Mr. Kendrick brings to BB&T significant financial services industry experience and corporate governance perspective from his service on the boards of First Virginia Banks, Inc., where he served as a director from 1986 until it merged with BB&T in 2003, and Branch Bank, where he has served as director since 2003 and is currently a member of the Trust Committee. As a successful business leader, Mr. Kendrick also brings to the BB&T Board a high level of business acumen, as well as significant experience and valuable perspective from the construction and real estate development industries.

 

Qualifications and Experience:

Executive leadership, corporate governance and supervision, financial services

 

 

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Kelly S. King

Winston-Salem, NC

      

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Age: 67

Tenure:

BB&T since 2008

Branch Bank since 1995

Board Committees:

Executive

Risk

      

Mr. King has served as Chairman of BB&T since 2010; President and Chief Executive Officer of BB&T and Chairman and Chief Executive Officer of Branch Bank since 2009; and Chief Operating Officer of BB&T and Branch Bank from 2004-2008.

 

Mr. King has forged a lifetime of leadership experience with BB&T, devoting 32 of his 43 years of service to BB&T as a member of Executive Management. He has assumed leadership roles in commercial and retail banking, operations, insurance, corporate financial services, investment services and capital markets.

 

Mr. King is credited with leading BB&T to continued profitability and financial stability through the economic downturn beginning in 2008. His unwavering commitment to the company’s vision, mission and values has led to a nationally recognized associate volunteer program, called the Lighthouse Project.

 

Mr. King has served as the Fifth District representative on the Federal Advisory Council of the Board of Governors of the Federal Reserve System since January 2013 and currently serves as President of the Federal Advisory Council. He has been a member of the Financial Services Roundtable since 2010 and he previously served on the Board of the Federal Reserve Bank of Richmond from 2009 to 2011. Mr. King has also served as Chairman of the North Carolina Bankers Association board and as Vice Chairman of the American Bankers Council.

 

Mr. King was named the Banker of the Year for 2015 by American Banker magazine. His leadership steered the successful completion of our 2015 acquisition of Susquehanna Bancshares—a transaction that was named M&A Deal of the Year (Over $1B to $5B) by The M&A Advisor. Mr. King was named by SNL Financial as one of its “Most Influential” in banking in 2015 & 2014. In 2011, he was ranked #3 “Best CEO” by sell-side analysts in a study by Institutional Investor magazine. Since 2009, BB&T has led all U.S. banks in total awards for small business and middle market banking by Greenwich Associates. In 2015, BB&T was named by Forbes as one of America’s Best Banks.

 

Qualifications and Experience:

Executive leadership, accounting, corporate governance and supervision, financial services

 

 

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Louis B. Lynn, Ph.D.

Columbia, SC

  

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Age: 67

Tenure:

BB&T since 2013

Branch Bank since 2006

Board Committees:

Compensation

Nominating and Corporate

Governance

 

  

Dr. Lynn has served as the President and Chief Executive Officer of ENVIRO AgScience, Inc. (a defense contractor and provider of construction, construction management, and landscape and design services) since founding the firm in 1985.

 

Dr. Lynn possesses valuable oversight skills and experiences gained in serving as the top executive of ENVIRO AgScience. He also brings to the BB&T Board government and private sector design and construction experience of sustainable energy efficient facilities. Dr. Lynn serves as an Adjunct Professor of Horticulture at Clemson University and has served on a number of boards and commissions relating to agriculture, higher education and business leadership. His familiarity with modern agriculture science and agribusiness imparts an important perspective to the Board, as does his service in the field of higher education.

 

Qualifications and Experience:

Executive leadership, academia, corporate governance and supervision

  

 

Edward C. Milligan

Marietta, GA

  

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Age: 71

Tenure:

BB&T since 2013

Branch Bank since 2007

Board Committees:

Audit

 

  

Mr. Milligan is currently retired, but his distinguished career in banking spans over four decades, beginning in 1967 at First National Bank of Atlanta, and moving up the ranks in a variety of leadership roles and management positions at several institutions, until he ultimately became the Chairman of Main Street Banks, Inc., which merged with BB&T in 2006. Mr. Milligan’s extensive experience in the financial services industry brings to BB&T a substantial banking skill set, including significant experience with respect to risk management, operations and credit quality. Mr. Milligan qualifies as an “audit committee financial expert” under SEC guidelines. Mr. Milligan’s longstanding board service at Main Street Banks and Branch Bank, where he currently serves as a member of its Trust Committee, imparts corporate governance and supervisory skills.

 

Qualifications and Experience:

Executive leadership, audit committee financial expert qualified, corporate governance and supervision, financial services

 

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Charles A. Patton

Hopewell, VA

      

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Age: 59

Tenure:

BB&T since 2013

Branch Bank since 1998

Board Committees:

Executive

Risk (Chair)

      

Mr. Patton has served as a consultant and manager of Patton Holdings, LLC (a real estate holding company) since 2007 and manager of PATCO Investments, LLC (emphasizing specialty lending and equity participations) since 1998.

 

Over the course of his extensive banking career, Mr. Patton has served in a variety of leadership positions, including as the President and Chief Executive Officer of Virginia First Savings Bank. As the top executive of Virginia First, he gained leadership, oversight and risk management skills, as well as financial industry and banking operations expertise, which are valuable as a director of BB&T. His long tenure on the Branch Bank board has imparted him with significant institutional knowledge about BB&T, while also providing corporate governance expertise. Mr. Patton also is a leader in his community, holding leadership positions in a variety of social and civic organizations in the Richmond, Virginia area.

 

Qualifications and Experience:

Executive leadership, corporate governance and supervision, financial services

 

    

 

Nido R. Qubein

High Point, NC

      

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Age: 67

Tenure:

BB&T since 1990

Branch Bank since 2013

Board Committees:

Executive

Risk

Public Company

Directorship:

La-Z-Boy Incorporated

      

Dr. Qubein, has been a BB&T director since 1990 and a Branch Bank director since 2013. He has served as President of High Point University since 2005 where he transformed the institution from a small college to a thriving university. He is also Chairman of Great Harvest Bread Company (a whole grain bread bakery franchising company) since 2001.

 

Dr. Qubein has written a dozen books on leadership, sales, communication and marketing and serves as advisor to businesses and organizations throughout the country on how to position their enterprises and create successful leadership programs. He is a business coach to CEOs and top executives. During his tenure on the BB&T Board, he has provided key leadership and made important contributions to the development and successful execution of BB&T’s strategy to be the “best of the best.” His many entrepreneurial ventures and service on more than 30 volunteer boards over the course of his career contribute governance and community service skills and experience to BB&T. He has been recognized nationally for his entrepreneurial and professional achievements including his induction in three halls of fame, receiving the University of Delaware’s Siegfried Entrepreneurship Award, membership in the Horatio Alger Association for Distinguished Americans with such notable leaders like Starbuck’s Howard Schultz and General Colin Powell.

 

Qualifications and Experience:

Executive leadership, public company director, academia, corporate governance and supervision

 

 

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William J. Reuter

Lititz, PA

 

      

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Age: 66

Tenure:

BB&T since 2015

Branch Bank since 2015

Board Committees:

Executive

Risk

      

Mr. Reuter is the retired Chairman and Chief Executive Officer of Susquehanna Bancshares, Inc., having served as Chairman from May 2002 until the merger of the company with BB&T Corporation. He was also Chairman of the Board of its banking subsidiary, Susquehanna Bank, as well as the following subsidiaries: Boston Service Company, Inc. (d/b/a Hann Financial Service Corp.), Valley Forge Asset Management, LLC, The Addis Group, LLC; Stratton Management Company and Semper Trust Company.

 

He started his career with Susquehanna in 1973, when he joined one of its predecessor banks in Maryland. Mr. Reuter’s 35+ years in leadership roles within the banking industry, his experience as the CEO and Chairman of a large, publicly traded financial services organization and his risk management skill and expertise qualify him to serve as a member of our Board. Mr. Reuter joined our Board in August 2015 as a part of the Susquehanna merger. Mr. Reuter also qualifies as an “audit committee financial expert” under SEC guidelines. Mr. Reuter has held leadership roles in numerous community organizations throughout his career, including serving as campaign chairman for United Way campaigns in both Hagerstown, MD, and Lancaster, PA.

 

Qualifications and Experience:

Executive leadership, corporate governance and supervision, financial services

 

    

 

Tollie W. Rich, Jr.

Cape Coral, FL

      

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Age: 66

Tenure:

BB&T since 2013

Branch Bank since 2007

Board Committees:

Audit

      

Mr. Rich brings valuable perspective to the BB&T Board by combining financial industry expertise with significant corporate governance and supervisory expertise. His banking career spanned over 30 years, culminating with his service as the Executive Vice President, Chief Operating Officer and a director of Life Savings Bank, FSB, which merged with Branch Bank in 1998, and subsequent service as a senior banking executive at Branch Bank, retiring in 2000. His extensive banking experience affords a deep understanding of operations and management, while his tenure on the Branch Bank board provides experience on corporate governance matters. Mr. Rich has a longstanding involvement with charitable and community organizations and presently utilizes his leadership skills on various civic and business association boards. He currently serves as a member of the Trust Committee of the Branch Bank Board.

 

Qualifications and Experience:

Executive leadership, corporate governance and supervision, financial services

 

 

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Christine Sears

Harrisburg, PA

      

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Age: 60

Tenure:

BB&T since 2015

Branch Bank since 2015

Board Committees:

Audit

      

Ms. Sears has served as the President and Chief Executive Officer of Penn National Insurance since January 1, 2015. Prior to being appointed Penn National’s President and Chief Executive Officer, Ms. Sears served as Penn National’s Executive Vice President and Chief Operating Officer since 2010 after serving as Penn National’s Chief Financial Officer from 1999 to 2010.

Ms. Sears joined Penn National in 1980 as a financial analyst and held various positions of increasing leadership in the company prior to being named the President and Chief Executive Officer. Her deep understanding of the insurance industry is very valuable to our Board of Directors as BB&T’s insurance operations are our largest source of non-interest income. Ms. Sears joined our Board in August 2015 as a part of the Susquehanna merger. Ms. Sears qualifies as an “audit committee financial expert” under SEC guidelines.

 

Ms. Sears is a Certified Public Accountant, holds the Chartered Property Casualty Underwriter designation from the American Institute for Chartered Property Casualty Underwriters, and has completed the Insurance Executive Development Course of the Wharton School of Business at the University of Pennsylvania.

 

Qualifications and Experience:

Executive leadership, audit committee financial expert qualified, accounting, corporate governance and supervision, financial services

 

    

 

Thomas E. Skains

Charlotte, NC

      

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Age: 59

Tenure:

BB&T since 2009

Branch Bank since 2013

Board Committees:

Executive (Chair)

Risk

Public Company

Directorship:

Piedmont Natural Gas

Company, Inc.

 

      

Mr. Skains has served as Chairman, President and Chief Executive Officer of Piedmont Natural Gas Company, Inc. since 2003.

 

Mr. Skains brings extensive leadership and strategic planning experience to BB&T through his experience leading a major natural gas utility in the Southeast. Mr. Skains also brings a wealth of corporate governance and risk management expertise gained through his role as the Chairman of the Board of Piedmont Natural Gas, a publicly traded corporation. His experience in the highly regulated natural gas industry is especially valuable given the high degree of regulation in the financial services industry. Mr. Skains also has served on a wide variety of boards for prominent civic and business associations, providing him with extensive community relations experience.

 

Qualifications and Experience:

Executive leadership, public company director, corporate governance and supervision

 

 

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Thomas Thompson

Owensboro, KY

      

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Age: 67

Tenure:

BB&T since 2008

Branch Bank since 2013

Board Committees:

Compensation

Nominating and

Corporate Governance

 

      

Mr. Thompson has served as President of Thompson Homes, Inc. (a home builder) since 1978 and as a member of the Kentucky House of Representatives since 2003.

 

As a member of the Kentucky legislature, including serving as the Chairman of the House Banking and Insurance Committee, Mr. Thompson provides BB&T with a unique perspective on risk management and the regulation of the financial services industry. Mr. Thompson also brings governance and community service skills and experience to the BB&T Board, having served as a director of various educational and community organizations.

 

Qualifications and Experience:

Executive leadership, corporate governance and supervision, financial services

    

Edwin H. Welch, Ph.D.

Charleston, WV

      

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Age: 71

Tenure:

BB&T since 2011

Branch Bank since 2013

Board Committees:

Compensation (Chair)

Nominating and

Corporate Governance

      

Dr. Welch has served as President of the University of Charleston since 1989, and he joined BB&T’s Board after 11 years on Branch Bank’s local advisory board in Charleston, West Virginia.

 

He brings his vast knowledge of economics, political science and education to the BB&T Board. He understands the need for an organization to grow and evolve, as well as the related challenges in implementing such growth. As President of the University of Charleston, he has led the institution through unprecedented growth and fundraising, doubling full-time student enrollment, redefining the university’s mission, transforming its academic program and adding graduate schools of pharmacy and business. Dr. Welch also led the creation of a central administrative computing company, Independent College Enterprise, Inc., which serves eight colleges and universities. In 2006, he received the inaugural Charles L. Foreman Award for Innovation in Private Higher Education from the Foundation for Independent Higher Education. Dr. Welch was given the 2007 YMCA Spirit of the Valley Award in recognition of his exemplary community service.

 

Qualifications and Experience:

Executive leadership, academia, corporate governance and supervision

 

 

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Stephen T. Williams

Winston-Salem, NC

      

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Age: 56

Tenure:

BB&T since 2007

Branch Bank since 2013

Board Committees:

Audit (Chair)

      

 

Mr. Williams has served as a consultant and manager of Williams Development Group, LLC (a real estate development company) since August 2013. He has served as President of A.T. Williams Oil Company (a family investment company) since 1995 and served as President and Chief Executive Officer of WilcoHess, LLC (an operator of gas stations, convenience stores, restaurants and travel centers) from 2001 through January 2014.

 

In addition to the management and oversight skills and experiences gained in serving as the top executive of A.T. Williams Oil Company and WilcoHess, Mr. Williams has a unique perspective on the needs of customers within BB&T’s footprint through his experience with the daily operations of a chain of over 400 gas stations, convenience stores, restaurants and travel centers in Alabama, Georgia, Tennessee, Virginia, Pennsylvania, and the Carolinas. In addition, Mr. Williams has gained experience in building ties between business and the local community through his involvement with community-oriented organizations such as the Winston-Salem Alliance. Mr. Williams qualifies as an “audit committee financial expert” under SEC guidelines.

 

Qualifications and Experience:

Executive leadership, audit committee financial expert, corporate governance and supervision

 

 

OUR BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” EACH OF THE DIRECTOR NOMINEES NAMED ABOVE.

 

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CORPORATE GOVERNANCE MATTERS

 

The Board of Directors periodically reviews BB&T’s corporate governance policies, practices and procedures to see that we meet or exceed the requirements of applicable laws, regulations and rules. Our ultimate purpose is to create a strong, sound, and profitable financial services company with long-term growth and value for its shareholders.

 

Corporate Governance Guidelines

 

 

Our Corporate Governance Guidelines provide the framework for fulfillment of the Board’s corporate governance duties and responsibilities, taking into consideration corporate governance best practices and applicable laws and regulations. The Corporate Governance Guidelines address a number of matters applicable to directors, including director qualification standards and director independence requirements, share ownership guidelines, Board responsibilities, role of the independent Lead Director, retirement, meetings of non-management directors, and Board compensation. A link to our Corporate Governance Guidelines can be found in the section below entitled “Corporate Governance Materials.”

 

Director Independence

 

 

In determining director independence, our Board considers the New York Stock Exchange’s (“NYSE”) bright-line independence criteria. Consistent with NYSE rules, our Board of Directors also broadly considers all other relevant facts and circumstances that bear on the materiality of each director’s relationship with BB&T, including the potential for conflicts of interest, when determining director independence. To assist it in making independence determinations, our Board of Directors has adopted categorical standards which are contained in our Corporate Governance Guidelines. These director nomination and qualification standards reflect, among other items, the NYSE independence requirements, other applicable laws and regulations related to director independence, and address certain relationships that the Board has determined do not affect a director’s independence.

 

To assist our Board in its determination of director independence, the Nominating and Corporate Governance Committee annually evaluates each prospective and incumbent director using the foregoing standards and such other factors as the Nominating and Corporate Governance Committee deems appropriate, and makes a recommendation to the Board regarding the independence or non-independence of each such person. As a part of this evaluation process, the Nominating and Corporate Governance Committee considers each director’s occupation, other publicly held company directorships, personal and affiliate loan and non-loan transactions with BB&T and its subsidiaries, certain charitable contributions, relationships considered by the Nominating and Corporate Governance Committee in accordance with our Related Person Transactions Policy and Procedures, and other relevant direct and indirect relationships that may affect the prospective or incumbent director’s independence. Banking relationships with BB&T or any of its subsidiaries (including deposit, investment, lending and fiduciary) that are conducted in the ordinary course of business on substantially the same terms and conditions as otherwise available to nonaffiliated customers for comparable transactions are not considered material in determining independence.

 

After duly considering all such information, our Board of Directors has affirmatively determined that of the eighteen members of the Board, the following sixteen directors have no disqualifying material relationships with BB&T or its subsidiaries and are independent: Messrs. Boyer, Faulkner, Kendrick, Lynn, Milligan, Patton, Reuter, Rich, Skains, Thompson, Welch and Williams, and Mmes. Banner, Cablik, Henry and Sears. The following two directors were deemed not independent due to certain disqualifying relationships with BB&T: Messrs. King and Qubein.

 

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In assessing the independence of Thomas Skains, the Board considered his occupation as the Chairman, President and Chief Executive Officer of Piedmont Natural Gas Company, Inc. Branch Bank paid Piedmont Natural Gas approximately $228,000 in 2015, $280,000 in 2014 and $247,000 in 2013 for natural gas. Under Securities and Exchange Commission (“SEC”) rules, these transactions do not constitute Related Person Transactions because they involve the rendering of services by a public utility, at rates or charges fixed in conformity with law or governmental authority.

 

Board Composition

 

 

Our Board currently consists of eighteen directors. While that number of Board members is greater than the number we have maintained historically, we believe the Board’s current size provides us with certain advantages. Over the last several years, financial institutions have faced increased regulatory and economic pressure. This has led to additional demands resulting in a greater time commitment on the part of our directors and executive officers. In response, we have expanded the number of Board committees and increased the responsibilities of each committee. The relatively large size of our Board has proved to be an advantage when assigning an appropriate number of members to each committee in order to properly analyze and respond to increasingly complex developments, whether regulatory, economic, or otherwise. The larger Board and committee size also allows for more effective challenge to proposals from management and directors and increases the diversity of views available to consider. In addition, the number of independent directors aids in maintaining the requisite independence standards of the Audit, Compensation, and Nominating and Corporate Governance committees. The Board believes that its current size and structure enables each director to effectively represent the interests of BB&T’s shareholders.

