DEF 14A 1 d277064ddef14a.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 Schedule 14(a) of the

Securities Exchange Act of 1934 (Amendment No.      )

Filed by the Registrant  

Filed by a Party other than the Registrant  

Check the appropriate box:

 

  Preliminary Proxy Statement
  Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
  Definitive Proxy Statement
  Definitive Additional Materials
  Soliciting Material under §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)

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  No fee required

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  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.
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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 25, 2017. This year’s meeting will be held in Harrisburg, Pennsylvania at the Hilton Harrisburg, on One North Second Street. Shareholders as of the record date of February 15, 2017 are invited to attend.

We are again providing proxy materials to our shareholders primarily through the Internet. We have found this process significantly lowers the cost of our annual proxy campaign. We hope this continues to offer you a convenient way to access our proxy materials. Please read the 2017 proxy statement carefully because it contains important information about the matters we will vote on at our annual meeting.

Separately, on behalf of the Board of Directors, we would like to thank recently retired directors Edward C. Milligan and Edwin H. Welch, Ph.D., and recently retired members of Executive Management, Ricky K. Brown, Steven B. Wiggs and Cynthia A. Williams, for their service and contributions to our company. All were instrumental in executing our vision and mission in the face of meaningful obstacles during the past several years. We benefited from their sound judgement and guidance.

 

Even if you plan to attend the meeting, we encourage you to vote your shares in advance by following the voting instructions provided. Every vote is important and we look forward to hearing from you.

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 25, 2017

   11:00 a.m. EDT   

Hilton Harrisburg

One North Second Street

Harrisburg, PA 17101

 

AGENDA:

  ·   Election of the 16 directors named in the proxy statement, each for a one-year term expiring at the 2018 Annual Meeting of Shareholders
  ·   Ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2017
  ·   Advisory vote to approve BB&T’s executive compensation program, commonly referred to as a “say on pay” vote
  ·   Advisory vote on the frequency of our “say on pay” vote
  ·   Approval of amendments to the BB&T Corporation 2012 Incentive Plan, which include increasing the number of authorized shares, and re-approval of the Plan for purposes of Internal Revenue Code Section 162(m)
  ·   A shareholder proposal requesting the elimination of supermajority voting provisions in BB&T Corporation’s articles and bylaws, if properly presented at the meeting
  ·   Any other business that may properly be brought before the meeting

 

 

Record date: You can vote if you were a shareholder of record on February 15, 2017.

 

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 15, 2017

 

 

  Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting To Be
Held on April 25, 2017

 

A copy of this proxy statement is available at http://www.edocumentview.com/BBT. Also available at this website is the 2016 Annual Report, which highlights summary financial information about BB&T, and our Annual Report on Form 10-K for the year ended December 31, 2016.

 


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PROXY STATEMENT TABLE OF CONTENTS

 

PROXY STATEMENT SUMMARY      1  
PROPOSAL 1 – ELECTION OF DIRECTORS      8  
CORPORATE GOVERNANCE MATTERS      19  

CORPORATE GOVERNANCE GUIDELINES

     19  

DIRECTOR INDEPENDENCE

     19  

BOARD COMPOSITION

     20  

BOARD LEADERSHIP STRUCTURE

     20  

STRATEGIC DIRECTION AND PLANNING

     21  

STANDING BOARD COMMITTEES, MEMBERSHIP AND ATTENDANCE AND LEAD DIRECTOR RESPONSIBILITIES

     21  

MAJORITY VOTING AND DIRECTOR RESIGNATION POLICY; DIRECTOR RETIREMENT

     24  

BB&T’S CULTURE

     24  

ETHICS AT BB&T

     25  

SHAREHOLDER ENGAGEMENT PROGRAM

     25  

PROXY ACCESS

     26  

NOMINATING AND CORPORATE GOVERNANCE COMMITTEE DIRECTOR NOMINATIONS

     26  

CORPORATE SOCIAL RESPONSIBILITY REPORT

     27  

STATEMENT OF POLITICAL ACTIVITY

     28  

POLICY FOR ACCOUNTING AND LEGAL COMPLAINTS

     28  

BOARD SKILLS AND TRAINING PROGRAM

     29  

MANAGEMENT SUCCESSION PLANNING

     29  

RISK OVERSIGHT

     29  

COMMUNICATIONS WITH THE BOARD OF DIRECTORS

     30  
STOCK OWNERSHIP INFORMATION      31  

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     32  
PROPOSAL 2 – RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2017      33  

FEES TO AUDITORS

     33  

AUDIT COMMITTEE PRE-APPROVAL POLICY

     34  

AUDIT COMMITTEE REPORT

     35  
PROPOSAL 3 – VOTE ON AN ADVISORY RESOLUTION TO APPROVE BB&T’S EXECUTIVE COMPENSATION PROGRAM      36  
COMPENSATION DISCUSSION AND ANALYSIS      38  

SECTION 1 – EXECUTIVE SUMMARY

     39  

SECTION 2 – 2017 CHANGES TO OUR COMPENSATION PROGRAM

     44  

SECTION 3 – 2016 EXECUTIVE COMPENSATION PROGRAM AND PAY DECISIONS

     46  

SECTION 4 – BB&T’S EXECUTIVE COMPENSATION PROCESS

     56  

SECTION 5 – OTHER ASPECTS OF BB&T’S EXECUTIVE COMPENSATION PROGRAM AND GOVERNANCE PRACTICES

     60  

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

     64  

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

     64  


Table of Contents
  

 

 

COMPENSATION OF EXECUTIVE OFFICERS      65  

2016 SUMMARY COMPENSATION TABLE

     65  

2016 GRANTS OF PLAN-BASED AWARDS

     68  

2016 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

     69  

OPTION EXERCISES AND STOCK VESTED IN 2016

     70  

2016 PENSION BENEFITS

     71  

2016 NON-QUALIFIED DEFERRED COMPENSATION

     72  

POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL

     73  
COMPENSATION OF DIRECTORS      77  

2016 DIRECTOR COMPENSATION TABLE

     77  
PROPOSAL 4 – ADVISORY VOTE ON THE FREQUENCY OF “SAY ON PAY” VOTES      80  
PROPOSAL 5 – APPROVAL OF AMENDMENTS TO THE 2012 INCENTIVE PLAN, WHICH INCLUDE INCREASING THE NUMBER OF AUTHORIZED SHARES, AND RE-APPROVAL OF THE PLAN FOR PURPOSES OF INTERNAL REVENUE CODE SECTION 162(m)      81  
PROPOSAL 6 – SHAREHOLDER PROPOSAL REQUESTING THE ELIMINATION OF SUPERMAJORITY VOTING PROVISIONS IN BB&T CORPORATION’S ARTICLES AND BYLAWS      90  
TRANSACTIONS WITH EXECUTIVE OFFICERS AND DIRECTORS      93  

LOANS TO EXECUTIVE OFFICERS AND DIRECTORS

     93  

RELATED PERSON TRANSACTIONS

     93  
VOTING AND OTHER INFORMATION      95  

SHARES ENTITLED TO VOTE AT THE MEETING

     95  

QUORUM REQUIREMENTS

     95  

VOTING PROCEDURES

     95  

VOTES REQUIRED, NON-VOTES, ABSTENTIONS, AND REVOCATIONS

     96  

DELIVERING PROXY MATERIALS

     96  

PROXY COSTS

     97  

PROPOSALS FOR 2018 ANNUAL MEETING OF SHAREHOLDERS

     97  

OTHER BUSINESS

     98  
ANNEX A – NON-GAAP FINANCIAL MEASURES      A-1  
ANNEX B – BB&T CORPORATION 2012 INCENTIVE PLAN, AS AMENDED      B-1  
ATTENDING THE ANNUAL MEETING     

 

 

 

 

 


Table of Contents
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 2016 performance can be found in our Annual Report on Form 10-K.

2017 Annual Meeting of Shareholders

 

 

Time and Date

  

Location

  

Record Date

April 25, 2017, at 11:00 a.m. EDT

  

Hilton Harrisburg

One North Second Street

Harrisburg, PA 17101

   February 15, 2017

Proposals and Voting

 

Shareholders will vote on the following six proposals:

 

Proposals   Votes Required  

Board

Recommendation

 

More

Information

Election of 16 directors named in the proxy statement   Majority of votes cast for each nominee   FOR EACH NOMINEE   Page 8
Ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2017   Majority of votes cast   FOR   Page 33
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 36
Advisory vote on the frequency of “say on pay” votes   Majority of votes cast (in the absence of a majority, we will consider which frequency receives the most votes by shareholders)  