 

Board Leadership Structure

 

 

CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER

 

Our Board of Directors is led by the Chairman. Under our bylaws, the Chairman is elected by the Board and presides over each Board meeting and performs such other duties as may be incident to the office of Chairman. BB&T’s bylaws and Corporate Governance Guidelines each provide that the Chairman may also hold the position of Chief Executive Officer. BB&T’s Chairman and/or Chief Executive Officer is not permitted to serve as a member of any standing Board committee, other than the Executive Committee and the Risk Committee. BB&T’s Corporate Governance Guidelines provide that when the position of Chairman of the Board is not held by an independent director, the Board will appoint an independent Lead Director.

 

It is the Board’s current belief that having a unified Chairman and Chief Executive Officer is appropriate and in the best interests of BB&T and our shareholders. The Board believes that combining the Chairman and Chief Executive Officer roles provides the following advantages to us:

 

   

our Chief Executive Officer is the director most familiar with BB&T’s business and industry and is best situated to lead discussions on important matters affecting the business of BB&T;

 

   

combining the Chief Executive Officer and Chairman positions creates a firm link between management and the Board and promotes the development and implementation of corporate strategy; and

 

   

combining the roles of Chief Executive Officer and Chairman contributes to a more efficient and effective Board and does not undermine the independence of the Board.

 

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INDEPENDENT LEAD DIRECTOR

 

The role of the Lead Director is to assist the Chairman and the remainder of the Board in assuring effective governance in overseeing the direction and management of BB&T. The Lead Director serves a two-year term, subject to election to the Board each year by our shareholders, and may serve for one subsequent one-year term at the discretion of the Board. As enumerated in our Corporate Governance Guidelines, several of the Lead Director’s specific responsibilities are to:

 

   

organize and preside over executive sessions;

 

   

preside at all Board meetings at which the Chairman is not present (including executive sessions);

 

   

take responsibility for feedback to/engagement with the Chief Executive Officer on executive sessions;

 

   

suggest matters and issues for inclusion on the Board agenda;

 

   

work with the Chairman and committee chairs to ensure that there is sufficient time for discussion of all agenda items; and

 

   

facilitate teamwork and communication among the independent directors and the Chairman.

 

In addition, if the Chairman of the Board should be unable to continue his or her responsibilities due to death, disability or other event, then the Lead Director shall call a special Board meeting within one week of the determination that the Chairman of the Board cannot continue his or her responsibilities, to elect a successor Chairman of the Board. Our Board believes that the Lead Director serves an important corporate governance function by providing separate leadership for the non-management and independent directors. Jennifer S. Banner serves as the Board’s Lead Director.

 

EXECUTIVE SESSIONS OF THE BOARD

 

Our Corporate Governance Guidelines require that non-management directors meet in regular executive sessions of the Board at least three times per year and at such other times as it deems necessary or advisable. The Corporate Governance Guidelines also require independent directors to meet in executive session (without non-independent directors present) at least annually. The Lead Director presides over the non-management and independent director executive sessions.

 

Strategic Direction and Planning

 

 

One of the Board’s most important and vital functions is to provide oversight, guidance and direction as to BB&T’s long-term strategy. Accordingly, each January management provides to the Board a detailed report on BB&T’s strategic plan, goals and initiatives for the upcoming year and beyond. The process includes an independent risk assessment to ensure all strategic activities are consistent with the board approved risk appetite parameters. Before it is approved, the Board engages in thorough and detailed discussions and deliberations over the strategic plan. The plan also includes reporting on management’s success in executing on the prior year’s strategic plan to ensure accountability.

 

Board Committees, Membership and Attendance

 

 

Under our Corporate Governance Guidelines, directors are expected to attend Board meetings, meetings of assigned committees, and annual meetings of shareholders. Each director is required to be sufficiently familiar with the business of BB&T, including our strategy, financial statements, capital structure, business risks and competition, to facilitate active and effective participation in such meetings. During 2015, the full Board of Directors held ten meetings. Each of the directors attended more than 75% of the Board of Directors’ meetings and assigned committee meetings held in 2015 during the period for which he or she has been a director. All of our directors serving at that time attended the Annual Meeting of Shareholders in 2015, with the exception of one director, who could not attend due to health-related reasons.

 

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Each member of the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee has been determined by the Board to be “independent” in accordance with the requirements of the NYSE (including the specific SEC and NYSE independence requirements for audit committee members and the specific NYSE independence requirements for compensation committee members) and BB&T’s Corporate Governance Guidelines. See “Director Independence” above.

 

It is also anticipated that the Board committees will perform additional duties that are not specifically set out in their respective charters as may be necessary or advisable in order for us to comply with certain laws, regulations or corporate governance standards, as the same may be adopted, amended or revised from time to time. The current members of each committee, the principal functions of each committee and the number of meetings held in 2015 are shown below. Please refer to “Corporate Governance Materials” below for the location of the committee charters.

 

Audit Committee

   

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Stephen T. Williams

Chair

 

Met 8 Times in 2015

  

Committee Members:

James A. Faulkner, I. Patricia Henry, Edward C. Milligan, Tollie W. Rich, Jr., Christine Sears

 

 

    Assists the Board in its oversight of the integrity of our financial statements and disclosures.

   Assists in oversight of BB&T’s internal control processes.

    Monitors financial risks and exposures and reviews with management and the auditors the steps management has taken to monitor, minimize or control such risks or exposures.

    Responsible for the appointment, compensation, retention and oversight of the work of the independent auditor for the purpose of preparing or issuing an audit report or performing other audit, review or attest services.

    Evaluates the qualifications, performance and independence of, the independent registered public accounting firm.

   Oversees BB&T’s internal audit function and receives regular reports from the internal auditor.

 

Compensation Committee

 

   

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Edwin H. Welch

Chair

 

Met 9 Times in 2015

  

Committee Members:

Anna R. Cablik, Eric C. Kendrick, Louis B. Lynn, Thomas N. Thompson

 

 

    Manages the duties of the Board related to executive compensation.

   Reviews and approves BB&T’s compensation philosophy and practices.

    Determines the compensation of the CEO and the highest levels of BB&T management.

   Recommends Board compensation and benefits for directors.

    Engages an independent compensation consultant to make recommendations relating to overall compensation philosophy, the peer financial group to be used for external comparison purposes, short-term and long-term incentive compensation plans, and related compensation matters.

   Oversees risk management with respect to the design and administration of material incentive compensation arrangements.

    Responsible for oversight and review of our compensation and benefit plans, including administering our executive incentive programs.

 

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Executive Committee

   

LOGO

Thomas E. Skains

Chair

 

Met 2 Times in 2015

 

  

Committee Members:

Jennifer S. Banner, K. David Boyer, Jr., Kelly S. King, Charles A. Patton, Nido R. Qubein, William J. Reuter

 

 

    Authorized to exercise all powers and authority of the Board in management of the business and affairs of the Corporation between Board meetings.

 

Nominating and Corporate Governance Committee

 

   

LOGO

Anna R. Cablik

Chair

 

Met 6 Times in 2015

 

  

Committee Members:

Eric C. Kendrick, Louis B. Lynn, Thomas N. Thompson, Edwin H. Welch

 

 

    Reviews and recommends the composition and structure of the Board and its committees and evaluates the qualifications and independence of members of the Board on a periodic basis.

    Considers the performance of incumbent directors in determining nominations for re-election.

   Identifies and reviews qualified candidates for election as directors.

    Administers BB&T’s Related Person Transactions Policy and Procedures.

   Oversees annual self-assessments for board members.

    Oversees Board Committee composition and executive management succession planning processes.

 

Risk Committee

   

LOGO

Charles A. Patton

Chair

 

Met 11 Times in 2015

  

Committee Members:

Jennifer S. Banner, K. David Boyer, Jr., Kelly S. King, Nido R. Qubein, William J. Reuter, Thomas E. Skains

 

 

    Reviews processes for identifying, assessing, monitoring and managing regulatory, credit, liquidity, market, operational, reputational and strategic risks.

    Assesses the adequacy of BB&T’s risk management policies and procedures.

   Receives periodic reports on our risks, approves BB&T’s risk management framework and periodically reviews and evaluates the adequacy and effectiveness of the risk management framework.

   Discusses with management, including the Chief Risk Officer, our major risk exposures and reviews the steps management has taken to identify, monitor and control such exposures.

   Approves statements defining BB&T’s risk appetite, monitors our risk profile and provides input to management regarding our risk appetite and risk profile.

    Oversees management’s implementation and management of, and conformance with, BB&T’s significant risk management policies, procedures, limits and tolerances.

 

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Majority Voting and Director Resignation Policy

 

 

Our articles of incorporation generally require each director to be elected by the majority of the votes cast at a meeting of shareholders. Under the current Director Resignation Policy, any director nominee who receives a greater number of votes “withhold” than votes “for” such election shall tender his or her resignation to the Board. The Nominating and Corporate Governance Committee will then consider all of the relevant facts and circumstances and recommend to the Board whether to accept, reject or otherwise act with respect to such resignation. The Board will act on the Committee’s recommendation within 130 days following certification of the shareholder vote and will publicly disclose its decision within this 130-day timeframe. A director whose resignation is under consideration will abstain from participating in any recommendation or decision regarding that resignation. If a director’s resignation is not accepted, the director will continue to serve for the remainder of his or her term.

 

Currently, pursuant to North Carolina law and our bylaws, an incumbent director who is not re-elected remains in office until the director’s successor is elected and qualified or until his or her earlier resignation or removal. Under our current majority voting standard, the Board retained its Director Resignation Policy to address this “holdover” issue, so that any director who does not receive the requisite affirmative majority of the votes cast for his or her re-election must tender his or her resignation to the Board pursuant to this Policy.

 

BB&T’s Culture

 

 

We are very proud of our culture at BB&T, which has been deliberately developed and consistently articulated over the last 40-plus years. In a rapidly changing and unpredictable world, we believe individuals and organizations need a clear set of fundamental principles to guide their actions. At BB&T, we know our business will, and should, experience constant change. Change is necessary for progress. In any context, our vision, mission and values, are unchanging because these principles are based on basic truths.

 

We are a mission-driven organization with a clearly defined set of values. We encourage our associates to have a strong sense of purpose, a high level of self-esteem and the capacity to think clearly and logically. We believe a competitive advantage is largely in the minds of our associates and their capacity to turn rational ideas into actions that help us accomplish of our mission to make the world a better place to live by:

 

   

Helping our clients achieve economic success and financial security;

 

   

Creating a place where our associates can learn, grow and be fulfilled in their work;

 

   

Making the communities in which we work better places to be; and

 

   

Thereby optimizing the long-term return to our shareholders, while providing a safe and sound investment.

 

We realize our vision—“to create the best financial institution possible”—by meeting our responsibilities to our clients, associates, shareholders and communities. Our 10 values represent our over-arching beliefs. Our values are consistent with one another and integrated into a sound framework of character, judgment, success and happiness. Our focus on values grows from a belief that ideas matter and that an individual’s character is of critical significance.

 

Executive Management continually reinforces the BB&T culture (mission, vision and values) through a quarterly video, annual regional in-person visits and other internal communication channels.

  

BB&T Values

 

LOGO

 

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Ethics at BB&T

 

 

Ethics matter at BB&T. We believe that the ultimate success of BB&T is directly related to the extent that each one of our associates lives and works every day by adhering to our BB&T values. Our collective beliefs, behaviors, and results define our BB&T culture—a Culture of Ethics. We are keenly focused on always doing what is right in all interactions with our stakeholders—our clients, associates, senior leaders, directors, communities and shareholders. We also value and respect the opinions and insights of associates at all levels throughout the organization. Accordingly, we encourage associates to raise concerns with their managers, but we also provide other channels such as regional associate relations managers, a BB&T Ethics Hotline and our “Raise a Concern” web reporting form. We appointed a Chief Ethics Officer in 2015 in furtherance of our commitment to, and focus on ethics.

 

We maintain three separate Board-approved Codes of Ethics that apply to our associates, senior financial officers and Directors. BB&T’s Code of Ethics for Associates helps each of our associates understand the basic principles that govern our corporate conduct and the conduct of our associates generally. We similarly maintain a Code of Ethics for Directors, which governs the conduct of our directors generally. The Board also has adopted the Code of Ethics for Senior Financial Officers, which incorporates the Code of Ethics for Associates and also considers the importance of these individuals to our financial and regulatory reporting. For a copy of our Codes of Ethics, please refer to “Corporate Governance Materials” below. Any future waivers or substantive amendments of the Codes of Ethics applicable to our Directors and certain of our executive officers will be disclosed on our website.

 

Communications with the Board of Directors

 

 

Any shareholder or other interested party desiring to contact the Board of Directors or any individual director serving on the Board (including any specific non-management director or non-management directors as a group) may do so by written communication mailed to: Board of Directors, care of the Secretary, BB&T Corporation, 200 West Second Street, Winston-Salem, North Carolina 27101. Any proper communication so received will be processed by the Secretary as agent for the Board or an individually named director. Unless, in the judgment of the Secretary, the matter is not intended or appropriate for the Board (and subject to any applicable regulatory requirements), the Secretary will prepare a summary of the communication for prompt delivery to each member of the Board or, as appropriate, to the member(s) of the Board named in the communication.

 

Shareholder Engagement Program

 

 

Our shareholder engagement program is a formal and coherent system for building and maintaining relationships with our shareholders. Since 2009, we’ve engaged in a recurring dialogue with a number of our larger shareholders concerning corporate governance and executive compensation issues. In 2015, we expanded our shareholder engagement program and contacted 37 of our 50 largest shareholders, representing 38% of our outstanding shares. Our Compensation Committee Chair led meetings with four of our largest shareholders. We also reached out to each of the three shareholders that had submitted proposals at our 2013, 2014 and 2015 annual meetings. In addition, we met with certain of the proxy advisory firms followed by some of our largest shareholders.

 

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The conversations centered on our executive compensation philosophy and design, including the Merger Completion Incentive Program announced last year. We also discussed corporate governance matters such as political contributions disclosure, sustainability reporting and proxy access. Overall, we received feedback that was generally supportive of our executive compensation programs and corporate governance practices. The feedback we received during these sessions was considered in our compensation decisions.

 

We believe that our shareholder engagement program allows Executive Management and the Board to gather information about investor concerns and make educated and deliberate decisions that are balanced and appropriate for our diverse shareholder base and in the best interests of BB&T. For additional information regarding our outreach efforts in 2015, please see “Shareholder Engagement” within our Compensation Discussion and Analysis section.

 

Environmental, Social, and Governance Report

 

 

We understand that it is important to our shareholders that we minimize our environmental impact, promote positive social efforts, and implement transparent governance practices. In order to emphasize our commitment to these areas, we expect to issue an annual Environmental, Social, and Governance report beginning in 2016. This publication will highlight our endeavors to act as good stewards of the natural resources entrusted to us and to promote the well-being of our associates and communities.

 

Statement of Political Activity

 

 

The Board of Directors oversees BB&T’s political strategy, political contributions and lobbying expenses. BB&T periodically participates in policy debates on issues to support our interests and sponsors employee political action committees, or PACs, which allow associates to voluntarily pool their financial resources to support federal and state candidates who support legislation important to us, and our shareholders, clients and communities. All PAC expenditures are a matter of public record and are available for review on the websites of the Federal Election Commission and various state election offices. It is our policy not to use corporate funds to make contributions to political candidates, political parties or committees or political committees organized for the advancement of political candidates, including Super PACs or independent expenditure committees. In response to feedback we received during our shareholder engagement program in 2013, we have posted on our website a Statement of Political Activity which describes our Board and management oversight process for political contributions and political activity by the Corporation, including the activities of our Government Affairs Group. Please refer to “Corporate Governance Materials” below for its location.

 

Board Skills and Training Program

 

 

The Board Skills and Training Program (the “Training Program”) provides a formal framework designed to support the directors’ performance of their responsibilities as members of the Board and Board committees. The Training Program is based on knowledge, skills and resources curricula developed for the Board and each Board committee and individual learning plans are created for each director. Courses of general application are offered to the full Board while others are tailored to the specific requirements of the various Board committees. The directors’ participation is considered by the Nominating and Corporate Governance Committee in its annual evaluation of directors’ performance.

 

Policy for Accounting and Legal Complaints

 

 

The Audit Committee oversees a policy that governs the reporting of (a) associate complaints regarding accounting, internal accounting controls, or auditing matters and (b) evidence of (i) a material violation by the Corporation or any of its officers, directors, associates or agents, of federal or state securities laws, (ii) a material

 

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breach of fiduciary duty arising under federal or state law, or (iii) a similar material violation when such evidence is obtained by an attorney authorized to appear or practice before the SEC. We have engaged an independent service provider to receive and track all such complaints. Most verified complaints are referred to BB&T’s General Counsel, who is responsible for reviewing those complaints in accordance with BB&T’s whistleblower procedures and reporting all relevant information regarding the nature of the complaint to the Audit Committee. Our General Counsel investigates or causes to be investigated all matters referred pursuant to this policy and maintains a record of such complaints that includes the tracking of the receipt of their referral, investigation and resolution. Generally, if such a complaint is raised by an attorney in our legal department, then the complaint will be referred to our Chief Executive Officer. The General Counsel (or the Chief Executive Officer, as the case may be) periodically prepares a summary report of such complaints for the Audit Committee, which oversees the consideration of all reported complaints covered by this policy. The telephone number for reporting complaints as described in this section is 800-432-1911. Please refer to “Corporate Governance Materials” below for the location of BB&T’s Accounting, Securities and Legal Violations Policy.

 

Director Nominations

 

 

The Nominating and Corporate Governance Committee is responsible for selecting individuals who demonstrate the highest personal and professional integrity, have demonstrated exceptional ability and judgment and who are expected to be the most effective in serving the long-term interests of BB&T and its shareholders.

 

A director candidate is nominated to stand for election based on his or her professional experience, recognized achievement in his or her respective field, an ability to contribute to our business, his or her experience in risk management, and the willingness to make the commitment of time and effort required of a BB&T director over an extended period of time. A director must be “financially literate,” as defined by the Board, and should understand the intricacies of a public company. A director should possess good judgment, strength of character, and an independent mind, as well as a reputation for integrity and the highest personal and professional ethics. Other factors will be taken into consideration to assure that the overall composition of our Board is appropriate, such as occupational and geographic diversity and age. An important goal is to include members with diverse backgrounds, skills, and characteristics that, taken as a whole, will help ensure a strong and effective governing body. The Nominating and Corporate Governance Committee annually assesses the effectiveness of these factors in the director selection and nomination process.

 

Director nominees are recommended to the Board of Directors annually by the Nominating and Corporate Governance Committee for election by the shareholders. The Nominating and Corporate Governance Committee considers candidates submitted by directors, as well as self-nominations and, from time to time, it may consider candidates submitted by a third-party search firm hired for the purpose of identifying director candidates. The Nominating and Corporate Governance Committee conducts an extensive due diligence process to review potential director candidates and their individual qualifications, and all such candidates, including those submitted by shareholders, will be evaluated by the Nominating and Corporate Governance Committee using the Board membership criteria described above.