EVERY YEAR

  Page 80
Approval of amendments to the BB&T Corporation 2012 Incentive Plan, which include increasing the number of authorized shares, and re-approval of the Plan for purposes of Internal Revenue Code Section 162(m)   Majority of votes cast   FOR   Page 81
A shareholder proposal requesting the elimination of supermajority voting provisions in BB&T Corporation’s articles and bylaws, if properly presented at the meeting   Majority of votes cast   AGAINST   Page 90

 

BB&T Corporation | 2017 Proxy Statement    1


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Proxy Statement Summary   

 

 

How to Vote

 

A proxy that is signed and dated, but which does not contain voting instructions, will be voted as recommended by our Board of Directors on each proposal. In addition to voting in person at the annual meeting, shareholders may also vote the following ways:

 

Voting By Proxy

Voting Methods

 

 

 

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Internet

 

 

 

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Telephone

 

 

 

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Mail

 

Shareholders of Record
(shares registered via
Computershare)
  www.envisionreports.com/BBT   Call 1-800-652-VOTE (8683) and follow the instructions on the proxy card   Sign, date and mail
your proxy card
Beneficial Owners (shares
owned through your bank
or brokerage account)
  www.proxyvote.com   Call 1-800-454-VOTE (8683) and follow the instructions on your voting instruction form   Sign, date and mail
your voting
instruction form

 

2    BB&T Corporation | 2017 Proxy Statement


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Proxy Statement Summary    LOGO

 

 

Shareholder Engagement and Changes to our Compensation and Governance Programs

 

 

Highlights: Significant Enhancements to Compensation and Governance Programs

 

   Performance Share Units—a new compensation vehicle

 

   Total Shareholder Return—a new long-term incentive metric

 

   Enhanced Mix of Long-Term Incentives—two-thirds of long-term incentives subject to robust performance criteria

 

   Proxy Access—allows shareholders to have their nominees appear in our proxy statement.

 

As described under “Corporate Governance Matters—Shareholder Engagement Program,” for the past several years we have conducted a formal shareholder engagement program to discuss 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 last two annual meetings, we received a lower level of shareholder support for that proposal than in prior years. In particular, in 2016, we received 55% of votes in favor of our “say on pay” proposal.

 

What We Heard

Since receiving the results of the 2016 “say on pay” vote, we have contacted our 50 largest shareholders, representing more than 44% of our outstanding shares. We also met with proxy advisory firms followed by some of our largest shareholders. The primary purpose of these discussions was to better understand and address our shareholders’ concerns about our executive compensation and governance programs. We received the following feedback on our compensation and governance programs:

 

   Our shareholders wanted to see a significant portion of our long-term compensation be tied to robust performance objectives.

 

   Shareholders suggested adding an additional performance-based metric to our long-term incentive program.

 

   As a result of our asset size as compared to our peers, shareholders suggested that we consider adding larger banks to our peer group.

 

   Even though we are above the median of our peers in terms of asset size, compensation should not be targeted above the median of our peers.

 

   Shareholders expressed concerns that the 2015 Merger Incentive Award would become a regular part of our executive compensation program.

 

   Shareholders suggested that we increase our CEO stock ownership guideline.

 

   Shareholders requested that we adopt proxy access.

 

   Shareholders requested that we publish our Corporate Social Responsibility report on our website.

 

 

BB&T Corporation | 2017 Proxy Statement    3


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Proxy Statement Summary   

 

 

What We Did

As outlined below, the Compensation Committee, the Nominating and Corporate Governance Committee and the Board carefully considered the constructive feedback we received during our engagement sessions and enhanced our executive compensation and governance programs over the course of 2016 and continuing into 2017. These changes fit well within our overall compensation philosophy and the objectives of our executive compensation and governance programs.

 

Compensation Changes Effective in 2016

 

   In June 2016, we retroactively added Total Shareholder Return (“TSR”) as a payment modifier that can decrease payments under the previously granted 2016-2018 Long-Term Incentive Performance (“LTIP”) awards based on BB&T’s TSR performance relative to its peer group.

 

   We increased the CEO’s stock ownership requirement from 5x salary to 6x salary.

 

   We made no 2016 base salary increases for our 2015 Named Executive Officers (“NEOs”).

 

   We did not increase compensation target opportunities for our 2015 NEOs.

 

   We revised the peer group to add one bank larger than us (Wells Fargo) and one bank closer in size (Citizens Financial).