 

The Nominating and Corporate Governance Committee also will consider qualified director nominees recommended by shareholders when such recommendations are submitted in accordance with Article II, Section 10 of the Corporation’s bylaws and policies regarding director nominations. Shareholders may submit, in writing, the names and qualifications of potential director nominees to the Secretary, BB&T Corporation, 200 West Second Street, Winston-Salem, North Carolina 27101, for delivery to the Chair of the Nominating and Corporate Governance Committee for consideration. The written notice must include the following information about the nominee: (i) the nominee’s full name and residential address; (ii) the nominee’s age; (iii) the nominee’s principal occupation(s) during the past five years; (iv) the nominee’s previous and/or current memberships on all public

 

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company boards of directors; (v) the number and types of securities of the Corporation beneficially owned, if any, by the nominee; (vi) any agreements, understandings or arrangements between the nominee and any other person or persons with respect to the nominee’s nomination or service on the Board of Directors or the capital stock or business of BB&T; (vii) any bankruptcy filings of the nominee or any affiliate of the nominee; (viii) any criminal convictions of the nominee or any affiliate of the nominee; (ix) any civil actions or actions by the Securities and Exchange Commission or other regulatory agency against the nominee or an affiliate of the nominee whereby they were found to have violated any Federal or State securities law; and (x) a signed statement by the nominee consenting to serve as a director if elected. The written notice also must be submitted in accordance with the general procedures for shareholder nominations (including deadlines for the notice to be received by the Secretary), which are summarized under the caption “Other Matters-Proposals for 2017 Annual Meeting of Shareholders” below. Any shareholder desiring to recommend a nominee for consideration by the Nominating and Corporate Governance Committee prior to the 2017 Annual Meeting must do so in accordance with our policies and bylaws.

 

Once a director nominee has been recommended, whether by a shareholder or otherwise, the Nominating and Corporate Governance Committee, in accordance with our Corporate Governance Guidelines, reviews the background and qualifications of the nominee. The Nominating and Corporate Governance Committee reports to the Board, in writing, its recommendations concerning each director nominee. The Board then considers the Nominating and Corporate Governance Committee’s recommendations and finally selects those director nominees to be submitted by BB&T to shareholders for approval at the next annual meeting of shareholders.

 

Risk Oversight

 

 

BB&T’s vision, mission and values are the foundation for the risk management framework utilized at BB&T and therefore serve as the basis on which the risk appetite and risk strategy are built. In keeping with the belief that consistent values drive long-term behaviors, the Risk Management Organization (RMO) has its own risk values that establish the guiding principles of our day-to-day activities:

 

   

We believe managing risk is the responsibility of every associate.

 

   

Our business units and corporate support groups are responsible for proactively identifying risk and managing the inherent risks of their business.

 

   

We manage risk with a balanced approach which includes quality, profitability, and growth.

 

   

We ensure the appropriate return for the risk taken.

 

   

We utilize accurate and consistent risk management practices.

 

   

We thoroughly analyze risk quantitatively and qualitatively with judgments clearly identified.

 

   

We believe high quality risk management results in lower cost of capital.

 

   

We measure what we want to manage and we manage what we measure.

 

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As illustrated below, BB&T executes on its risk values through a risk management framework based on a “three lines of defense” model:

 

LOGO

 

   

First Line of Defense: Risk management begins with the business units and corporate support groups, the point at which risk is originated and where risks must be managed. Business unit managers in the first line identify, assess, control, and report their respective group’s risk profile.

 

   

Second Line of Defense: The RMO provides independent oversight and guidance of risk-taking across the enterprise. The RMO aggregates, integrates, and correlates risk information into a holistic picture of the corporation’s risk profile and concentrations.

 

   

Third Line of Defense: Audit Services (BB&T’s internal audit function) evaluates the design and effectiveness of the risk management framework and its results.

 

BB&T places significant emphasis on risk management and has a stand-alone Board-level Risk Committee which oversees risk reporting to the Board of Directors and functions as a significant part of our risk management framework. Among other things, the Risk Committee approves the Corporation’s risk appetite statements, monitors the Corporation’s risk profile, and provides input to management regarding the Corporation’s risk appetite and risk profile. The other key functions of the Risk Committee are listed in the section above entitled, “Board Committees, Membership and Attendance.”

 

The RMO is led by the Chief Risk Officer (CRO) and is responsible for facilitating effective risk management oversight, measurement, monitoring, reporting, and consistency. The CRO has direct access to the Corporation’s Board of Directors and Executive Management to communicate any risk issues (current or emerging) as well as the performance of the risk management activities throughout the enterprise. The CRO also chairs the Risk Management Committee (RMC), which provides oversight on a fully integrated view of risks across BB&T, including strategic, compliance, credit, liquidity, market, operational, and reputation risks.

 

The BB&T RMO is further expanded and strengthened through the designation of five Senior Risk Officers, or SROs. The Chief Commercial Credit Risk Officer, the Chief Retail Credit Risk Officer, the Chief Market and Liquidity Risk Officer, the Deputy Chief Risk Officer, and the Chief Regulatory and Compliance Risk Officer, together are responsible for ongoing aggregation, integration, correlation and reporting of the risks across our organization. Key to this effort is a bottoms-up risk identification and disclosure process that begins with the first line of defense. This business risk assessment process allows the SROs to report risks horizontally across various lines of business to identify emerging risk themes and evaluate strategies to mitigate, reduce, or avoid identified inherent risks. SROs communicate risks on a regular basis to enterprise level risk committees.

 

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COMPENSATION HOLDBACK/CLAWBACK

 

We maintain a pay-for-performance philosophy which governs our incentive compensation programs. Our Compensation Committee administers all aspects of the executive compensation program as applicable to Executive Management, including risk management. For additional detail, please refer to “Risk Management” within Section 4 of the Compensation Discussion and Analysis.

 

At the direction of the Compensation Committee, management has established the management compensation committee as well as processes and controls for the design and evaluation of incentive plans utilized for associates outside of Executive Management. The management compensation committee is responsible for exercising authority to modify payments and impose or release “holdbacks” from incentive compensation arrangements, based on a risk review or regulatory requirements. The management compensation committee also has the authority to prescribe prospective changes to incentive compensation arrangements to ensure their balance, consistent with BB&T’s safety and soundness. Risk and control functions are involved in the design, oversight, and administration of the incentive compensation programs used by the Corporation.

 

We have employed risk balancing in the design of incentive programs. For instance, our Compensation Committee, at its sole discretion, may reduce incentives and bonuses based on risk outcomes. See “Executive Risk Scorecard” within Section 3, and “Compensation Clawbacks” within Section 4 of the Compensation Discussion and Analysis.

 

Management Succession Planning

 

 

Management succession planning is a priority of the Board of Directors. Our Corporate Governance Guidelines provide that the Board of Directors is responsible for ensuring that we have developed an Executive Management succession plan, including procedures for Chief Executive Officer selection in the event of an emergency or the retirement of the CEO. This plan is reviewed and evaluated by the Board at least annually. The Lead Director leads the Board’s review and evaluation of BB&T’s Executive Management succession plan. As part of the plan, our Chairman and Chief Executive Officer, Kelly S. King, makes available his recommendations and evaluations of potential successors, along with a review of any development plans of such individuals. This process establishes procedures for planning and responding to events involving an absence of the CEO, whether for short- or long-term, and allows the Board to exercise its judgment and discretion with regard to the selection of a new CEO.

 

Corporate Governance Materials

 

 

Description    Available on BB&T’s Website at:
Corporate Governance Guidelines   

http://bbt.investorroom.com/corporate-governance

Board Committees and Charters    http://bbt.investorroom.com/committee-charters
Codes of Ethics    http://bbt.investorroom.com/code-of-ethics
Statement of Political Activity   

http://bbt.investorroom.com/corporate-governance

Accounting, Securities and Legal Violations Policy   

http://bbt.investorroom.com/corporate-governance

 

A shareholder may also request a copy of any of these documents by contacting the Secretary, BB&T Corporation, 200 West Second Street, Winston-Salem, North Carolina 27101.

 

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STOCK OWNERSHIP INFORMATION

 

The table below sets forth the beneficial ownership of BB&T common stock by all directors, the NEOs, all directors and executive officers of BB&T as a group and each person who is known to be the beneficial owner of more than five percent of our common stock as of February 17, 2016. Unless otherwise indicated, all persons listed below have sole voting and investment powers over all shares beneficially owned. Applicable percentage ownership is based on 780,470,501 shares of BB&T common stock outstanding as of February 17, 2016.

 

Name of Beneficial

Owner/Number of Persons in

Group

  

Shares of Common

Stock Beneficially

Owned(1)

   

Shares of Common

Stock Subject to a

Right to Acquire(2)

    

Percentage of
Common

Stock

   
Directors and Executive Officers          

Jennifer S. Banner

     22,746        27,489       *

K. David Boyer, Jr.

     11,550        9,203       *

Anna R. Cablik

     16,432        33,166       *

James A. Faulkner

     36,827 (3)      1,115       *

I. Patricia Henry

     13,933        1,115       *

Eric C. Kendrick

     164,743 (4)      1,115       *

Kelly S. King

     388,366 (5)      1,232,173       *

Louis B. Lynn, Ph.D.

     4,717        1,115       *

Edward C. Milligan

     57,445        1,115       *

Charles A. Patton

     67,939        1,115       *

Nido R. Qubein

     95,690 (6)      33,666       *

William J. Reuter

     41,488        35,280       *

Tollie W. Rich, Jr.

     115,615 (7)      1,115       *

Christine Sears

     9,018        1,058       *

Thomas E. Skains

     14,263 (8)      9,203       *

Thomas N. Thompson

     551,451 (9)      22,722       *

Edwin H. Welch, Ph.D.

     20,050 (10)      1,697       *

Stephen T. Williams

     381,342 (11)      22,722       *

Daryl N. Bible

     82,257        299,614       *

Ricky K. Brown

     159,839 (12)      490,212       *

Christopher L. Henson

     165,972 (13)      491,025       *

Clarke R. Starnes III

     82,723        218,830       *

Directors and Executive Officers as a group (30 persons)

     2,804,377 (14)      4,098,300       *
Beneficial Owners Holding More Than 5%          

BlackRock, Inc.(15)

55 East 52nd Street

New York, NY 10022

     42,031,540        -       5.40%

The Vanguard Group, Inc.(16)

100 Vanguard Blvd.

Malvern, PA 19355

     44,752,781        -       5.73%

 

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 *   Less than 1%.
(1)   As reported to BB&T by the directors and executive officers, and includes shares held by spouses, minor children, Individual Retirement Accounts (IRAs), affiliated companies, partnerships and trusts as to which each such person has beneficial ownership. With respect to executive officers, also includes shares allocated to such persons’ individual accounts under the BB&T Corporation 401(k) Savings Plan, the BB&T Corporation Non-Qualified Defined Contribution, and Individual Retirement Accounts (IRAs).
(2)   Amount includes options to acquire shares of BB&T common stock that are or become exercisable within sixty days of February 17, 2016 and restricted stock units that will vest within sixty days of that date.
(3)   Amount includes 5,900 shares pledged as security.
(4)   Amount includes 120,121 shares pledged as security.
(5)   Amount includes 57,700 shares held by spouse with sole investment and voting powers.
(6)   Amount includes 8,641 shares held by spouse with sole investment and voting powers and 2,979 shares held by spouse as custodian, for child with sole investment and voting powers.
(7)   Amount includes 26,050 shares held by spouse’s trust for which Mr. Rich, as co-trustee, shares investment and voting powers. Amount also includes 2,548 shares held by his mother with sole investment and voting powers.
(8)   Amount includes 11,763 shares jointly owned with spouse with shared investment and voting powers.
(9)   Amount includes 3,814 shares held by his son. Amount also includes 261,836 shares pledged as security.
(10)   Amount includes 4,171 shares held by spouse with sole investment and voting powers.
(11)   Amount includes 11,937 shares held by Mr. Williams as trustee in trusts for his children, 1,340 shares held by Mr. Williams, as custodian for his children. Amount also includes 355,728 shares pledged as security.
(12)   Amount includes 287 shares held by spouse with sole investment and voting powers.
(13)   Amount includes 7 shares held as custodian for minor children.
(14)   Amount includes an aggregate of 747,113 shares pledged as security.
(15)   Based upon information contained in the Schedule 13G/A filed by BlackRock, Inc. (“BlackRock”) with the SEC on February 10, 2016, BlackRock beneficially owned 42,031,540 shares of common stock as of December 31, 2015, with sole voting power over 35,490,961 shares, shared voting power over no shares, sole dispositive power over 42,031,540 shares and shared dispositive power over no shares.
(16)   Based upon information contained in the Schedule 13G filed by The Vanguard Group, Inc. (“Vanguard”) with the SEC on February 10, 2016, Vanguard beneficially owned 44,752,781 shares of common stock as of December 31, 2015, with sole voting power over 1,436,840 shares, shared voting power over 76,147 shares, sole dispositive power over 43,232,893 shares and shared dispositive power over 1,519,888 shares.

 

Section 16(a) Beneficial Ownership Reporting Compliance

 

 

Under the federal securities laws, our directors and certain of our executive officers are required to report their beneficial ownership of BB&T common stock and any changes in that ownership to the SEC. Specific deadlines for such reporting have been established by the SEC. We are required to report in this Proxy Statement any failure to timely file these reports that occurred in 2015. To the best of our knowledge, during 2015, all of the filing requirements were satisfied by our directors and executive officers subject to Section 16 of the Securities Exchange Act of 1934, as amended (“Exchange Act”). In making this statement, we have relied on the written representations of our directors and executive officers subject to Section 16 and copies of the reports that have been filed with the SEC.

 

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Proposal 2—Ratification of the Appointment of PricewaterhouseCoopers LLP as Independent Registered Public Accounting Firm For 2016    LOGO

 

 

PROPOSAL 2—RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2016

 

The Audit Committee is directly responsible for the appointment, compensation, retention and oversight of our independent registered public accounting firm. To execute on this responsibility, the Committee engages in a comprehensive annual evaluation of the independent registered public accounting firm’s qualifications, performance and independence. The Audit Committee has carefully considered the selection of PricewaterhouseCoopers LLP (“PwC”) as its independent registered public accounting firm to audit and report on the consolidated financial statements of BB&T and the effectiveness of our internal control over financial reporting.

 

In accordance with SEC rules, audit partners are subject to rotation requirements to limit the number of consecutive years of service an individual partner may provide us with audit services. For lead and concurring audit partners, the maximum number of consecutive years of service in that capacity is five years. In connection with this mandated rotation, the Audit Committee is directly involved in the selection of any new lead engagement partner. The current lead PwC engagement partner was designated commencing with the 2015 audit and is eligible to serve in that capacity through the end of the 2019 audit.

 

Our shareholders are being asked to ratify the appointment of PwC for 2016 because we value our shareholders’ views on BB&T’s independent registered public accounting firm and as a matter of good corporate governance. Representatives of PwC are expected to be present at the Annual Meeting, will have an opportunity to make a statement if they so desire and are expected to be available to respond to questions posed by the shareholders. If shareholders do not ratify the decision of the Audit Committee to reappoint PwC as our independent registered public accounting firm for 2016, the Audit Committee will reconsider its decision.

 

THE BOARD OF DIRECTORS OF THE CORPORATION RECOMMENDS A VOTE “FOR” PROPOSAL 2—RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS BB&T’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2016.

 

Fees to Auditors

 

 

The following table shows the aggregate fees incurred by the Corporation for professional services by PwC for fiscal years 2015 and 2014:

 

      2015 ($)    2014  ($)

Audit Fees

     9,146,000      8,185,000

Audit-Related Fees

     3,558,000      4,447,000

Tax Fees

        176,000         431,000

All Other Fees

     4,578,000      4,883,000

Total

   17,458,000    17,946,000

 

Audit Fees. This category includes fees billed for professional services for the integrated audits of the Corporation’s consolidated financial statements, including the audits of the effectiveness of our internal control over financial reporting, reviews of the financial statements included in our quarterly reports on Form 10-Q, statutory audits or other financial statement audits of subsidiaries, and comfort letters and consents related to SEC registration statements.

 

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Proposal 2—Ratification of the Appointment of PricewaterhouseCoopers LLP as Independent Registered Public Accounting Firm For 2016   

 

 

 

Audit-Related Fees. This category includes fees billed for assurance and related services that are reasonably related to the performance of the audit of our consolidated financial statements and effectiveness of internal controls and are not reported under the audit fees category above. These services consist of fees for service organization control reports, other attestation engagements traditionally performed by the independent accounting firm, pre-implementation assessments of internal controls for a new enterprise resource planning system and related business processes, controls assessments as part of our regulatory reporting initiatives, due diligence services related to proposed acquisitions, and audits of our employee benefit plans.

 

Tax Fees. This category includes fees billed for tax-related services rendered, including tax compliance, tax planning, and tax advice.

 

All Other Fees. This category includes fees billed for advisory services provided in conjunction with the Corporation’s regulatory reporting initiatives, mortgage advisory services, advisory services related to our adoption of a new enterprise resource planning system and other advisory services.

 

The Audit Committee considered the compatibility of the non-audit services performed by, and fees paid to, PwC in 2015 and determined that such services and fees are compatible with the independence of PwC.

 

Audit Committee Pre-Approval Policy

 

 

Under the terms of its charter, the Audit Committee must pre-approve all services (including the fees and terms of such services) to be performed for us by our independent registered public accounting firm, subject to a de minimis exception for permitted non-audit services that are approved by the Audit Committee prior to the completion of the audit and otherwise in accordance with the terms of applicable SEC rules. The Audit Committee may delegate authority to subcommittees consisting of one or more members when appropriate, including the authority to grant pre-approvals of audit and permitted non-audit services, as long as the decisions of such subcommittee(s) to grant pre-approvals are presented to the full Audit Committee at its next scheduled meeting. In 2015, all of the services provided by our independent registered public accounting firm were reviewed and approved by the Audit Committee.

 

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Audit Committee Report    LOGO

 

 

Audit Committee Report

 

 

The Audit Committee of the Board of Directors is currently composed of six independent directors and operates under a charter adopted by the Audit Committee on January 26, 2016. The SEC and the NYSE have established standards relating to audit committee membership and functions. With regard to such membership standards, the Board has determined that Stephen T. Williams meets the requirements of an “audit committee financial expert” as defined by the SEC and has the requisite financial literacy and accounting or related financial management expertise required generally of an audit committee member under the applicable standards of the SEC and NYSE.

 

The primary duties and responsibilities of the Audit Committee are to monitor: (i) the integrity of the financial statements of the Corporation; (ii) the independent registered public accounting firm’s qualifications and independence; (iii) the performance of the Corporation’s internal audit function and independent auditors; and (iv) compliance by the Corporation with legal and regulatory requirements. While the Audit Committee has the duties and responsibilities set forth above and those set forth in its charter, our management is responsible for the internal controls and the financial reporting process and the independent registered public accounting firm is responsible for performing an integrated audit of our financial statements and of the effectiveness of our internal control over financial reporting in accordance with standards established by the Public Company Accounting Oversight Board and issuing a report thereon.

 

In the performance of its oversight function, the Audit Committee has performed the duties required by its charter, including meeting and holding discussions with management, the independent registered public accounting firm, and the internal auditor, and has reviewed and discussed the audited consolidated financial statements with management and the independent registered public accounting firm. The Audit Committee has also discussed with the independent registered public accounting firm its views on fraud risks and how it demonstrates its independence and skepticism. Finally, the Audit Committee also has discussed with the independent registered public accounting firm the matters required to be discussed by the Public Company Accounting Oversight Board’s Auditing Standard No. 16 (Communications with Audit Committees).

 

The Audit Committee has received the written disclosures and the letters from the independent registered public accounting firm required by applicable requirements of the Public Company Accounting Oversight Board, as currently in effect, regarding the independent registered public accounting firm’s communications with the Audit Committee, and the Audit Committee has discussed with the independent registered public accounting firm its independence. The Audit Committee also has considered whether the provision of any non-audit services by our independent registered public accounting firm is compatible with maintaining the independence of the auditors.

 

Based upon a review of the reports by, and discussions with, management and the independent registered public accounting firm, and the Audit Committee’s review of the representations of management and the Report of Independent Registered Public Accounting Firm, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in our Annual Report on Form 10-K for the year ended December 31, 2015, filed with the SEC on February 25, 2016.

 

Submitted by the Audit Committee of the Board of Directors, whose current members are:

 

Stephen T. Williams, Chair    Edward C. Milligan
James A. Faulkner    Tollie W. Rich, Jr.
I. Patricia Henry    Christine Sears

 

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Proposal 3—Vote on an Advisory Resolution to Approve BB&T’s Executive Compensation Program   

 

 

PROPOSAL 3—VOTE ON AN ADVISORY RESOLUTION TO APPROVE BB&T’S

EXECUTIVE COMPENSATION PROGRAM

 

This year, we are again providing shareholders the opportunity to cast an advisory vote to approve our pay-for-performance executive compensation program. The large majority of our shareholders have approved this proposal each year since 2011, when we first asked shareholders to vote on this item.

 

The Compensation Committee and the Board believe that our executive compensation program, as described in the Compensation Discussion and Analysis and other sections of this proxy statement, reflects a pay-for-performance culture at BB&T that is rooted in our values. The Compensation Committee and the Board believe that the executive compensation program is well designed, and effective in aligning the interests of the executives with both the short-term and long-term interests of our shareholders, while reducing incentives for unnecessary and excessive risk taking. In making a decision on whether to approve our pay practices for our named executive officers, the Board asks that shareholders consider the following:

 

   

Our executive compensation program is incentive-based and reflects a pay-for-performance culture. Approximately 86% of our CEO’s target compensation for 2015 was variable and tied to BB&T’s performance (including stock price performance).

 

   

The performance measures we use (EPS, ROA and ROCE) are objective criteria established as key drivers of sustained and longer-term shareholder value and reflect our philosophy of closely linking pay with performance.

 

   

In reviewing compensation, the Compensation Committee utilizes an executive risk scorecard which can be used to adjust downward, if necessary, the short-term and long-term incentive compensation of each member of Executive Management in connection with negative risk outcomes.

 

   

We have long-standing stock ownership requirements for our NEOs, effectively aligning their interests with those of our shareholders and giving executives a greater financial interest in our company.

 

   

We value shareholder engagement. We have, and will continue to, incorporate feedback we receive into our programs.

 

We encourage you to review the complete description of our executive compensation programs provided on the following pages in the “Compensation Discussion and Analysis,” the compensation tables and accompanying narratives.

 

The Board strongly supports our executive pay practices and asks shareholders to support its executive compensation program through the following resolution:

 

“Resolved, that the shareholders approve BB&T’s overall executive compensation program, as described in the Compensation Discussion and Analysis, the compensation tables and the related narratives and other materials in this Proxy Statement.”

 

Your vote on this proposal, which is required by Section 14A of the Exchange Act, is “advisory,” and will serve as a non-binding recommendation to the Board. The Compensation Committee will seriously consider the outcome of this vote when determining future executive compensation arrangements. Unless the Board determines otherwise, the next advisory vote to approve the compensation of our named executive officers will be held at our 2017 Annual Meeting.

 

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” PROPOSAL 3—VOTE ON AN ADVISORY RESOLUTION TO APPROVE BB&T’S EXECUTIVE COMPENSATION PROGRAM.

 

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Compensation Discussion and Analysis    LOGO

 

 

COMPENSATION DISCUSSION AND ANALYSIS

 

In this Compensation Discussion and Analysis we describe our performance-based executive compensation program and philosophy in the context of the 2015 compensation decisions related to the Chief Executive Officer and each of the other executive officers named in the 2015 Summary Compensation Table (the named executive officers or “NEOs”). Each NEO is a member of our 13 person “Executive Management” team that manages and leads BB&T’s operations:

 

Name    Title   Years  of Service
at BB&T

Kelly S. King

   Chairman and Chief Executive Officer   43

Christopher L. Henson

   Chief Operating Officer   31

Ricky K. Brown

   Senior Executive Vice President and President, Community
Banking
  38

Clarke R. Starnes III

   Senior Executive Vice President and Chief Risk Officer   33

Daryl N. Bible

   Senior Executive Vice President and Chief Financial Officer   8

 

The Compensation Discussion and Analysis is organized into four sections:

 

   

Section 1—Executive Summary

   

Section 2—2015 Executive Compensation Program and Pay Decisions (page 42)

   

Section 3—BB&T’s Executive Compensation Process (page 58)

   

Section 4—Other Aspects of BB&T’s Executive Compensation Program (page 62)

 

Section 1—Executive Summary

 

About BB&T

 

 

BB&T is strong, profitable and remains committed to helping its shareholders, clients, communities and associates achieve economic success and financial security. By staying true to the vision, mission and values that have guided BB&T for over 140 years, we are well positioned for future opportunities. Led by our CEO, Kelly S. King, in 2015 we met substantially all of our strategic objectives and performed well in a challenging year for the financial services industry. We believe the financial and strategic accomplishments made in 2015, as well as our continued significant investment in important infrastructure projects, will benefit the Corporation and our shareholders in the coming years.

 

 

Business Overview

 

   9th largest U.S. financial services holding company by deposits

 

  Founded in 1872, providing over 140 years of stability in the communities we serve

 

  Fortune 500 company

 

   Named one of the World’s Strongest Banks by Bloomberg Markets magazine—one of the top three in the U.S. and in the top 15 globally

 

   Non-negotiable values

 

  Stable, seasoned Executive Management team (average age = 56 years old; average BB&T service = 29 years)

  

BB&T Values

 

LOGO

      

 

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Compensation Discussion and Analysis   

 

 

Our 2015 Achievements

M&A

 

 

Strategic

 

   Completed the Susquehanna merger

 

  Completed The Bank of Kentucky merger

 

  Completed the acquisition of 41 Texas Branches from a competitor

 

  Announced the acquisition of National Penn

 

   Obtained regulatory approvals and completed transactions at a time when there was limited bank M&A activity due to regulatory uncertainty

 

   Quickly and successfully integrated acquisitions into BB&T

 

  Drove revenue growth both organically and through strategic opportunities

 

  Continued to improve risk governance framework, including capital and liquidity management

 

  Continued investment in critical infrastructure improvements, including cyber-security preparedness and new general ledger and commercial lending systems

 

  Launched U by BB&T, our new digital banking platform

 

  Efficiently used capital by investing in strategic M&A transactions that will enhance future earnings

 

 

Driving Long–Term Shareholder Value

 
2015: A Highly Successful Year…But Not at the Risk of Long-Term Sustained Performance
   

  Net Income available to common shareholders of $1.9 billion

 

  Asset growth of 12.4% year-over-year v. peer average of 5.0%

 

   Average deposits increased 7.3% year-over-year v. peer average of 6.5%

 

   Record fee income of $4.0 billion

    

  Strong capital and liquidity ratios

 

   Debt ratings that are among the highest in our industry

 

  Total shareholder return exceeded peer average and S&P Financial Index for the 1, 5, 10, 15, and 20 year periods

   
Increased quarterly dividend in 2015 by 12.5% and #1 Dividend Yield:      Strong tangible book value per share ratio demonstrates the solid, enduring value of our company:
   
LOGO      LOGO
            Source: SNL Financial              Source: SNL Financial
 
#1 Net Interest Margin (“NIM”) demonstrates the strength of our core lending and deposit taking activities and was bolstered by our 2015 M&A transactions. Net interest income is our primary source of income:
 
LOGO
 

Source: SNL Financial                                                                       

 

*Please refer to Annex A for additional information on Price/Tangible Book.

 

 

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Performance Philosophy

 

 

COMPENSATION COMMITTEES APPROACH

 

The Compensation Committee’s key guiding principle is to align and reward executives commensurate with performance. The Compensation Committee is committed to providing total compensation opportunities that are competitive with the median of our Peer Group and where actual pay varies based on BB&T’s performance relative to our strategic goals and relative to our industry peers. The Compensation Committee believes that above median pay should be provided when BB&T exceeds our goals and peer performance, and conversely, average or below average performance should result in average or below average compensation. The Compensation Committee intends for our compensation program to be competitive with peer financial services institutions, with a focus on performance and rewards.

 

In keeping with these responsibilities in managing our compensation program, last year the Compensation Committee retained a new independent compensation consultant, Meridian Compensation Partners, to obtain a fresh perspective on our program.

 

NEO TARGET PAY MIX AND OVERALL COMPENSATION

 

As part of the Compensation Committee’s pay-for-performance philosophy, the majority of target pay is based on performance. The following graphs show the mix of 2015 target total compensation for Mr. King and the other NEOs averaged together.

 

LOGO

 

*   Above percentages represent CEO and NEO compensation opportunities at target levels. The charts above do not include amounts paid under the Merger Completion Incentive Program, since this is not part of our ongoing compensation program.

 

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2015 Pay Highlights and Performance Alignment

 

 

EXECUTIVE PAY—ALIGNED WITH PERFORMANCE

 

2015 was a solid and profitable year with many notable strategic and differentiating accomplishments, including BB&T’s successful integration of several significant acquisitions and infrastructure investments. We continued our strong performance relative to our peers, but performance was down from 2014 on some of the metrics that drive our executive incentive programs. Accordingly, the payout percentages for our variable pay awards (short and long-term) were lower for 2015 than in 2014. A significant portion of our pay continues to be at risk based on our future performance. Below is a summary of the most notable 2015 pay outcomes and decisions:

 

2015 PAY HIGHLIGHTS

 

Highlight    Considerations
2015 Annual Incentive Award paid at 76.3% of target award opportunity v. 92.3% for 2014 (see page 47)   

The decrease was driven by 2015 earnings per share of $2.73 v. $2.90 in 2014. Our return on assets for 2015 was in the 88th percentile relative to our peers (above the maximum ROA performance level of 75%).

 

The Compensation Committee excluded Susquehanna earnings in light of the Merger Incentive, further reducing EPS performance to $2.66 for Executive Management. The intent is to avoid the perception of Executive Management being twice rewarded for the Susquehanna merger.

2013-2015 LTIP paid at 123% of target award opportunity v. 150% for 2012-2014 LTIP (see page 50)    BB&T again performed well against the Peer Group generating payouts above target. The payout percentage decrease was driven by three-year average return on common equity for 2013-2015 at the 61st percentile of the Peer Group v. 72nd percentile for the prior period.
Increases in base salary and Annual Incentive Award target opportunities (see page 45)   

After reviewing market data and considering salaries were unchanged since 2013, salaries were increased modestly in 2015. Annual Incentive target award opportunities were increased to remain competitive and in consideration of reduced maximum award opportunities in response to regulatory feedback.

Expanded shareholder engagement program (see page 23)    Feedback from shareholders was considered in a number of Compensation Committee decisions.

A special, one-time Merger Incentive was provided to recognize the strategically significant Susquehanna merger and incentivize a successful integration (see page 52)

  

Special, one-time award not expected to be used again.

Based on shareholder feedback, Compensation Committee paid award 50% in cash and 50% in RSUs, which are subject to a 3-year vesting period and can be forfeited in the event of a negative risk outcome or annual operating loss.

 

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PERFORMANCE METRICS

 

The Compensation Committee regularly considers a variety of financial metrics when evaluating performance and making compensation decisions, as indicated below. By assessing different metrics over short, medium and long-term periods, the Compensation Committee is able to obtain a broad and accurate assessment of our performance against specific compensation goals and relative to the Peer Group.

 

Growth Metrics    Return Metrics    Capital Metrics
Deposits    Net Interest Margin    Net Charge-Offs /Average Loans

Earnings Per Share*

Loans

  

Return on Assets*

Return on Common Equity*

   Non-Performing Assets / Loans
& Other Real Estate Owned
     Total Shareholder Return    Common Equity Tier 1 Ratio

 

*   Metric used in BB&T’s pay-for-performance compensation plans.

 

Three of these metrics are used directly in BB&T’s executive incentive plans: return on assets (“ROA”), earnings per share (“EPS”), and return on common equity (“ROCE”). EPS and ROA are used in the Annual Incentive Award and three-year average ROCE is used for Long-Term Incentive Plan (“LTIP”) awards. The Compensation Committee believes these metrics are key drivers of sustained and longer-term shareholder value. The Compensation Committee also grants a meaningful portion of compensation through equity awards and maintains rigorous stock ownership guidelines to ensure executives are closely aligned with our stock performance.

 

Total Shareholder Return (“TSR”), a metric that has become increasingly popular with institutional shareholders and proxy advisory firms in recent years, is evaluated by the Compensation Committee. TSR measures stock price appreciation plus common stock dividend payments over a particular time period. The Compensation Committee monitors and considers TSR in assessing our performance, but does not include it as a direct measure in our incentive plans because one- and three-year TSR reflect shorter-term horizons, are volatile, are influenced by situations outside the control of executives (such as global market conditions), and may not reflect our core performance. The Compensation Committee believes that TSR is more useful as a longer-term performance metric as the market is most effective at differentiating the performance of companies over the long-run. Our consistent superior financial performance over time has increased long-term value for our shareholders, as shown below.

 

LOGO

 

  1 For periods ended December 31, 2015
       Source: Bloomberg

 

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Sound Compensation and Governance Practices

 

 

The Compensation Committee has implemented strong governance practices that reinforce our principles, support sound risk management and are shareholder aligned:

 

What we do    What we don’t do
ü    pay for performance; over 86% of CEO, and approximately 79% of the other NEOs’ total target compensation for 2015 is based on BB&T’s performance (EPS, ROA, ROCE, stock price)    ×    we don’t offer incentives that would provide payouts for negative returns
ü    award both cash and stock incentive awards, with an emphasis on performance-based awards    ×    we don’t reprice stock options
ü    provide for adjustments of payouts for negative risk outcomes based on the executive risk scorecard evaluation    ×    we don’t provide dividends on unvested equity awards
ü    utilize a broad-reaching clawback policy    ×    we don’t offer broad-based perquisites such as personal club memberships, corporate housing, and personal use of company aircraft
ü    decrease overall emphasis on stock option grants    ×    we don’t gross-up payments for excise taxes
ü    maintain stock ownership requirements    ×    we don’t permit hedging or speculative trading of BB&T common stock
ü    restrictions on pledging of BB&T common stock        
ü    review tally sheets for each executive as part of the process of setting compensation        
ü    retain an independent compensation consultant who performs services solely for the Compensation Committee          

 

Shareholder and Regulatory Feedback

 

 

SHAREHOLDER ENGAGEMENT

 

For the past several years we have conducted a formal shareholder engagement program to help us identify issues of importance to our shareholders, with a focus on corporate governance and executive compensation. Historically, shareholders have indicated strong support of our compensation programs through their “say on pay” voting results, but at our 2015 Annual Meeting, we received a lower level of shareholder support than in the past for that proposal. In response, we expanded our shareholder engagement program by reaching out to 37 of our 50 largest shareholders, representing 38% of our outstanding shares, as well as to the shareholder proponents who made proposals at the 2015 Annual Meeting. We also met with certain of the proxy advisory firms followed by some of our largest shareholders. The Compensation Committee Chair led the meetings with four of our largest institutional shareholders.

 

The feedback received on our executive compensation programs and philosophy was generally very favorable. As to executive compensation, the general sentiment was that our program is appropriate and well designed. Several governance and compensation points were raised by shareholders and this feedback proved influential in a number of subsequent decisions and actions, as outlined below and on page 55.

 

 

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What we heard    What we did
Even though we are above the median of the Peer Group in terms of size, compensation opportunities generally should not be targeted above the median of the Peer Group.    The Compensation Committee is committed to implementing a strategy in 2016 to provide target compensation opportunities that are aligned with the median of the Peer Group.
If we are in the top quartile of the Peer Group in terms of size, we should consider adding larger banks to the group.    The Compensation Committee reevaluated the Peer Group for 2016 and decided to add one bank larger than us (Wells Fargo) and one bank closer in size (Citizens Financial). The nature of the market limits the number of larger peers with a reasonably comparable business model so we will, for the near term, continue to be one of the larger banks in our Peer Group.
Shareholders are supportive of proxy access, which allows director nominees of shareholders to be included with the Corporation’s proxy materials under certain circumstances.    The Nominating and Corporate Governance Committee is closely monitoring this corporate governance issue.

Shareholders encouraged detailed proxy disclosure of the Merger Incentive and the Committee’s deliberations. After hearing our explanation of the rationale for the award, shareholders were generally supportive of the Merger Incentive and expressed that the amounts seemed reasonable.

   We provided a detailed discussion of the Merger Incentive beginning on page 52, including additional feedback we received from our shareholders regarding this award.

 

We are committed to ongoing shareholder engagement and expect to continue our shareholder engagement program. Consistent with the recommendation of our Board of Directors and the preference of our shareholders, BB&T believes that it is appropriate to conduct annual say on pay votes regarding our executive compensation programs.

 

REGULATORY CONSIDERATIONS IN SETTING COMPENSATION

 

Banking regulators continue to regularly provide input on and influence the compensation practices and incentive compensation at the largest financial institutions in the United States, focusing on the risks intrinsic to the design and implementation of compensation plans as well as the reasonableness of each element of compensation. While we have, for many years, focused our compensation philosophy on performance-based compensation, certain changes were made to our compensation programs over the last few years primarily as a result of regulatory guidance. Regulators influenced the following modifications of our compensation program:

 

   

Our NEOs are evaluated on individual risk performance, which has been integrated into the NEO’s annual performance evaluation through use of the executive risk scorecard.

 

   

Our NEO performance-based incentive plans have changed in response to regulatory requests including:

 

   

reduced maximum payout levels for Annual Incentive Awards from 200% to 125%,

 

   

reduced maximum payout levels for LTIP awards from 200% to 125%,

 

   

reduced emphasis on stock options, and

 

   

added risk-based performance condition(s) for vesting of stock options and RSUs granted to NEOs.

 

The Compensation Committee continues to assess our pay practices to balance risks with our commitment to linking NEO pay to BB&T’s performance while maintaining compensation programs that are market competitive and shareholder aligned.

 

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Compensation Actions for 2016

 

 

As part of its regular review, the Compensation Committee has taken the following actions for 2016 in regards to NEO compensation. These actions are all in furtherance of the Compensation Committee’s commitment to implementing a strategy to provide target compensation opportunities that are aligned with the median of the Peer Group.