 

   We continue to reinforce that the 2015 Merger Incentive Award was a one-time event that will not be repeated.

 

Compensation Changes Effective in 2017*

 

   We added performance share units to the long-term incentive program to comprise 50% of equity awards.

 

   We eliminated the use of stock options.

 

   We adjusted the long-term incentive mix to provide for an equal mix of performance share units, LTIP, and restricted stock units, resulting in two-thirds of long-term incentives being subject to robust performance criteria and all awards being subject to a performance hurdle.

 

   We included Total Shareholder Return as a payment modifier in our long-term incentive program, that can increase or decrease the LTIP award and performance share unit award payouts based on BB&T’s TSR performance relative to its peer group.

 

   We extended our risk-based forfeiture provision to all long-term incentive awards. Awards are subject to reduction or forfeiture if the Compensation Committee determines that there has been a significant negative risk outcome.

 

   We made no increases in base salaries for our NEOs.

 

Governance Changes Effective in 2016

 

   We adopted a proxy access bylaw that allows a shareholder or group of up to 20 shareholders that has held at least 3% of our common stock for at least three years to nominate up to 25% of the Board (but at least two directors) and have those nominees appear in our proxy statement, subject to notice and other specific requirements in our bylaws.

 

   We published a Corporate Social Responsibility report on our website, highlighting our good stewardship of the natural resources entrusted to us, our promotion of our associates’ and communities’ well-being, and our coherent corporate governance program.

 

 

*   See “Compensation Discussion and Analysis—Section 2—2017 Changes to Our Compensation Program” on page 44 for a detailed review of the compensation changes effective in 2017.

 

4    BB&T Corporation | 2017 Proxy Statement


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Proxy Statement Summary    LOGO

 

 

Performance Highlights

 

 

Strategic Accomplishments

  2016 was a strong and profitable year with record earnings, expansion into new markets and a healthy return to our shareholders. Our accomplishments in 2016 demonstrate the power of our vision, mission and values.

 

  We extended our long-standing commitment to leadership development for our clients and communities through our BB&T Leadership Institute, Lighthouse Project community service initiative, and Financial Foundations course to increase the financial proficiency of high school students.

 

  We ramped up our digital strategy by adding talent and technology to meet our clients’ evolving needs and expectations.

 

  We have continued to grow our digital platform, U by BB&T, which allows clients to do business with us wherever they are on whatever device they choose.

 

  We were able to approve a 7% increase in our quarterly dividend, achieve a 28.4% total return to

 

shareholders and were approved to conduct share repurchases totaling $840 million. Our dividend yield and long-term returns are among the best in the industry.

 

  We successfully integrated our National Penn acquisition and began capitalizing on our earlier acquisitions of Susquehanna Bancshares and The Bank of Kentucky, allowing us to create new capital markets relationships in Philadelphia and Cincinnati.

 

  We completed our second largest insurance acquisition – Swett & Crawford, a century-old wholesale broker with a strong and talented team of industry specialists.

 

  We made important changes in our Executive Management team, adding five new leaders, creating the new positions of chief digital officer and chief client experience officer, and appointing new leadership to the role of chief information officer.

 

  We invested approximately $1 billion in new infrastructure systems over the past three years, positioning us for future growth.

 

 

Financial Highlights

2016—A Record Performance Year:

 

  Record net income available to common shareholders of $2.3 billion.

 

  Asset growth of 4.4% year-over-year.

 

  Average non-interest bearing deposits increased 15% year-over-year, second highest growth rate in our peer group.

 

  Record revenue of $11.0 billion, up 12.3% from 2015.

 

  Nonperforming assets represented 0.57% of loan-related assets, best in our peer group (peer group average 0.99%).

 

 

  Strong capital and liquidity ratios.

 

  Credit ratings that are among the highest in our industry.

 

  Strong absolute total return to shareholders of 28.4%.

 

  Total shareholder return exceeded peer average and S&P Financials Index for the 10, 15, and 20 year periods.

 

  BB&T achieved a record stock price during the calendar year, which as of the record date was $48.26.

 

 

 

BB&T Corporation | 2017 Proxy Statement    5


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Proxy Statement Summary   

 

 

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:

Proxy Access

  In 2016, we adopted a proxy access bylaw that allows a shareholder or group of up to 20 shareholders that has held at least 3% of our common stock for at least three years to nominate up to 25% of the Board (but at least two directors) and have those nominees appear in our proxy statement, subject to notice and other specific requirements in our bylaws.
Active, Independent Board of Directors   Fourteen of our sixteen directors are independent, and our directors attended 98% 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

  The Board regularly reviews 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 our long-term strategy.