 

   

No base salary increases;

 

   

No change in compensation award opportunities or payout levels;

 

   

No special awards; and

 

   

Added Wells Fargo and Citizens Financial to the 2016 Peer Group to better reflect our growth in recent years.

 

The Compensation Committee recognizes that executive compensation practices in the banking industry are continuing to evolve due to feedback from regulators and shareholders. The Compensation Committee intends to closely monitor changes in market compensation practices as well as feedback on our programs from our shareholders and regulators. Accordingly, the Committee may make additional changes to our program in furtherance of its commitment to provide a compensation program that is competitive, performance-based, risk-balanced and aligned with the goals of our shareholders and regulatory expectations.

 

Section 2—2015 Executive Compensation Program and Pay Decisions

 

Compensation Philosophy

 

 

The Compensation Committee structures BB&T’s overall compensation program for Executive Management with an emphasis on long-term, performance-based compensation. Our executive compensation philosophy is based on the following guiding principles:

 

   

Compensation and reward systems are designed to support and drive our strategic goals and produce positive business results;

 

   

Total compensation is aligned with shareholder interests by providing a significant percentage of compensation in equity and setting stock ownership requirements for Executive Management;

 

   

Significant amounts of compensation are linked to the achievement of performance goals;

 

   

Total compensation opportunities are established relative to organizations with which we compete for both talent and shareholder investment and at levels that enable us to attract and retain executives critical to our long-term success; and

 

   

Compensation is compatible with effective controls and risk management and is supported by strong corporate governance.

 

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Compensation Program Elements

 

 

Our executive total compensation is heavily performance-based. Below is a summary of our regular pay components, their purpose and key program features.

 

Incentive Type   Compensation
Element
   What the Element Rewards    Key Features & Purpose
   

FIXED                      

  Base Salary    Scope of leadership responsibilities, years of experience, performance and contributions to BB&T.    Plays a relatively modest role in the overall pay package because we believe the significant majority of executive compensation should be variable and based on performance. Provides the only element of certain compensation for our NEOs.
PERFORMANCE-BASED INCENTIVES   Annual Incentive Awards    BB&T’s financial performance in 2015 based on achievement of specific earnings per share (weighted at 60%) and relative return on assets (weighted at 40%) performance.   

Rewards annual performance based on financial results that are expected to have a meaningful bearing on long-term shareholder value. Payments are based solely on corporate performance, reinforcing our team culture.

 

Performance levels (threshold, target, maximum) are established relative to Board approved internal forecast EPS expectations and our ROA performance relative to our Peer Group.

  Incentive Stock Awards (20% stock options and 80% restricted stock units)    Sustainable, long-term appreciation of BB&T’s stock price.   

Designed to align NEO compensation with the shareholder goal of stock price appreciation.

 

Stock options and RSUs vest ratably over three years. The award vesting is subject to BB&T exceeding a performance hurdle and adjustments for any negative risk outcomes. Prior to vesting, 100% of the unvested award is subject to forfeiture if the performance criteria are not met. Dividends are not paid on unvested RSUs.

  LTIP Awards    Achievement of superior three-year average return on common equity performance. LTIP Awards are typically paid in cash.    LTIP awards are designed to measure relative performance over three-year cycles. Each year begins a new three-year cycle. Payments are based on BB&T performance relative to its Peer Group.

 

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Analysis of Overall Compensation

 

 

The table below summarizes the actual NEO compensation paid for the 2015 performance year and illustrates how the Compensation Committee viewed NEO compensation in 2015. The table also compares total compensation for 2015 to 2014.

 

2015 COMPENSATION OVERVIEW TABLE

 

Name  

Salary(1)

($)

   

Annual

Incentive

Awards (2)

($)

   

Option

Awards(3)(4)

($)

 

Restricted

Stock Unit

Awards (3)(4)

($)

   

LTIP

(2013-

2015) (5)

($)

   

2015
Total for
regular
program

($)

   

2015

Total with
Merger
Incentive
(6)

($)

 

2014
Total

($)

 
Kelly S. King     1,056,250        1,572,160          591,499     2,365,971            2,009,603        7,595,483      8,625,483     7,200,244   
Christopher L. Henson     691,250        685,921          241,938     967,730            830,134        3,416,973      3,866,973     3,179,536   
Ricky K. Brown     691,250        685,921          241,938     967,730            830,134        3,416,973      3,866,973     3,179,536   
Clarke R. Starnes III     582,500        511,316          184,069     736,270            629,544        2,643,699      2,978,699     2,516,515   
Daryl N. Bible     582,500        511,316          184,069     736,270            629,544        2,643,699      2,978,699     2,516,515   

 

(1)   Reflects base salary actually received in 2015.
(2)   Amounts reflect the value of the 2015 Annual Incentive Award, paid in March 2016.
(3)   Amounts reflect the value the Compensation Committee sought to deliver through the restricted stock unit and stock option awards granted in February 2015. No amounts are immediately available to the officer as the options and units vest over time. The exercise price of the options was equal to the stock price on the date of grant, and therefore, there was no intrinsic value on the date of grant. The recipient will only be able to realize future value for the stock options if BB&T’s stock price increases.
(4)   The principal differences between this table and the Summary Compensation Table are that the Summary Compensation Table includes information on the grant date fair value of restricted stock unit awards, the change in pension value and nonqualified deferred compensation earnings as well as all other compensation. The components included in the table above are considered by the Compensation Committee when making compensation determinations.
(5)   Amounts reflect value of 2013-2015 LTIP awards, paid in March 2016.
(6)   Merger Incentive amounts: King - $1,030,000; Henson - $450,000; Brown - $450,000; Starnes - $335,000; Bible - $335,000. Paid 50% in cash and 50% in RSUs.

 

In 2015 we continued to perform well against our Peer Group, however, our overall performance results were not as strong under the Annual Incentive Award and LTIP as compared to 2014. As a result, the payout percentages for these plans were lower for 2015 than for 2014. Increases in 2015 total compensation paid under our regular compensation program resulted primarily from payments under the 2013-2015 LTIP (the LTIP target award opportunities were increased in 2013 relative to the 2012 levels).

 

     2014     2015(1)  
     Absolute
Performance
    Relative  to Peer
Group
    Absolute
Performance
    Relative  to Peer
group
 
EPS (Annual Incentive)     $2.90        N/A        $2.73 (2)      N/A   
ROA (Annual Incentive)     1.22     84th Percentile         1.14     88th Percentile   
Average 3-year ROCE (LTIP)     10.31     72nd Percentile        9.73     61st Percentile   

 

(1)   The EPS, ROA and ROCE performance presented herein includes adjustments to BB&T’s GAAP net income approved by the Compensation Committee. For additional detail regarding these adjustments and a GAAP reconciliation, please refer to Annex A.
(2)   In light of the Merger Incentive, EPS performance was further reduced to $2.66 to exclude the estimated impact attributable to the legacy Susquehanna operations.

 

A special, one-time Merger Incentive was provided to recognize the strategically significant Susquehanna merger and incentivize a successful integration. The Merger Incentive is not a part of our regular compensation program and is not expected to be used again. Based on shareholder feedback, the Compensation Committee

 

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paid the award 50% in RSUs and 50% in cash. As a result of approving the Merger Incentive, the Compensation Committee removed estimated Susquehanna earnings from the EPS component of the Annual Incentive Award, reducing EPS performance to $2.66. See the Merger Incentive discussion beginning on page 52.

 

Base Salary

 

 

The following table shows base salaries for each of our NEOs for 2015 as compared to 2014:

 

Name  

2015

Base Salary

($)(1)

   

2014

Base Salary

($)

   

Increase

($)

   

Percentage

Increase

Kelly S. King     1,075,000            1,000,000            75,000        7.50%
Christopher L. Henson     700,000            665,000            35,000        5.26%
Ricky K. Brown     700,000            665,000            35,000        5.26%
Clarke R. Starnes III     590,000            560,000            30,000        5.36%
Daryl N. Bible     590,000            560,000            30,000        5.36%

 

(1)   Effective as a April 1, 2015.

 

In its deliberations on the 2015 base salary increases, the Compensation Committee considered the competitive analyses provided by its independent compensation consultant that base salaries for our NEOs had remained unchanged since 2013.

 

Annual Incentive

 

 

Our Annual Incentive Award is a cash incentive based on the achievement of corporate performance goals established annually by the Compensation Committee.

 

   

The amount paid under the Annual Incentive Award is determined by a formula based on our: (1) EPS (against preset performance goals) and (2) ROA (as compared to our Peer Group).

 

   

In 2015, EPS was weighted at 60%, while ROA was weighted at 40%.

 

   

While EPS and ROA are independent and permit payouts under each measure ranging from 0% to 150% of the target award opportunity, when both metrics are combined under the formula, the maximum amount that may be paid under the Annual Incentive Award is 125% of the target award opportunity. If the EPS threshold was not achieved or exceeded, the executives could still receive a payment based solely on our ROA performance and vice versa.

 

   

The EPS performance level was adjusted downward (from $2.73 to $2.66) in light of the Merger Incentive and to avoid the appearance that NEOs were being rewarded twice for the Susquehanna merger.

 

   

The 2015 Annual Incentive Award paid out at approximately 76% of the target award opportunity based on our EPS and ROA performance and reflecting the downward adjustment to the EPS performance measure.

 

We have historically used EPS and ROA as the performance measures for Annual Incentive Awards because the Compensation Committee believes EPS and ROA have a meaningful bearing on long-term increases in shareholder value and are valuable barometers for our performance. EPS and ROA have a strong long-term correlation with shareholder returns. These measures also reflect the fundamental risk level and financial soundness of the business.

 

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Each executive has a target award opportunity (expressed as a percentage of base salary) which represents the amount of the Annual Incentive Award if we achieve the performance goals at the target performance level. The table below summarizes the Annual Incentive award opportunity for 2015 versus 2014.

 

Name    2015 Target Annual
Incentive Opportunity
  2014 Target Annual
Incentive Opportunity
Kelly S. King    195%   175%
Christopher L. Henson    130%   100%
Ricky K. Brown    130%   100%
Clarke R. Starnes III    115%   100%
Daryl N. Bible    115%   100%

 

The Compensation Committee increased the 2015 target award opportunities to provide competitive pay to these seasoned executives and to align total target compensation with the median level of the members of the Peer Group most aligned with us in terms of asset size and market capitalization. This increase was also intended to offset some of the lost upside caused by the maximum award opportunities for the Annual Incentive Award and LTIP being reduced below the median peer practice for comparable awards as a result of regulatory feedback.

 

Additional changes were made to the structure of the 2015 Annual Incentive versus 2014, as outlined below.

 

2015 Annual Incentive Change    Rationale
The weighting of the ROA component was increased to 40% from 33% in 2014.    Given the economic environment, the Compensation Committee wanted to place greater emphasis on our performance relative to the Peer Group.
For 2015, the performance matrix for each of EPS and ROA extends to 150% of target, but the aggregate payment is capped at 125% of target. In 2014, each performance measure was capped at 125%.    The Compensation Committee wanted to reward superior performance by allowing excellent EPS or ROA performance to raise the Annual Incentive’s overall payout percentage, subject to the aggregate payment cap of 125%.

 

ANNUAL INCENTIVE AWARD PERFORMANCE AND EPS DOWNWARD ADJUSTMENT

 

EPS for 2015 was $2.73. In approving the Merger Incentive payment, the Compensation Committee decided that the estimated earnings attributable to the legacy Susquehanna operations following the merger (which occurred on August 1, 2015) should be removed from the Annual Incentive’s EPS performance measure. The Compensation Committee felt this adjustment was important to avoid the perception that Executive Management was being rewarded twice for the Susquehanna merger. However, the Compensation Committee also determined that the Susquehanna merger was a differentiating event where we outperformed our peers, and accordingly, believe it was fair to include our full earnings for the compensation elements that measure our performance relative to the Peer Group. See the Merger Incentive discussion beginning on page 52.

 

The tables below summarize the performance matrix and payout levels under the Annual Incentive Award.

 

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EPS PERFORMANCE (60% OF ANNUAL INCENTIVE AWARD)

 

Level of Achievement   EPS Performance
Measure
  Payout as % of Participant’s Target
Award Opportunity
  Method for Setting
the Payout %

Below Threshold

  Less than $2.65   0%    

Threshold

  $2.65   25%   10% below target

Target

  $2.95   100%   Internal profit plan

Maximum

  $3.10   150%1   5% above target

Actual

  $2.73   45.83%    

Excluding SUSQ earnings

  $2.66   27.22%    

 

(1)   Annual Incentive Award combines EPS and ROA performance, with the final payout capped at 125% of the target award opportunity.

 

ROA PERFORMANCE (40% OF ANNUAL INCENTIVE AWARD)

 

Level of Achievement   

Percentile Performance

BB&T ROA Relative to Peer Group

ROA

   Payout as % of  Participant’s Target
Award Opportunity

Below Threshold

   Less than 25th Percentile    0%

Threshold

   25th Percentile    50%

Target

   50th Percentile    100%

Maximum

   75th Percentile    150%(1)

Actual

   88th Percentile    150%(1)

 

(1)   Annual Incentive Award combines EPS and ROA performance, with final payout capped at 125% of target opportunity.

 

2015 ANNUAL INCENTIVE AWARD RESULTS

 

The 2015 Annual Incentive Awards paid out at approximately 76.33% of the target award opportunity, based on BB&T’s 2015 EPS and ROA results as summarized below:

 

2015 ANNUAL INCENTIVE PAYOUT CALCULATION

 

      Performance
Level
   Payout Ratio    Item Weight    Annual Incentive  Award
Payout

EPS

   $2.66    27.22%    60%    16.33%

ROA

   1.14%    150%    40%    60%

Total

                  76.33%(1)

 

(1)   The EPS and ROA performance presented herein includes adjustments to BB&T’s GAAP net income by the Compensation Committee. EPS performance excludes estimated earnings attributable to the legacy Susquehanna operations. For additional detail regarding these adjustments, please refer to Annex A.

 

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Based on these results, executives received the following Annual Incentive Award payouts.

 

2015 ANNUAL INCENTIVE AWARD PAYMENTS

 

Name (1)  

Threshold 2015
Annual Incentive
Award Payments

($)

 

Targeted 2015
Annual Incentive
Award Payments

($)

 

Maximum 2015
Annual Incentive
Award Payments

($)

 

Actual 2015 Annual
Incentive Award
Payment

($)

Kelly S. King

  308,953   2,059,688   2,574,610   1,572,160

Christopher L. Henson

  134,794      898,625   1,123,281      685,921

Ricky K. Brown

  134,794      898,625   1,123,281      685,921

Clarke R. Starnes III

  100,481      669,875      837,344      511,316

Daryl N. Bible

  100,481      669,875      837,344      511,316

 

(1)   The Annual Incentive Awards for the officers covered by Section 162(m) of the Code were paid from a pool based on BB&T’s 2015 income before taxes (pre-tax income). For a more detailed discussion of the Annual Incentive Award 162(m) Pool, please refer to “Tax Considerations” in Section 4.

 

Long-Term Incentives

 

 

BB&T’s long-term incentive program provides compensation awarded under the shareholder-approved BB&T Corporation 2012 Incentive Plan (the “2012 Incentive Plan”). These awards are a mix of cash and equity and include the following components:

 

   

Incentive Stock: Consists of stock options and restricted stock units (“RSUs”) that align executives with shareholder interests, reward stock price appreciation, and encourage retention. Stock options represent a limited component, based on feedback from regulators and shareholders.

 

   

RSUs—represents 80% of incentive stock award

 

   

Stock Options—represents 20% of incentive stock award

 

   

Long-Term Incentive Plan (“LTIP”): Provides rewards based on our ROCE performance relative to the Peer Group over the applicable three-year period.

 

Executives have a defined target award opportunity for each long-term component, expressed as a percentage of base salary. None of the long-term incentive award opportunities increased for 2015.

 

      Long-Term Incentives
Name    LTIP      RSUs    Stock Options  

Kelly S. King

   160%      224%    56%

Christopher L. Henson

   100%      140%    35%

Ricky K. Brown

   100%      140%    35%

Clarke R. Starnes III

   90%      126%    32%

Daryl N. Bible

   90%      126%    32%

 

INCENTIVE STOCK PROGRAM SUMMARY

 

2015 Incentive Stock Awards for each NEO include nonqualified stock options (20% of award) and RSUs (80% of award).

 

   

Stock options and RSUs vest ratably over three years.

 

   

Award vesting is subject to BB&T exceeding a performance hurdle and adjustments for any negative risk outcomes.

 

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Up to 100% of unvested RSUs and stock options are subject to forfeiture if the Compensation Committee determines that there has been a significant negative risk outcome as a result of a corporate or individual action, or BB&T has incurred an annual operating loss for the year.

 

Restricted Stock Units

 

RSU awards are granted as a contingent share of BB&T common stock that is not earned or issued until specific conditions are met. RSUs vest 33 1/3% per year following each of the first three anniversaries of the date of grant, subject to the Compensation Committee’s performance review. For retirement eligible individuals, RSU vesting is generally accelerated upon retirement. No dividends are paid on the shares underlying the RSUs until the units vest and shares are issued. The Compensation Committee determined that the three-year vesting schedule is generally consistent with Peer Group practices. The Compensation Committee believes that the retentive features and perceived value of RSUs are enhanced in a volatile stock market, which the financial services industry has experienced.

 

Stock Options

 

Stock options historically have been an important part of our equity program. The Compensation Committee believes that stock options are inherently performance-based and effectively align the interests of the recipients with those of the shareholders because stock options only have value if our stock price increases relative to the stock price on the date of the award. Stock option awards vest 33 1/3% per year following each of the first three anniversaries of the date of grant, subject to attainment of the performance criteria, and expire on the ten year anniversary of the date of grant. For retirement eligible individuals, stock option vesting is generally accelerated upon retirement. The exercise price for each stock option grant in 2015, including each award to the NEOs, was the market closing price on the date of grant. The Compensation Committee determined that the three-year vesting schedule and ten year term is generally consistent with Peer Group practices.

 

2015 INCENTIVE STOCK AWARDS

 

The 2015 Incentive Stock Awards are detailed in the following table:

 

Name   

Non-

Qualified
Stock
Options(#)
(1)

  

Delivered

Value of Stock
Options ($)
(2)(3)

   RSUs (#)   

Delivered Value

of RSUs ($)(2)(3)

   Total
Delivered
Value of
Options and
RSUs ($)
Kelly S. King    120,714    591,499    61,904    2,365,971    2,957,470
Christopher L. Henson    49,375    241,938    25,320    967,730    1,209,668
Ricky K. Brown    49,375    241,938    25,320    967,730    1,209,668
Clarke R. Starnes III    37,565    184,069    19,264    736,270    920,339
Daryl N. Bible    37,565    184,069    19,264    736,270    920,339

 

(1)   The option exercise price for the 2015 awards is $38.22 per share, which was the closing price on February 24, 2015, the date of the grant. For additional detail, please refer to “Compensation of Executive Officers—2015 Outstanding Equity Awards at Fiscal Year-End.”
(2)   The table reflects the value the Compensation Committee seeks to deliver in making the award. The 2015 stock option and restricted stock unit awards were granted on February 24, 2015. In the case of both stock options and restricted stock units, the number of options or units granted was determined by dividing the target amount of compensation by the estimated value of each equity award. For stock options, the award was valued based on the Black-Scholes value of the options ($4.90). For restricted stock units, the number of units awarded was based on the closing price of BB&T’s common stock on the grant date ($38.22).
(3)   In accordance with SEC rules, the value of the awards reported in the 2015 Summary Compensation Table is the fair value of the awards on the grant date. For stock options, the grant date fair value was the same as the value used by the Compensation Committee to determine stock option awards ($4.90). For restricted stock units, the grant date fair value of $34.36 was calculated by discounting the closing price of BB&T’s common stock on the grant date by the present value of the dividends that are expected to be forgone during the three-year vesting period. For the grant date fair value of the awards and a discussion of how we compute the fair value, please refer to columns (d) and (e) of the 2015 Summary Compensation Table included in the “Compensation of Executive Officers” section below.