Stock Ownership Guidelines

  By requiring our CEO to own stock equal to 6x his annual salary and directors to own stock equal to 5x their annual retainer, we effectively align their interests to those of our shareholders.

Pledging/Hedging of Shares

  To reduce conflicts of interest, we have strong limitations on pledging and hedging of our common stock by directors and Executive Management members.
Majority Voting for Director
Elections
  All director nominees in uncontested elections must be elected by an affirmative vote of the majority of votes cast.

Risk Oversight

  We have developed a robust risk management organization, reporting to our Board, with the purpose of providing objective oversight of our risk-taking activities.
Clawbacks and Executive Risk Scorecard   We make all executive awards (cash and equity) subject to recoupment and also may utilize our executive risk scorecard to reduce incentive compensation for negative risk outcomes.

Shareholder Engagement

  We maintain a robust shareholder engagement program, actively seeking feedback from our shareholders to improve our governance and compensation practices.

Statement of Political Activity

  We publish on our website a Statement of Political Activity, describing our Board’s oversight of political contributions and political activity.
Corporate Social Responsibility Report   We publish on our website a Corporate Social Responsibility Report, highlighting our good stewardship of the natural resources entrusted to us, our promotion of our associates’ and communities’ well-being, and our coherent corporate governance program.

Board Committees

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

 

 

6    BB&T Corporation | 2017 Proxy Statement


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Proxy Statement Summary    LOGO

 

 

BB&T BOARD OF DIRECTORS AND COMMITTEES

The table below shows for each of our directors, their memberships in standing committees and their independence status.

    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      

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

 

     

Stephen T. Williams*

  LOGO   LOGO                

 

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

 

BB&T Corporation | 2017 Proxy Statement    7


Table of Contents
Proposal 1—Election of Directors   

 

 

PROPOSAL 1—ELECTION OF DIRECTORS

We are asking you to reelect each of the sixteen 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 2018. Each director nominee will require the affirmative vote of the majority of votes cast to be elected.

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.

The membership of our Board of Directors includes all of the board members of Branch Banking and Trust Company (“Branch Bank,” 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.

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. Sound judgment and community leadership are also important characteristics that our Board members possess. Each nominee additionally brings to us a strong and unique background and set of skills, providing our Board with competence and experience in a wide variety of areas.

 

8    BB&T Corporation | 2017 Proxy Statement


Table of Contents
Proposal 1—Election of Directors    LOGO

 

 

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 two other publicly-traded company boards. 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

 

LOGO

 

Other Bank
Director

or Bank
Executive
Experience

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   LOGO

I. Patricia Henry

  LOGO               LOGO      

Eric C. Kendrick

  LOGO               LOGO   LOGO   LOGO

Kelly S. King

  LOGO           LOGO     LOGO   LOGO    

Louis B. Lynn, Ph.D.

  LOGO             LOGO   LOGO      

Charles A. Patton

  LOGO               LOGO   LOGO   LOGO

Nido R. Qubein

  LOGO   LOGO           LOGO   LOGO     LOGO

William J. Reuter

  LOGO               LOGO   LOGO   LOGO

Tollie W. Rich, Jr.

  LOGO               LOGO   LOGO   LOGO

Christine Sears

  LOGO     LOGO     LOGO     LOGO   LOGO   LOGO

Thomas E. Skains

  LOGO   LOGO             LOGO      

Thomas N. Thompson

  LOGO               LOGO   LOGO   LOGO

Stephen T. Williams

  LOGO       LOGO               LOGO        

 

(1)   Indicates Audit Committee members 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.

 

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Nominees for Election as Directors for a One-Year Term Expiring in 2018

The names of the nominees for election to our Board of Directors and their principal occupations, experience, and key qualifications and skills is set forth below.

 

 

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” EACH OF THE

DIRECTOR NOMINEES NAMED BELOW.

 

 

 

Jennifer S. Banner

Knoxville, TN

 

      

 

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Age: 57

Lead Director

Tenure:

  BB&T since 2003

  Branch Bank since 2013

Board Committees:

  Executive

  Risk

Public Company Directorship:

  Communications Sales & Leasing, Inc.