 

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LTIP PROGRAM SUMMARY

 

LTIP awards reward performance measured by our ROCE relative to our Peer Group over a three year performance cycle. Each year begins a new three-year performance cycle, and at the beginning of the cycle, the Compensation Committee establishes the performance measures and payout range. The Compensation Committee believes that measuring ROCE over a three-year period relative to the Peer Group provides a valuable measure of company performance over time.

 

LTIP awards are payable, in the Compensation Committee’s discretion, in the form of shares of BB&T common stock, cash or a combination of both. LTIP awards have historically been paid in cash. The Compensation Committee believes that with approximately 64% of the NEOs’ long-term incentive compensation currently consisting of equity, it is appropriate to pay the LTIP awards in cash, rather than additional equity, especially in light of the substantial BB&T common stock holdings of each of the NEOs.

 

The LTIP award is calculated as follows:

 

 Target Award Opportunity 
 (as % of base salary)

    X      3-Year Average Salary      X       Performance Scale Payout %   

 

2013-2015 LTIP Cycle (Paid in March 2016)

 

The performance matrix for the 2013-2015 LTIP award follows. Under the matrix, our actual ROCE performance relative to the Peer Group translates to a corresponding payout percentage on a simple interpolation basis.

 

2013-2015 LTIP CYCLE PERFORMANCE MATRIX

 

Level of Achievement   

Percentile Performance of
BB&T ROCE Relative

to Peer Group ROCE

  

Payout Percent of Participant’s

Target Award Opportunity

Threshold

   25th    50%
     30th    60%
     35th    70%
     40th    80%
     45th    90%

Target

   50th    100%
     55th    110%
     60th    120%
     65th    130%
     70th    140%

Maximum

   75th or greater    150%

 

Our average ROCE performance for 2013-2015 was 9.73%, which placed us in the 61st percentile of the Peer Group and generated a payout of 123% of the target award opportunity. Our ROCE performance includes adjustments to our GAAP net income approved by the Compensation Committee. Please refer to Annex A for a GAAP reconciliation.

 

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Based on these results, executives received the following 2013-2015 LTIP payouts:

 

2013-2015 LTIP CYCLE PAYMENTS

 

Name    Threshold($)(1)    Target($)      Maximum($)      Actual LTIP Payment,  Based on
2013-2015 Performance($)(2)

Kelly S. King

   814,000      1,628,000         2,442,000       2,009,603   

Christopher L. Henson

   336,250      672,500         1,008,750       830,134

Ricky K. Brown

   336,250      672,500         1,008,750       830,134

Clarke R. Starnes III

   255,000      510,000         765,000       629,544

Daryl N. Bible

   255,000      510,000         765,000       629,544

 

(1)   The threshold payments represented above show the minimum amount to be received if threshold performance is met.
(2)   Under the approved formula, the actual payment is based on the actual average salary paid over the three-year performance cycle.

 

2015-2017 LTIP Cycle (Payable in 2018)

 

Our 2015-2017 LTIP awards use a ROCE performance hurdle in addition to assessing our average ROCE performance relative to the Peer Group. If our average ROCE performance is not at least 3%, then the hurdle is not cleared and no payout is earned. If the ROCE hurdle is cleared, then our ROCE performance relative to the Peer Group is measured per the performance matrix below. In establishing the ROCE performance hurdle, the Compensation Committee determined that 3% average three-year ROCE was the minimum level of performance where a payout would be justified, irrespective of our relative Peer Group performance.

 

Also consistent with LTIP awards made in 2014, the maximum payout level for the 2015-2017 LTIP awards is 125% of the target award opportunity.

 

2015-2017 LTIP CYCLE PERFORMANCE MATRIX

 

Level of Achievement   

Percentile Performance of

BB&T ROCE Relative

to Peer Group ROCE

  

Payout Percent of Participant’s

Target Award Opportunity

Threshold

   25th    50%
     30th    60%
     35th    70%
     40th    80%
     45th    90%

Target

   50th    100%
     55th    110%
     60th    120%

Maximum

   62 1/2 or greater    125%

 

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Merger Incentive

 

 

On June 23, 2015, the Compensation Committee adopted the Merger Completion Incentive Program (the “Merger Incentive”), a unique, one-time incentive opportunity to reward significant strategic achievements related to the successful acquisition and conversion of Susquehanna, an $18.3 billion asset bank headquartered in Central Pennsylvania. At the time the Merger Incentive was approved, the Susquehanna merger had not yet closed as regulatory approval was still pending. Successfully closing and converting the Susquehanna merger were seen as critical strategic goals representing a significant investment in BB&T’s future growth and success.

 

While the operational conversion in November 2015 triggered the ability to pay the incentive, the Compensation Committee considered a broad review of performance and strategic considerations before approving the payout on December 31, 2015. Below we summarize the objectives, incentive features, payout considerations and resulting awards.

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Objective and Purpose of Merger Incentive

 

   

Provide opportunity for a one-time, special recognition of significant achievements related to the successful integration and conversion of Susquehanna (BB&T’s largest merger to date)

 

   

Reinforce the strategic importance of the acquisition to BB&T’s future success and long-term shareholder value

 

   

Recognize the difficulty of completing significant transactions in recent years (at the time, BB&T was the only bank in its peer group to complete an acquisition of this size in three years, as bank M&A was limited largely due to uncertainty regarding the ability to obtain regulatory approval)

 

Award Features

 

   

One-time, special incentive, not intended to be a regular component of our compensation program

 

   

Full Compensation Committee discretion to choose the form of payment (cash and/or equity) and to reduce payments (including to zero) based on its assessment of BB&T’s overall performance

 

   

Award opportunities reflect a modest component of executives’ total 2015 compensation (Merger Incentive award opportunity was set at approximately 50% of each NEO’s Annual Incentive Award target award opportunity)

 

   

Award contingent on successful operational conversion, defined as the time BB&T’s computer systems became the current and primary systems of record for Susquehanna’s transactional and accounting data (conversion is also when Susquehanna’s bank and ATM signage change to BB&T and legacy Susquehanna customers begin operating within the BB&T environment)

 

   

Award contingent on conversion occurring before June 23, 2016

 

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Payout Considerations

 

During December 2015, the Compensation Committee conducted a thorough evaluation of the conversion results as well as BB&T’s overall performance. The following factors were considered:

 

Successful and Well-Executed Conversion

 

The Compensation Committee considered in-depth reports detailing the conversion results, including but not limited to:

 

   

Conversion of nearly 900,000 deposit accounts and 140,000 loans

 

   

Conversion of 245 bank branches and 300 ATMs

 

   

Dissolution or merger of thirty-three subsidiaries and non-consolidated legal entities

 

   

Establishment of new call center in Lititz, Pennsylvania

 

   

Limited client issues that were resolved quickly

 

   

On track to achieve targeted cost savings from the merger

 

Based on its review of the conversion, the Compensation Committee determined that the Susquehanna conversion was successful and well executed.

 

Evaluation of BB&T’s Overall Performance

 

The Compensation Committee also considered our financial performance and strategic initiatives, including, but not limited to, the following:

 

   

BB&T’s financial strength and ability to obtain regulatory approval for several acquisitions reinforced the positive impact from significant investments in people, processes, systems, capital, liquidity and risk management

 

    We closed multiple bank acquisitions during 2015 and announced another sizable acquisition (National Penn), which is scheduled to close in 2016

 

    The Bank of Kentucky and Susquehanna transactions were the first acquisitions by a “systemically important” acquirer to be approved by the Federal Reserve in over two years

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The Susquehanna and National Penn regulatory approvals took only eight months and four months, respectively, from announcement, in an environment where other banks experienced significant delays (multi-year, in the instance of one peer) in achieving approval for acquisitions

 

   

Management was able to achieve virtually all strategic objectives with no delays in ongoing strategic projects (including key infrastructure investments) and strategies, or compromise of BB&T’s vision, mission or values

 

   

BB&T increased its quarterly common stock dividend by 12.5% in 2015

 

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Overall, our TSR performance relative to the Peer Group improved as of December 31, 2015 versus 2014

 

   

BB&T successfully rolled out U by BB&T, a groundbreaking mobile and online banking platform

 

Historical Compensation Factors

 

As context for the granting of this one-time incentive and the determination of whether to make payments under the incentive, the Compensation Committee considered several historical compensation issues involving Executive Management that stemmed from regulatory feedback:

 

   

In 2013, BB&T reduced the maximum payout level for the 2014 annual incentive plan from 150% to 125% (which followed a reduction to the 2013 annual incentive’s maximum payout level from 200% to 150% as a result of similar regulatory feedback). A subsequent peer review made clear that the overwhelming majority of our peers all retained substantially higher payout opportunities, and that this compensation element was below market practice. Additionally, an unintended plan design feature caused reduced payouts under our 2014 annual incentive plan for Executive Management (such reductions were not applied to non-Executive Management associates).

 

   

Also in 2013, the maximum payout level for the 2014-2016 LTIP was reduced from 150% to 125% (which followed a reduction to the maximum payout level for the 2012-2014 LTIP from 200% to 150% as a result of similar regulatory feedback). A subsequent peer review made clear that the overwhelming majority of our peers granted long-term incentives with substantially higher payout opportunities, and that this compensation element was below market.

 

   

Further, the 2012-2014 LTIP used, for the first time, a performance band structure. However, the structure unintentionally did not provide interpolation between performance band levels. As a result, BB&T’s ROCE performance (72nd percentile relative to peers) missed the 75th percentile maximum payout by only three percentage points, but yielded a target level payout instead of a nearly maximum payout.

 

Prior to its consideration of whether to establish the Merger Incentive, the Compensation Committee considered all three of these issues and debated a simple special cash bonus, as BB&T’s culture strongly supports doing what is right and fair, especially in regard to compensation matters. The Compensation Committee believed that such payments would have been consistent with BB&T’s corporate values of justice, but ultimately refrained from doing so because such award would not be performance based and, therefore, would have been at odds with the Compensation Committee’s pay-for-performance philosophy.

 

Accordingly, the most important contextual point is that this special, one-time Merger Incentive is not a part of our normal compensation philosophy and is not expected to be used again, and in considering whether to payout the Merger Incentive, the Compensation Committee was mindful of these historical compensation matters.

 

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Shareholder Feedback

 

At the Compensation Committee’s direction, we conducted an expanded shareholder engagement program in the fall of 2015. The Chair of the Compensation Committee led a number of the shareholder meetings. One of the topics for discussion was the Merger Incentive. After hearing our explanation of the rationale for the Merger Incentive, shareholders were generally supportive of the award and expressed that the amounts seemed reasonable.

 

   
Shareholder Feedback    Compensation Committee Response

Shareholders generally expressed that incentives like the Merger Incentive should not become a regular feature of BB&T’s compensation program as M&A is part of BB&T’s ordinary course historical practice.

   The Compensation Committee agrees. The Merger Incentive is a one-time event that was designed to reward differentiating performance and is not expected to be repeated. We have never before provided an incentive tied to M&A activity.

Some shareholders suggested that awards under the Merger Incentive be in the form of equity, preferably with a vesting or performance component.

   Based on this shareholder feedback, the Compensation Committee elected to pay awards under the Merger Incentive 50% in RSUs that vest over a three-year period and 50% in cash. The RSUs include performance features and are subject to forfeiture for any significant negative risk outcomes, which include any arising out of the Susquehanna merger. Additionally, RSU awards do not count toward pension benefits.

Several shareholders noted that the Merger Incentive could lead to a perception that Executive Management would be paid twice for Susquehanna in that the merger is accretive to BB&T’s earnings and would therefore flow through BB&T’s regular compensation program.

   The Compensation Committee excluded the Susquehanna results from the EPS component of the 2015 Annual Incentive Award for Executive Management. The Committee also felt that the Susquehanna merger was a differentiating strategic event and, accordingly, felt it was fair to include our full earnings for the compensation elements that measure our performance relative to the Peer Group.

 

Other Considerations

 

In addition, the Committee recognized several accolades about BB&T and the acquisition. Bloomberg Markets magazine rated BB&T as one of the top 15 strongest banks in the world and one of the three strongest in the United States. American Banker magazine named CEO Kelly S. King banker of the year for 2015 for steering BB&T “…through an extended period of industry adversity, while providing a blueprint for large-scale M&A.” In addition, SNL Financial named Mr. King one of its “Most Influential” in banking in 2015 and 2014.

 

Payouts

 

On December 31, 2015, after considering the above factors and reviewing year-end information, including final 2015 TSR, the Compensation Committee determined that the Susquehanna conversion was successful and BB&T’s overall performance for 2015 was solid and, accordingly, decided to pay the full award opportunity under the Merger Incentive. Based on shareholder feedback and a desire to ensure that payouts would be subject to the continued success of the acquisition and BB&T as a whole, the Committee determined to pay the awards in a combination of RSUs and cash. RSU awards are subject to forfeiture if BB&T experiences a negative operating loss or a significant negative risk outcome (including any arising out of the Susquehanna merger) during the vesting period.

 

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The following table outlines the award opportunities and final payouts:

 

  Name   

Total Award
Opportunity

($)

     Cash
Awarded
($)
     RSUs
Awarded
($)
     RSUs
Awarded1(#)  
 

  Kelly S. King

     1,030,000         515,000         515,000         13,620   

  Christopher L. Henson

     450,000         225,000         225,000         5,950   

  Ricky K. Brown

     450,000         225,000         225,000         5,950   

  Clarke R. Starnes

     335,000         167,500         167,500         4,430   

  Daryl N. Bible

     335,000         167,500         167,500         4,430   
    

 

 

    

 

 

    

 

 

    

 

 

 

Total:

   $ 2,600,000       $ 1,300,000       $ 1,300,000         34,380   

 

1  

The number of RSUs awarded was calculated by dividing the “RSUs Awarded ($)” by the closing price of BB&T Stock on December 31, 2015 of $37.81. The RSUs ratably vest in 3 equal annual installments beginning on February 15, 2017. See “Incentive Stock Program Summary” for a discussion of other terms of our RSU awards.

 

Performance Adjustments and Considerations

 

 

The Compensation Committee retains discretion to make adjustments to our performance, as well as the reported results from members of our Peer Group, for purposes of making performance-based compensation awards.

 

   

In February, the Compensation Committee receives preliminary performance information for the prior year, and historically has made adjustments to our reported results (e.g., net income) to ensure that the applicable compensatory plans fairly compensate participants for core BB&T performance.

 

   

The Compensation Committee may also make adjustments to the reported performance of Peer Group members for awards that measure our performance relative to the Peer Group.

 

   

Reconciliation of adjustments that the Compensation Committee made for the purposes of certifying 2015 performance are included in Annex A to this proxy statement.

 

Unless otherwise indicated, discussions of 2015 performance for compensation purposes in this proxy statement include these adjustments made by the Compensation Committee.

 

Pension Plan

 

 

   

We provide the BB&T Corporation Pension Plan, a tax-qualified defined benefit retirement plan for eligible associates (the “Pension Plan”). We are among the few remaining companies that offers a traditional pension plan.

 

   

We also provide an excess benefit plan, the BB&T Corporation Non-Qualified Defined Benefit Plan (the “Excess Plan”), to augment the benefits payable under the Pension Plan to the extent that such benefits are curtailed by application of certain tax limitations. The Compensation Committee believes that the benefits provided by the Excess Plan assure that we will receive the executive retention benefits of the Pension Plan.

 

   

The Pension Plan and the Excess Plan are broad-based benefits and the NEOs participate in the Pension Plan and the Excess Plan on the same basis as other similarly situated associates.

 

   

The Pension Plan and the Excess Plan provide retirement benefits based on length of service and salary level prior to retirement with benefits increasing substantially as a participant approaches retirement.

 

   

Four of the five NEOs have spent substantially all of their professional careers at BB&T and have built up significant benefits under the Pension Plan. Three of the five NEOs are retirement eligible.

 

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We believe the retirement benefits provided by the Pension Plan are meaningful to all associates, but especially to those who devote substantial service to BB&T. Moreover, we view the Pension Plan and the Excess Plan as important retention tools for the NEOs and other highly compensated associates in the later stages of their careers because these retirement benefits could not easily be replicated upon the associate’s departure from the Corporation prior to retirement. The Compensation Committee believes that while the overall retirement benefits provided to the NEOs are in line with those provided by its Peer Group, the Pension Plan and Excess Plan provide us with a competitive advantage in attracting and retaining talent in light of the high number of companies that have frozen or abandoned traditional pension plans in recent years.

 

Perquisites Practices

 

 

The NEOs receive limited perquisites and other personal benefits that the Compensation Committee believes are reasonable and consistent with our overall compensation program. Executive Management, including the NEOs, do not receive perquisites such as personal club memberships, corporate housing or personal travel on the company’s airplane.

 

Other Employee Benefits

 

 

During 2015, we maintained various employee benefit plans that constitute a portion of the total compensation package available to the NEOs and all eligible associates of BB&T. These plans consist of the following:

 

   

the BB&T Corporation 401(k) Savings Plan, which in 2015 permitted associates to contribute up to 50% of their cash compensation, on a tax-deferred basis, within certain IRS compensation deferral amount limits applicable to tax-qualified retirement plans, with BB&T matching deferrals up to 6% of their compensation;

 

   

the BB&T Corporation Non-Qualified Defined Contribution Plan, which is designed to augment the benefits under the BB&T Corporation 401(k) Savings Plan to the extent such benefits are curtailed by the application of certain limits imposed by the Code (during 2015, eligible participants in the Non-Qualified Defined Contribution Plan were permitted to defer up to 50% of their cash compensation with certain participants eligible to receive a matching contribution of up to 6% of their compensation);

 

   

a medical plan that provides coverage for all eligible associates; and

 

   

certain other welfare benefits (such as sick leave, vacation, dental and vision coverage, etc.).

 

We also provide disability insurance for the benefit of our associates (including each of the NEOs) which, in the event of disability, pays an associate 50% of the associate’s monthly compensation, subject to a cap of $35,000 per month. Under this program, associates may select greater disability coverage with a benefit that pays 60% of their monthly compensation; however, associates are required to pay the additional premium (over that already paid by us to receive the standard 50% coverage) to receive this heightened level of coverage. If a member of Executive Management, including a NEO, became disabled and the insurance benefit was limited due to the monthly cap, we would provide supplemental payments to the member of Executive Management to bring the monthly payment up to the selected coverage level.

 

The employee benefits for the NEOs discussed in this subsection are determined by the same criteria applicable to all of our associates. In general, benefits are designed to provide a safety net of protection against the financial catastrophes that can result from illness, disability or death, and to provide a reasonable level of retirement income based on years of service with BB&T. These benefits help keep us competitive in attracting and retaining associates. We believe that our employee benefits are generally on par with benefits provided by the Peer Group and consistent with industry standards.

 

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Section 3—BB&T’s Executive Compensation Process

 

Role of Compensation Committee

 

 

The Compensation Committee administers BB&T’s compensation program for Executive Management, including each of the NEOs. The Compensation Committee’s authority and responsibilities are set forth in its charter and include, but are not limited to:

 

   

reviewing and approving the compensation for the Chief Executive Officer, the remaining NEOs and other members of Executive Management;

 

   

selecting and approving the performance metrics and goals for all Executive Management compensation programs and evaluating performance at the end of each performance period; and

 

   

approving Annual Incentive Award opportunities, Incentive Stock Awards and LTIP award opportunities.

 

In making compensation decisions, the Compensation Committee uses several resources and tools, including the services of its independent compensation consultant, Compensation Advisory Partners and, as of October 2015, Meridian Compensation Partners LLC. The Committee also considers summary analyses of total compensation delineating each compensation element (“tally sheets”), executive risk scorecards provided by our Chief Risk Officer, competitive benchmarking and other analyses, as further described below.

 

In addition, the Compensation Committee periodically receives reports from our Chief Risk Officer regarding our risk environment and risk management practices, from our Chief Compliance Officer regarding compliance and risk matters and from our General Auditor, the head of our internal audit function, regarding our internal controls and regularly reviews the minutes of the Risk Committee of the Board of Directors. The purpose of these reports is to allow the Compensation Committee to evaluate our current risk environment and internal control positions relevant to incentive compensation, and to take these issues into consideration when determining incentive compensation.

 

The Chief Executive Officer also is involved in compensation determinations for other members of Executive Management (including compensation for each of the NEOs) and makes recommendations to the Compensation Committee on base salary and the other compensation elements. We believe that the Chief Executive Officer is in the best possible position to assess the performance of the other members of Executive Management, and he accordingly plays an important role in the compensation setting process. However, decisions about individual compensation elements and total compensation, including those related to the Chief Executive Officer, are ultimately made by the Compensation Committee using its judgment, focusing primarily on the executive officer’s performance and BB&T’s overall performance, particularly in light of the business environment in which the results were achieved.

 

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The following table illustrates the Compensation Committee’s executive compensation process timeline at BB&T. In addition, the Compensation Committee’s independent compensation consultant attends and participates in Committee meetings from time to time throughout the year.

 

Executive Compensation Process

February Teleconference

         Receive risk management update on risk appetite and events that could impact incentive compensation
           Joint meeting among the Compensation, Audit and Risk Committees
           Review executive risk scorecards for the prior year
           Review projected financial results with proposed adjustments for incentive plans
           Receive update from BB&T’s General Auditor regarding the effectiveness of internal controls
          

Receive a report from BB&T’s Chief Compliance Officer regarding compliance and risk matters

February Meeting

         Approve financial results and proposed adjustments for incentive plans
           Determine payments/vesting for incentive plans with performance periods completed the prior year (Annual Incentive Awards, LTIP, and Incentive Stock Awards)
           Approve peer group for the current year
           Determine compensation for the current year—base salary increases (if any), cash incentive plans (Annual Incentive Awards and LTIP) and Incentive Stock Awards
           Review and approve the draft Compensation Discussion and Analysis and the draft Compensation Committee Report on Executive Compensation sections of the proxy statement

June Meeting

        

Review projected financial results with proposed adjustments for incentive plans

October Meeting

         Receive risk management update on risk appetite and events that could impact incentive compensation
           Joint meeting among the Compensation, Audit and Risk Committees
           Review projected financial results with proposed adjustments for incentive plans
           Review of Executive Management compensation with the Compensation Committee’s independent compensation consultant
           Conduct a mid-year review of current executive risk scorecards

December Meeting

         Review projected financial results with proposed adjustments for incentive plans
           Conduct annual review of director compensation
            Consider retaining the Compensation Committee’s independent compensation consultant for the upcoming year

 

Role of Compensation Consultant

 

 

The Compensation Committee engages an independent compensation consultant to provide market reference perspective and serve as an advisor. The independent compensation consultant serves at the request of, and reports directly to, the Compensation Committee. Further, the Compensation Committee has the sole authority to approve the independent compensation consultant’s fees and other retention terms, including the authority to limit the amount of fees the independent compensation consultant may earn from other services provided to BB&T. For January to October 2015, the Compensation Committee retained Compensation Advisory

 

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Partners to act as the Committee’s independent compensation consultant. In this capacity, Compensation Advisory Partners performed a review of our executive compensation programs, peer group analysis, advised on regulatory developments, corporate governance and best practice trends.

 

In keeping with its responsibilities in managing our compensation program, the Compensation Committee periodically reviews its outside advisors. Last year, the Compensation Committee met with several compensation consulting firms as part of a governance review of executive compensation providers. After considering the services offered by several firms, the Compensation Committee determined to retain Meridian Compensation Partners in October 2015 as its new independent compensation consultant.

 

The Compensation Committee determined that, based on an assessment of NYSE factors, the consulting firms retained were independent and that engagement of these firms did not present any conflicts of interest. In making this determination, the Compensation Committee noted that (a) the consultants provide no other services to BB&T other than compensation consulting, (b) no personal or business relationships exist between the consultants and members of our Board or executive officers, (c) the consultants do not directly own any shares of BB&T stock, and (d) the consultants retain a written policy designed to avoid conflicts of interest that may arise. Each consultant also determined that it was independent from our management and confirmed this in a written statement delivered to the Chair of the Compensation Committee.

 

During 2015, the compensation consultants provided the following services to the Compensation Committee:

 

   

reviewed our company’s total compensation philosophy for reasonableness and appropriateness;

 

   

reviewed overall compensation levels;

 

   

reviewed our total executive compensation program and advised the Compensation Committee of plans or practices that may be changed to improve effectiveness;

 

   

provided market and peer data and recommendations on Executive Management compensation;

 

   

assisted in analyzing the risk impact of our compensation practices including with respect to the Merger Incentive;

 

   

reviewed public disclosure on compensation, including the draft Compensation Discussion and Analysis and related tables and compensation disclosures for our proxy statement; and

 

   

advised the Compensation Committee regarding the compensation of outside directors.

 

In order for a compensation consultant to provide effective advice, the Compensation Committee expects them to interact with our management from time to time. These interactions generally involve, among other things:

 

   

obtaining compensation and benefits data, as well as other relevant information that is not available from public sources;

 

   

working with management to understand the scope of the various executive jobs in order to provide accurate benchmarking; and

 

   

conferring with management so that factual and data analyses are accurate and up-to-date.

 

This process enables the compensation consultant to identify any areas where further research or analysis may be necessary, while allowing it to discuss any changes to the compensation program or refine recommendations before finalizing its reports to the Compensation Committee.

 

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Benchmarking and Competitive Analyses

 

 

The compensation structure for Executive Management, which includes the NEOs, emphasizes variable pay based on performance. We generally compare each element of compensation against what the Compensation Committee determines is a reasonable grouping of publicly traded bank or financial services holding companies (identified below, the “Peer Group”).

 

Throughout 2015 and continuing into 2016, the Compensation Committee has carefully considered its benchmarking practices. The Compensation Committee reevaluated the peer group for 2016 and decided to add one larger bank (Wells Fargo) and one bank closer in size (Citizens Financial). The nature of the market limits the number of larger peers with a reasonably comparable business model. During our shareholder engagement program we received feedback that shareholders preferred that compensation opportunities generally not be targeted above the median of the Peer Group, irrespective of our relative size. Accordingly, the Compensation Committee will be closely monitoring peer and market compensation practices and the Compensation Committee may make additional changes to the executive compensation program (or awards) in furtherance of its commitment to provide a compensation program that is competitive, performance-based, risk balanced and aligned with the goals of our shareholders and regulatory expectations. The Compensation Committee is committed to implementing a strategy in 2016 to provide target compensation opportunities that are aligned with the median of the Peer Group.

 

In evaluating our 2015 Peer Group, the Compensation Committee considered a number of factors, including that our asset size and market capitalization are in the top quartile of our Peer Group. Also considered was the independent compensation consultant’s advice that the most significant correlating factors for compensation levels of financial services institutions are asset size and market capitalization. Accordingly, for 2015 the Compensation Committee considered the compensation positioning relative to the members of the Peer Group most comparable to us in terms of asset size and market capitalization (which we refer to as the “Comparable Size Peers” as indicated in the table below) in addition to positioning relative to the overarching Peer Group. Our asset size approximates the median asset size of our Comparable Size Peers.

 

   BB&T 2015 PEER GROUP   
   v  Comerica       v PNC   
   v Fifth Third       v Regions   
   v  Huntington       v SunTrust   
   v KeyCorp       v  U.S. Bancorp   
   v M&T         v Zions   

 

Comparable Size Peers appear in burgundy.

 

In considering the NEOs’ total compensation opportunities for 2015, the Compensation Committee’s objective was to target total compensation opportunities near the median of the Comparable Size Peers, which resulted in an overall compensation opportunity positioning above the median of the Peer Group. In making this determination, the Compensation Committee specifically considered that it was important to maintain the competitiveness of pay opportunities in light of the significant regulatory, competitive and economic challenges facing the financial services industry and the high demand for our talented, long-tenured and highly marketable Executive Management team. Also considered was that regulatory pressure has resulted in our executive compensation program shifting away from peer practice in several important aspects, possibly compromising the competitiveness of our compensation program.

 

In addition to the external Peer Group analysis, the Compensation Committee also reviews detailed tally sheets for each executive and reviews the total compensation of the Executive Management team relative to one another. This practice is consistent with our compensation philosophy of rewarding our employees based upon their level of responsibility within the Company.

 

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Executive Risk Scorecard

 

 

We utilize an executive risk scorecard which the Compensation Committee may use to adjust, if necessary, the short-term and long-term incentive compensation of each member of Executive Management (which includes the NEOs). The executive risk scorecard:

 

   

allows for evaluation of both corporate and individual results that can be compared to stated risk appetites in all risk categories;

 

   

presents the positive and negative risk outcomes that have influenced each risk category and includes recommended actions with respect to significant negative outcomes;

 

   

is used in conjunction with the recommendations of the Chief Risk Officer, the CEO and the Committee’s own insight and evaluation;

 

   

is included as part of our risk review process in which 100% of each Executive Manager’s short-term and long-term compensation for 2015 is subject to potential adjustment;

 

   

was developed by our Senior Risk and Compliance Officers; and

 

   

is reviewed by the independent compensation consultant.

 

The Compensation Committee believes that the executive risk scorecard is an important element to ensure that incentive compensation at the Executive Management level is risk balanced. The use of this risk scorecard has been discussed with our regulators as an additional way to conform to incentive compensation guidance and best practices.

 

Section 4—Other Aspects of BB&T’s Executive Compensation Program

 

In addition to the key components of our executive compensation program described in Section 2 above, other significant policies, plans and factors influence executive compensation, including the compensation of the NEOs. These items provide meaningful value to members of Executive Management, including the NEOs, while at the same time promoting the retention of these highly valued executives and aligning their interests with those of the shareholders.

 

Stock Ownership Guidelines for Executive Management

 

 

The Compensation Committee believes that members of Executive Management, including the NEOs, should accumulate meaningful equity stakes in BB&T over time to further align their economic interests with the interests of shareholders, thereby promoting our objective of increasing shareholder value.

 

The table below summarizes the stock ownership guidelines for our NEOs. Each of our NEOs currently exceeds these guidelines.

 

   Name   

Stock Ownership

Guidelines

   Approximate Stock Value to be held Under Stock
Ownership Guidelines(1)

  Kelly S. King

   5x Base Salary    $5,375,000
  Christopher L. Henson    3x Base Salary    $2,100,000

  Ricky K. Brown

   3x Base Salary    $2,100,000

  Clarke R. Starnes

   3x Base Salary    $1,770,000

  Daryl N. Bible

   3x Base Salary    $1,770,000

 

(1)   Under the stock ownership guidelines, all shares of BB&T common stock held or controlled by the individual are considered in determining compliance with the ownership requirement, including, but not limited to, direct holdings, shares in qualified and nonqualified individual account plans sponsored by BB&T, and unvested restricted stock units and restricted shares (but not stock options) granted by us.

 

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Risk Management

 

 

In establishing and reviewing the executive compensation program, the Compensation Committee annually considers whether the program encourages unnecessary or excessive risk taking. The goal of the Compensation Committee is to establish a compensation program designed to encourage prudent risk management and discourage inappropriate risk-taking by granting a diverse portfolio of compensation to the NEOs and other members of Executive Management that is expected to reward the creation of shareholder value over time. To help achieve this goal, the Compensation Committee considers the risk profile of the primary compensation elements. The Compensation Committee believes that because the base salaries of the NEOs and the other members of Executive Management are fixed in amount they do not encourage inappropriate risk-taking. In addition, a significant proportion of compensation provided to the NEOs and other members of Executive Management is in the form of equity awards that have performance and retention features that extend over a period of years. The Compensation Committee believes that these awards do not encourage unnecessary or excessive risk-taking because the ultimate value of the awards is tied to our stock price. In addition, because awards are subject to long-term vesting schedules they help ensure that the NEOs and other members of Executive Management have significant value tied to long-term stock price performance. Also, LTIP awards are based on our performance over a three-year period, which encourages the NEOs to focus on long-term performance in addition to annual results, further reducing risk-taking that is likely to produce only short-term benefits and allowing sufficient time for risk outcomes to emerge.

 

The Compensation Committee is responsible for exercising authority to modify payments and impose or release “holdbacks” from Executive Management’s incentive compensation arrangements, based on a risk review or regulatory requirements. When determining incentive compensation and consistent with regulatory guidance, the Compensation Committee evaluates our current risk environment and internal control positions relevant to incentive compensation, and reviews the reports, including executive risk scorecards, provided by our Chief Risk Officer. The Compensation Committee also receives reports from our General Auditor, the head of BB&T’s internal audit function, regarding the effectiveness of our overall system of internal controls. Please also refer to the below discussion of the Compensation Committee’s broad clawback ability and, in Section 3, the use of an executive risk scorecard to adjust compensation, if necessary, for negative risk outcomes.

 

In addition, and consistent with our compensation philosophy of rewarding the NEOs based on the long-term success of BB&T, our Codes of Ethics and Insider Trading Policy prohibit all associates, including the NEOs, from speculative trading in BB&T common stock (including prohibitions on buying call options and selling put options for our common stock) and place limitations on a NEO’s ability to conduct short-term trading, thus encouraging long-term ownership of common stock. Our Corporate Governance Guidelines contain a similar prohibition applicable to members of Executive Management and also prohibit members of Executive Management from entering into hedging strategies and limit pledging activity. See “Pledging/Hedging of Shares” below.

 

Compensation Clawbacks

 

 

Our Board believes that the current structure of BB&T’s incentive compensation recoupment practices is appropriate, effective, and provides a balanced approach to risk management and properly aligns the interests of our Executive Management and shareholders.

 

Our 2012 Incentive Plan and award agreements contain broad language regarding clawbacks and make all awards subject to recoupment to the extent determined by the Compensation Committee. Any and all amounts payable under the 2012 Incentive Plan or paid under the 2012 Incentive Plan are subject to clawback, forfeiture, and reduction to the extent determined by the Compensation Committee as necessary to comply with applicable law and/or policies adopted by BB&T.

 

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Responsible Equity Grant Practices

 

 

Generally, the timing of our regular annual equity awards is determined months in advance of the actual grants in order to coincide with the regular February meetings of the Board and the Compensation Committee. The grant date is established when the grants and all key terms are approved by the Board or the Compensation Committee, as the case may be. The exercise price for each stock option grant in 2015 was the market closing price on the date of grant. For the 2015 Incentive Stock Awards, the Compensation Committee also used the closing price of our common stock on the grant date to determine the number of restricted stock unit awards. In addition, the 2012 Incentive Plan includes prohibitions on the direct and indirect repricing of stock options without shareholder approval. We are required to recognize the expense of all share-based awards (such as stock options and restricted stock units) in our income statement over the award’s minimum required service period.

 

Pledging/Hedging of Shares

 

 

Consistent with our compensation philosophy of rewarding the NEOs based on the long-term success of BB&T, our Codes of Ethics and Insider Trading Policy prohibit all associates, including the NEOs, from speculative trading in BB&T common stock (including prohibitions on buying call options and selling put options for our common stock) and place limitations on a NEO’s ability to conduct short-term trading, thus encouraging long-term ownership of common stock. Our Corporate Governance Guidelines contain a similar prohibition applicable to members of Executive Management and also prohibit members of Executive Management, including the NEOs, from entering into hedging strategies that protect against downside risk in our common stock. Furthermore, our Corporate Governance Guidelines limit pledging activity so that future share pledges by directors and members of Executive Management are limited to those shares in excess of each individual’s share ownership requirements.

 

Employment Agreements

 

 

We use employment agreements to secure the services of key talent within the highly competitive financial services industry. Generally, the employment agreements are entered into with high-performing and long-term potential senior employees and are structured to carefully balance the individual financial goals of the executives relative to the needs of BB&T and its shareholders. All the NEOs have entered into employment agreements with BB&T. Each employment agreement with the NEOs includes provisions: (a) generally prohibiting the executive from competing against us (or working for a competitor) if the executive leaves BB&T; (b) providing for payments if the executive is terminated by us for other than “Just Cause” or if the executive voluntarily terminates his employment with us for “Good Reason;” and (c) generally providing for payments under various termination scenarios following a “Change of Control.” These arrangements set compensation and benefits payable to the NEOs in certain termination and merger and acquisition scenarios, giving them some certainty regarding their individual outcomes under these circumstances. Specifically, we believe the “Change of Control” provisions appropriately minimize the distraction of the NEOs in the event of a significant merger and acquisition scenario, allowing them to remain objective and focused on maximizing shareholder value.

 

The employment agreements for the NEOs provide that, under certain circumstances upon leaving the employment of BB&T and Branch Bank, the executive may not compete in the banking business, directly or indirectly, against the Corporation, Branch Bank and their affiliates. This prohibition generally precludes the NEO from working for a direct competitor with a banking presence within the continental United States. Additionally, the employment agreements for the NEOs prohibit the executive from soliciting or assisting in the solicitation of any of our depositors, customers, or affiliates, or inducing any of our associates to terminate their employment with BB&T or its affiliates. These noncompetition and nonsolicitation provisions generally will be effective until the one-year anniversary of the NEO’s termination. These noncompetition provisions generally are not effective if the NEO terminates employment after a “Change of Control.”