 

      

 

Professional Experience:

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.

 

Qualifications and Skills:

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 served for six years (2010-2015) 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.

    

 

K. David Boyer, Jr.

Oakton, VA

 

      

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Age: 65

Tenure:

  BB&T since 2009

  Branch Bank since 2013

Board Committees:

  Executive

  Risk

 

      

 

Professional Experience:

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 2002-2014.

 

Qualifications and Skills:

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, governance structure and its values and culture. Mr. Boyer has extensive experience with risk management, accounting and finance, as well as information technology services, information management, cybersecurity and anti-terrorism assistance services, and brings skills related to this experience to the BB&T Board.

 

 

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Anna R. Cablik

Marietta, GA

 

      

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Age: 64

Tenure:

  BB&T since 2004

  Branch Bank since 2013

Board Committees:

  Compensation

  Nominating and Corporate Governance (Chair)

Public Company Directorship:

  Georgia Power Company

 

      

 

Professional Experience:

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.

 

Qualifications and Skills:

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 governance experience to the BB&T Board. Her public company director experience has provided her a broad understanding of corporate governance matters. 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.

    

 

James A. Faulkner

Dahlonega, GA

 

      

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Age: 72

Tenure:

  BB&T since 2013

  Branch Bank since 2000

Board Committees:

  Audit

 

      

 

Professional Experience:

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

 

Qualifications and Skills:

Mr. Faulkner brings to BB&T significant financial services leadership, oversight and expertise stemming from his distinguished 52-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 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.

 

 

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I. Patricia Henry

Stone Mountain, GA

 

      

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Age: 69

Tenure:

   BB&T since 2013

   Branch Bank since 1999

Board Committees:

   Audit

 

      

 

Professional Experience:

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

 

Qualifications and Skills:

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.

    

 

Eric C. Kendrick

Arlington, VA

 

      

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Age: 70

Tenure:

   BB&T since 2013

   Branch Bank since 2003

Board Committees:

   Compensation

   Nominating and Corporate Governance

 

      

 

Professional Experience:

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.

 

Qualifications and Skills:

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. As a successful executive, 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.

 

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Kelly S. King

Winston-Salem, NC

 

      

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Age: 68

Tenure:

  BB&T since 2008

  Branch Bank since 1995

Board Committees:

  Executive

  Risk

      

 

Professional Experience:

Mr. King has served as Chairman of BB&T since 2010; 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.

 

Qualifications and Skills:

Mr. King has forged a lifetime of leadership experience with BB&T, devoting 33 of his 44 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. Since 2009, the Lighthouse Project completed more than 7,700 projects for the communities we serve.

 

Mr. King served as the Fifth District representative on the Federal Advisory Council of the Board of Governors of the Federal Reserve System from 2013 through 2016, and served as President of the Federal Advisory Council in 2016. 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 also has 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. BB&T was named one of the “2017 Best Banks in America” by Forbes, and one of the “World’s Most Admired Companies” by Fortune, ranking #4 among superregional banks.

 

 

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Louis B. Lynn, Ph.D.

Columbia, SC

 

      

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Age: 68

Tenure:

  BB&T since 2013

  Branch Bank since 2006

Board Committees:

  Compensation

  Nominating and Corporate Governance

 

      

 

Professional Experience:

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.

 

Qualifications and Skills:

Dr. Lynn possesses valuable oversight skills and governance experience 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 has served as a member of the Clemson University Board of Trustees since 1988. He also serves as an Adjunct Professor of Horticulture at Clemson University and served on a number of national and state boards related 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.

 

 

Charles A. Patton

Hopewell, VA

 

      

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Age: 60

Tenure:

  BB&T since 2013

  Branch Bank since 1998

Board Committees:

  Executive

  Risk (Chair)

 

      

Professional Experience:

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.

 

Qualifications and Skills:

Over the course of his extensive career in the financial services industry, 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. He is a Director and the Chairman of the Audit and Finance Committees of Richard Bland College Foundation, Inc.

 

 

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Nido R. Qubein

High Point, NC

 

      

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Age: 68

Tenure:

  BB&T since 1990

  Branch Bank since 2013

Board Committees:

  Executive

  Risk

Public Company Directorship:

   La-Z-Boy Incorporated

      

Professional Experience:

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 Executive Chairman of Great Harvest Bread Company (a whole grain bread bakery franchising company) since 2001.