 

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The employment agreements have terms of 36 months that automatically extend monthly by an additional month, absent contrary notice by either party. The term of any employment agreement ends when such NEO reaches age 65, with the exception of Mr. King, whose employment agreement does not contain that provision. Information provided by the independent compensation consultant showed that providing a three-year contract term is a common practice within the financial services industry. The Compensation Committee believes that a three-year term provides appropriate incentives for retention, protections against unjustified terminations, and is in line with other financial services companies. The employment agreements provide for reductions in payments to the extent necessary to avoid exceeding the limits established by Section 280G of the Code. Payments in excess of these limits are often referred to as “excess parachute payments,” and exceeding the Section 280G limits generally triggers an excise tax on the payments.

 

The Compensation Committee approves Executive Management’s employment agreements and then reviews the agreements on an as-needed basis, based on market trends or on changes in our business environment. The employment agreements for each of the NEOs are described in greater detail under the section “Compensation of Executive Officers – Narrative to 2015 Summary Compensation Table” and the section “Compensation of Executive Officers – Potential Payments Upon Termination or Change of Control.”

 

Tax Considerations

 

 

SECTION 162(M)

 

In establishing total compensation for the executive officers, the Compensation Committee considers the effect of Section 162(m) of the Internal Revenue Code. Section 162(m) generally disallows a tax deduction for compensation over $1 million paid for any fiscal year to the Chief Executive Officer and the three other highest paid executive officers other than the Chief Financial Officer (“Covered Employees”) unless the compensation qualifies as performance-based.

 

Our compensation philosophy and policies are generally intended to comply with Section 162(m) to the extent the Compensation Committee determines appropriate. In typical years, when establishing and administering our compensation programs, the Compensation Committee generally intends that performance-based compensation will be deductible under Section 162(m). However, the Compensation Committee retains the flexibility to pay compensation that is not deductible under Section 162(m) if the Compensation Committee determines it is in the best interest of the Corporation to do so. For example, vesting of the 2015 RSUs generally accelerates upon retirement for retirement-eligible grantees who are Covered Employees, including the NEOs, and therefore the awards will not be deductible under Section 162(m).

 

ANNUAL INCENTIVE AWARD 162(M) POOL AND 2015-2017 LTIP AWARDS

 

As discussed in Section 2 – Components of Executive Compensation, the Compensation Committee employed a performance-based compensation structure for the Annual Incentive Award that is sometimes referred to as a “162(m) Pool,” and retained the ability to exercise negative discretion to reduce Annual Incentive Award payments to the Covered Employees.

 

Under the 162(m) Pool structure, the Annual Incentive Awards for the Covered Employees were paid from a 162(m) Pool equal to 1.5% of BB&T’s 2015 income before taxes (pre-tax income), pursuant to a percentage of the pool assigned, within the first 90 days of 2015, to each Covered Employee (45.4% for Mr. King, 19.9% for Mr. Henson, 19.9% for Mr. Brown, and 14.8% for Mr. Starnes). Under the 2012 Incentive Plan, each Covered Employee’s Annual Incentive Award payment was also subject to a $7.5 million cap on the size of each individual payment. Under the 162(m) Pool, the Compensation Committee can exercise negative discretion (but not upward discretion) in determining the actual Annual Incentive Award payment amounts to the Covered Employees. For

 

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2015, the Compensation Committee approved in February 2016, through its exercise of negative discretion, actual Annual Incentive Award payment amounts to Covered Employees that were below each Covered Employee’s assigned percentage of the 162(m) Pool. Because the 2015 Annual Incentive Award awards to the Covered Employees were subject only to the negative discretion of the Compensation Committee to reduce potential awards payments, such awards are expected to qualify as “performance-based compensation” for Section 162(m) purposes and therefore should not be subject to the $1 million compensation deduction cap.

 

The 2015-2017 LTIP cycle awards similarly are expected to qualify as “performance-based compensation” for Section 162(m) purposes because they are subject only to the negative discretion of the Compensation Committee to reduce potential payments. The Compensation Committee expects that the amounts paid, if any, to the Covered Employees in 2018 for the 2015-2017 LTIP awards will not be subject to the Section 162(m) $1 million compensation deduction limit. The rules and regulations promulgated under Section 162(m) are complicated, however, and may change from time to time, sometimes with retroactive effect. As such, there can be no guarantee that all amounts intended to comply with the requirements of Section 162(m) will so qualify.

 

Conclusion

 

 

BB&T and the Compensation Committee review all elements of our compensation program for the NEOs, including a tally sheet for each NEO delineating each element of the NEO’s compensation. In designing the various elements of the total compensation program, we have taken great care to select elements that are performance-based and to use a variety of performance metrics that, on the whole, will encourage the achievement of short-term and long-term shareholder value while enabling us to retain our talented executives. We believe the total compensation for each NEO is reasonable and the components of our compensation program for the NEOs are consistent with market standards and with comparable programs of the Peer Group. The compensation program for the NEOs is based on our financial performance and links executive performance to our annual financial and operational results and the long-term financial interests of the shareholders. We further believe that the foregoing compensation philosophy is consistent with our corporate culture and objectives and has served, and will continue to serve, as a reasonable basis for administering our total compensation program, both for the NEOs and for all of our associates, for the foreseeable future.

 

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Compensation Committee Report on Executive Compensation

 

 

The Compensation Committee is composed entirely of non-employee directors, each of whom has been determined in the Board’s business judgment to be independent based on the categorical standards for independence adopted by the Board, which include the applicable NYSE standards. The Compensation Committee is responsible for oversight and review of our compensation and benefit plans, including administering our executive incentive plan, fixing the compensation for the Chief Executive Officer and reviewing and approving the compensation for the other members of Executive Management.

 

The Compensation Discussion and Analysis section of this proxy statement is management’s report on the Corporation’s compensation program and, among other things, explains the material elements of the compensation paid to the Chief Executive Officer and the other NEOs. The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis section of this proxy statement with management. Based on this review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement and incorporated by reference into our Annual Report on Form 10-K for the fiscal year ended December 31, 2015.

 

Submitted by the Compensation Committee of the Board of Directors, whose current members are:

 

  Edwin H. Welch, Ph.D., Chair               Louis B. Lynn, Ph.D.  
  Anna R. Cablik               Tommy N. Thompson  
  Eric C. Kendrick    

 

Compensation Committee Interlocks and Insider Participation

 

 

The directors who constituted the Compensation Committee during some or all of 2015 were Anna R. Cablik, John P. Howe III, M.D., Eric C. Kendrick, Louis B. Lynn, Ph.D., Tollie W. Rich, Jr. and Edwin H. Welch, Ph.D. None of the individuals who served as a member of the Compensation Committee during 2015 was at any time an officer or an employee of BB&T or any of its subsidiaries or had any relationship with us requiring disclosure under SEC regulations.

 

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COMPENSATION OF EXECUTIVE OFFICERS

 

2015 SUMMARY COMPENSATION TABLE

 

Name and

Principal Position

(1)

(a)

  Year    

Salary

($)

   

Stock
Awards

(2)(3)
($)

   

Option
Awards

(2)(4)
($)

   

Non-Equity
Incentive

Plan
Compensation

(5)
($)

 

Change in
Pension
Value &
Non-Qualified
Deferred
Compensation
Earnings

(6)

($)

 

All Other
Compensation

(7)
($)

  Total
($)
  (b)     (c)     (d)     (e)     (f)   (g)   (h)   (i)

Kelly S. King

    2015        1,056,250        2,583,019        591,499      4,096,763   3,070,931   298,430  

11,696,892

Chairman and Chief

    2014        1,000,000        2,050,870        559,998      3,400,276   6,803,966   303,653  

14,118,763

Executive Officer

    2013        996,250        1,984,529        557,897      4,058,587   4,040,976   355,386  

11,993,625

Christopher L. Henson

    2015        691,250        1,069,201        241,938      1,741,055   1,173,107   136,024  

5,052,575

Chief Operating Officer

    2014        665,000        852,383        232,747      1,350,812   2,863,816   142,711  

6,107,469

      2013        661,250        823,258        231,437      1,713,520      593,804   160,939  

4,184,208

Ricky K. Brown

    2015        691,250        1,069,201        241,938      1,741,055   1,574,421   136,024  

5,453,889

Senior Executive Vice

    2014        665,000        852,383        232,747      1,350,812   3,561,848   142,711  

6,805,501

President and President,

Community Banking

    2013        661,250        823,258        231,437      1,713,520      951,910   158,914  

4,540,289

Clarke R. Starnes III

    2015        582,500        810,227        184,069      1,308,360   1,139,457   109,304  

4,133,917

Senior Executive Vice

    2014        560,000        648,063        176,959      1,071,738   2,794,286   114,974  

5,366,020

President and Chief

Risk Officer

    2013        557,500        626,646        176,166      1,356,240      867,220   129,045  

3,712,817

Daryl N. Bible

    2015        582,500        810,227        184,069      1,308,360      408,120   109,304  

3,402,580

Senior Executive Vice

    2014        560,000        648,063        176,959      1,071,738      647,239   114,974  

3,218,973

President and Chief

Financial Officer

    2013        557,500        626,646        176,166      1,356,240      220,843   145,229  

3,082,624

 

(1)   In accordance with SEC regulations, the listed positions are those held as of December 31, 2015.
(2)   The amounts in column (d) and (e) reflect the dollar amount of fair value of the restricted stock unit and stock option awards, respectively, received in each year. The assumptions used in the calculation of these amounts for awards granted in 2015, 2014, and 2013 are included in Note 10 “Shareholders’ Equity” in the “Notes to Consolidated Financial Statements” included within BB&T’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015. As discussed in the Compensation Discussion and Analysis, the outstanding restricted stock units and stock options remain subject to vesting criteria and accordingly, the NEO may never receive any value from such award.
(3)   The grant date fair value of the restricted stock unit awards and the corresponding number of restricted stock units for each of the last three years are as follows:

 

Name    Date of
Grant
   Restricted Stock
Units (#)
   Per Unit Grant
Date Fair
Value ($)
     Grant Date Fair Value  ($)

Kelly S. King

   12/31/2015

  2/24/2015

  2/25/2014

  2/26/2013

   13,620

61,904

59,653

74,188

   $33.48

$34.36

$34.38

$26.75

        455,998

2,127,021

2,050,870

1,984,529

Christopher L. Henson

   12/31/2015

  2/24/2015

  2/25/2014

  2/26/2013

     5,950

25,320

24,793

30,776

   $33.48

$34.36

$34.38

$26.75

        199,206

   869,995

   852,383

   823,258

Ricky K. Brown

   12/31/2015

  2/24/2015

  2/25/2014

  2/26/2013

     5,950

25,320

24,793

30,776

   $33.48

$34.36

$34.38

$26.75

        199,206

   869,995

   852,383

   823,258

Clarke R. Starnes III

   12/31/2015

  2/24/2015

  2/25/2014

  2/26/2013

     4,430

19,264

18,850

23,426

   $33.48

$34.36

$34.38

$26.75

        148,316

   661,911

   648,063

   626,646

Daryl N. Bible

   12/31/2015

  2/24/2015
  2/25/2014

  2/26/2013

     4,430

19,264

18,850

23,426

   $33.48

$34.36

$34.38

$26.75

        148,316

   661,911

   648,063

   626,646

 

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(4)   The grant date fair value of option awards to the NEOs with the corresponding number of stock options for each of the last three years are as follows:

 

Name    Date of Grant      Stock Options (#)    Per Option
Grant Date
Fair Value ($)
     Grant Date Fair Value  ($)

Kelly S. King

    
 
 
2/24/2015
2/25/2014
2/26/2013
  
  
  
   120,714
  71,611
101,806
   $4.90

$7.82

$5.48

     591,499

559,998

557,897

Christopher L. Henson

    

 
 

2/24/2015

2/25/2014
2/26/2013

  

  
  

     49,375
  29,763
  42,233
   $4.90

$7.82

$5.48

     241,938

232,747

231,437

Ricky K. Brown

    
 
 
2/24/2015
2/25/2014
2/26/2013
  
  
  
     49,375
  29,763
  42,233
   $4.90

$7.82

$5.48

     241,938

232,747

231,437

Clarke R. Starnes III

    
 
 
2/24/2015
2/25/2014
2/26/2013
  
  
  
     37,565
  22,629
  32,147
   $4.90

$7.82

$5.48

     184,069

176,959

176,166

Daryl N. Bible

    
 
 
2/24/2015
2/25/2014
2/26/2013
  
  
  
     37,565
  22,629
  32,147
   $4.90

$7.82

$5.48

     184,069

176,959

176,166

 

(5)   Column (f) contains Annual Incentive Award and LTIP payments, as indicated in the following table. Column (f) also includes the cash payment under the Merger Incentive. Payments under each award occur when specific performance measures are achieved, as described in the “Compensation Discussion and Analysis” section above, rather than upon the date of grant.

 

     2015 Information ($)          2014 Information ($)   2013 Information ($)
       
Name   2015  Annual
Incentive
Award
  2013-2015
LTIP
  Merger
Incentive
    2014  Annual
Incentive
Award
  2012-2014
LTIP
  2013  Annual
Incentive
Award
  2011-2013
LTIP

Kelly S. King

  1,572,160   2,009,603     515,000      1,614,638   1,785,638   2,002,861   2,055,726

Christopher L. Henson

     685,921      830,134     225,000         613,562      737,250      759,644      953,876

Ricky K. Brown

     685,921      830,134     225,000         613,562      737,250      759,644      953,876

Clarke R. Starnes III

     511,316      629,544     167,500         516,684      555,054      640,456      715,784

Daryl N. Bible

     511,316      629,544     167,500         516,684      555,054      640,456      715,784

 

(6)   The amounts listed in column (g) are attributable to changes in the present value of the benefits under the BB&T Corporation Pension Plan and the BB&T Corporation Non-Qualified Defined Benefit Plan, as applicable, for each of the NEOs. The benefits the NEOs, including Mr. King, receive are calculated in the same manner as all plan participants. Mr. King’s increase in 2014 relative to the other listed years is primarily driven by his years of service, age, compensation and accounting changes regarding mortality tables and discount rates. Due to Mr. King’s long tenure, he receives the maximum credit for years of service under the plans. Additionally, Mr. King would receive his retirement benefits immediately upon retirement. Consistent with all plan participants, the calculations for these benefits generally reference the highest levels of compensation over a five-year consecutive period in the ten-year period before retirement.
(7)   The detail relating to “All Other Compensation” for 2015 found in column (h) to the Summary Compensation Table is set forth in the “Narrative to 2015 Summary Compensation Table”, which follows.

 

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NARRATIVE TO 2015 SUMMARY COMPENSATION TABLE

 

The following narrative focuses on NEO compensation for 2015. For a discussion that focuses on compensation for 2014 and 2013, please refer to the proxy statements for the annual meeting of shareholders that occurred on April 28, 2015 and April 29, 2014, respectively. Copies of prior years’ proxy statements are available for review on the SEC’s website at www.sec.gov.

 

All Other Compensation. The detail relating to the “All Other Compensation” for 2015 found in column (h) to the 2015 Summary Compensation Table is as follows:

 

COMPONENTS OF ALL OTHER COMPENSATION

 

  Name    401(k) Match(1)($)    NQDC Match(2)($)

  Kelly S. King

   15,900    282,529

  Christopher L. Henson

   15,900    120,124

  Ricky K. Brown

   15,900    120,124

  Clarke R. Starnes III

   15,900      93,404

  Daryl N. Bible

   15,900      93,404

 

  (1)   BB&T’s matching contribution under the BB&T Corporation 401(k) Savings Plan on behalf of the applicable NEO.
  (2)   BB&T’s matching contribution to the BB&T Corporation Non-Qualified Defined Contribution Plan on behalf of the applicable NEO.

 

Compensation Program. As indicated in the 2015 Summary Compensation Table, salary as a percentage of total annual compensation (set forth in column (i) of the 2015 Summary Compensation Table) for each of the NEOs in 2015 were as follows: Mr. King—9.0%; Mr. Henson—13.7%; Mr. Brown—12.7%; Mr. Starnes—14.1%; and Mr. Bible—17.1%.

 

Perquisites. Pursuant to SEC rules, we have not reported perquisites to NEOs because the value of the perquisites, in aggregate, is less than $10,000.

 

Change in Pension Value and Non-Qualified Deferred Earnings. For information regarding the formula for calculation of the pension values, see the discussion included in the “Narrative to 2015 Pension Benefits Table” below. Eligible associates are permitted to defer a percentage (up to 50% in 2015) of their cash compensation under the Non-Qualified Defined Contribution Plan. All cash compensation is eligible for deferral unless otherwise limited by Code Section 409A. Plan participants may select from deemed investment funds under the Non-Qualified Defined Contribution Plan that are identical to the investment funds offered in the BB&T Corporation 401(k) Savings Plan (the “401(k) Plan”) with the exception that no deemed investments in BB&T common stock are permitted. Participants make an election upon entering the plan regarding the timing of plan distributions. The two allowable distribution elections are distribution upon termination or distribution upon reaching age 65. The Non-Qualified Defined Contribution Plan also allows for an in-service hardship withdrawal based on facts and circumstances that meet Internal Revenue Service guidelines.

 

401(k) Plan. The BB&T 401(k) Plan is maintained to provide a means for most associates of BB&T and its subsidiaries to defer and save a percentage (up to 50% in 2015, subject to IRS limitations) of their annual cash compensation on a pre-tax basis for retirement. The 401(k) Plan provides for BB&T to match 100% of a participant’s deferrals up to 6% of his or her compensation. Our contributions to each of the NEOs during 2015 under the 401(k) Plan are included under the “All Other Compensation” column in the 2015 Summary Compensation Table above.

 

Employment Agreements. We and our wholly owned subsidiary, Branch Bank, have entered into employment agreements with each member of Executive Management, including each NEO. The employment agreements generally provide a 36 month term that is automatically extended monthly for an additional month, absent contrary

 

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notice by either party. The employment agreements provide that the NEOs are guaranteed minimum annual salaries equal to their current annual base salaries and continued participation in incentive compensation plans that BB&T or Branch Bank may from time to time extend to its similarly situated officers. During the term of the employment agreements, each NEO is entitled to participate in and receive, on the same basis as other similarly situated officers of BB&T and Branch Bank, pension and welfare benefits and other benefits such as sick leave, vacation, group disability and health, life and accident insurance and similar non-cash compensation that BB&T or Branch Bank may from time to time extend to its officers.

 

For a discussion of the potential payments that would be provided to each of the NEOs under their respective employment agreements in the event of such NEO’s termination, including in connection with a Change of Control, please refer to the “Potential Payments Upon Termination or Change of Control” section below. For a further discussion of the employment agreements of our NEOs, please see “Employment Agreements” within Section 4 of the Compensation Discussion and Analysis.

 

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2015 GRANTS OF PLAN-BASED AWARDS

 

         

Estimated Future Payouts Under

Non-Equity Incentive Plan
Awards(3)(4)(5)

    Estimated Future Payouts Under
Equity Incentive Plan Awards(6)
  Exercise
or Base
Price of
Option
Awards
($/Sh)(7)
   

Grant Date Fair

Value of Stock

and Option

Awards ($)(8)

 
Name  

Grant

Date

  Threshold
($)
   

Target