 

Qualifications and Skills:

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, and membership in the Horatio Alger Association for Distinguished Americans with such notable leaders like Starbuck’s Howard Schultz and General Colin Powell.

 

 

 

William J. Reuter

Lititz, PA

 

      

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Age: 67

Tenure:

  BB&T since 2015

  Branch Bank since 2015

Board Committees:

  Executive

  Risk

      

 

Professional Experience:

Mr. Reuter is the retired Chairman and Chief Executive Officer of Susquehanna Bancshares, Inc., having served as Chief Executive Officer and Chairman from 2001 and 2002, respectively, 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.

 

Qualifications and Skills:

Mr. Reuter brings extensive experience in the financial services industry, beginning his career with Susquehanna in 1973, when he joined one of its predecessor banks in Maryland. He has more than 40 years in leadership roles within the banking industry. Mr. Reuter’s experience as the CEO and Chairman of a large, publicly traded financial services organization and his risk management expertise qualify him to serve as a member of our Board. He joined our Board in August 2015 as a part of the Susquehanna merger. 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.

 

 

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Tollie W. Rich, Jr.

Cape Coral, FL

 

      

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Age: 67

Tenure:

  BB&T since 2013

  Branch Bank since 2007

Board Committees:

  Audit

 

      

 

Professional Experience:

Mr. Rich retired in 2000 as a senior banking executive at Branch Bank. Prior to that, 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.

 

Qualifications and Skills:

Mr. Rich brings valuable perspective to the BB&T Board by combining financial industry leadership and expertise with significant corporate governance and supervisory experience. His extensive career in the financial services industry 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.

 

 

 

Christine Sears

Harrisburg, PA

 

      

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Age: 61

Tenure:

  BB&T since 2015

  Branch Bank since 2015

Board Committees:

  Audit

      

Professional Experience:

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.

 

Qualifications and Skills:

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 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.

 

 

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Thomas E. Skains

Charlotte, NC

 

      

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Age: 60

Tenure:

  BB&T since 2009

  Branch Bank since 2013

Board Committees:

  Executive (Chair)

  Risk

Public Company

Directorship:

  Duke Energy Corporation

  National Fuel Gas
Company

 

      

Professional Experience:

Mr. Skains served as Chairman, President and Chief Executive Officer of Piedmont Natural Gas Company, Inc. from 2003 until its acquisition in October 2016 by Duke Energy Corporation.

 

Qualifications and Skills:

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 former role as the President and Chief Executive Officer of Piedmont Natural Gas, a publicly traded corporation, and as a director of Duke Energy Corporation and National Fuel Gas Company, both publicly traded companies. His experience in the highly regulated natural gas industry is especially valuable given the high degree of regulation that currently exists in the financial services industry. Mr. Skains has served on a wide variety of boards for prominent civic and business associations, providing him with extensive community relations experience.

 

 

 

Thomas N. Thompson

Owensboro, KY

 

      

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Age: 68

Tenure:

  BB&T since 2008

  Branch Bank since 2013

Board Committees:

  Compensation (Chair)

  Nominating and
  Corporate Governance

 

      

 

Professional Experience:

Mr. Thompson has served as President of Thompson Homes, Inc. (a home builder) since 1978 and served as a member of the Kentucky House of Representatives from 2003-2016.

 

Qualifications and Skills:

As a former 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. He also has valuable experience in the banking industry, having served as a director of AREA Bancshares, which was acquired by BB&T in 2002. 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.

 

 

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Stephen T. Williams

Winston-Salem, NC

 

      

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Age: 57

Tenure:

BB&T since 2007

Branch Bank since 2013

Board Committees:

Audit (Chair)

      

 

Professional Experience:

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.

 

Qualifications and Skills:

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.

 

 

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CORPORATE GOVERNANCE MATTERS

The Board of Directors periodically reviews BB&T’s corporate governance policies, practices and procedures to ensure that we follow best practices and 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, sustainable growth and value for our shareholders.

 

Key Corporate Governance Documents—Please visit our website at www.bbt.investorroom.com to view the following documents:

 

  Corporate Governance Guidelines

 

  Board Committees and Charters

 

  Codes of Ethics

 

  Statement of Political Activity

 

  Accounting, Securities and Legal Violations Policy

 

  Corporate Social Responsibility Report

 

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

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 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 director compensation.

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 independence standards reflect, among other items, the NYSE independence requirements and 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.

 

The Nominating and Corporate Governance Committee assists the Board by annually evaluating the independence of 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 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 transactions with BB&T and its subsidiaries, certain charitable contributions, relationships considered in accordance with our Related Person Transactions Policy and Procedures, and other relevant direct and indirect relationships that may affect independence. Banking relationships with BB&T or any of

 

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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 sixteen members of the Board, the following fourteen directors have no disqualifying material relationships with BB&T or its subsidiaries and are independent: Messrs. Boyer, Faulkner, Kendrick, Lynn, Patton, Reuter, Rich, Skains, Thompson 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. 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 and our Corporate Governance Guidelines.

Board Composition

 

Our Board currently consists of sixteen directors. 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 size of our Board committees and increased the responsibilities of each committee. The size of our Board is 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 diversity of viewpoints on each committee also allows for more effective challenge to proposals from management and directors. 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 is appropriate to effectively represent the interests of our 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. Our bylaws and Corporate Governance Guidelines each provide that the Chairman may also hold the position of Chief Executive Officer. BB&T’s Chairman and 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. Our 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 our 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

 

Jennifer S. Banner serves as the Board’s Lead Director. The role of the Lead Director is to assist the Chairman and the remainder of the Board in ensuring effective governance in overseeing the direction and management of BB&T. The Lead Director serves a two-year term and may serve for one subsequent one-year term at the discretion 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.

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, in the first quarter of each year, management provides to the Board a detailed report on our 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.

Standing Board Committees, Membership and Attendance and Lead Director Responsibilities

 

Under our Corporate Governance Guidelines, directors are expected to attend all 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 2016, the full Board of Directors held ten meetings. Each of the directors attended more than 75% of the aggregate meetings of our Board and the committees on which they served in 2016. All of our directors attended the Annual Meeting of Shareholders in 2016.

It is anticipated that the Board standing 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. With respect to each standing committee, the current members, the principal functions and the number of meetings held in 2016 are shown below. Also shown below are the responsibilities of our Lead Director.

 

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Independent Lead Director

 

 

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Jennifer S. Banner

  

 

  Assists the Chairman and the remainder of the Board in ensuring effective governance in overseeing the direction and management of BB&T.

  Organizes and sets the agenda and presides over executive sessions, which meet at least three times per year.

  Presides at all Board meetings at which the Chairman is not present (including executive sessions).

  Takes responsibility for feedback to/engagement with the Chief Executive Officer on executive sessions.

  Suggests matters and issues for inclusion on the Board agenda.

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

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

Audit Committee

 

 

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Stephen T. Williams

Chair

 

8 meetings in 2016

 

  

 

Committee Members:

James A. Faulkner, I. Patricia Henry, 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 external 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 general auditor.

Compensation Committee

 

 

LOGO

Thomas N. Thompson

Chair

 

7 meetings in 2016

 

  

 

Committee Members:

Anna R. Cablik, Eric C. Kendrick, Louis B. Lynn

 

 

  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 compensation programs.

 

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Executive Committee

 

 

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Thomas E. Skains

Chair

 

4 meetings in 2016

 

 

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

 

5 meetings in 2016

 

 

 

Committee Members:

Eric C. Kendrick, Louis B. Lynn, Thomas N. Thompson

 

 

   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.

   Reviews and monitors compliance with BB&T’s Codes of Ethics.

   Oversees management’s integration of BB&T’s values and culture with its strategy and objectives.

Risk Committee

 

LOGO

Charles A. Patton

Chair

 

12 meetings in 2016

 

 

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 compliance, credit, liquidity, market, operational (including information technology and client information risks), 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; Director Retirement

 

Our articles of incorporation require each director to be elected by the majority of the votes cast at a meeting of shareholders. Under our 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. Our current Director Resignation Policy addresses this “holdover” issue by requiring any director who does not receive the requisite affirmative majority of the votes cast for his or her re-election to tender his or her resignation to the Board.

Our bylaws require directors to retire at the end of the year in which the director becomes 72 years of age; provided, however, that a director may voluntarily elect to retire earlier.

BB&T’s Culture

 

We are very proud of our culture at BB&T, which has been deliberately developed and consistently articulated for more than 40 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 employees, who we commonly refer to as 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 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 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. 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, and 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 sound ethical practices.

We maintain three separate Board-approved Codes of Ethics that apply to our associates, senior financial officers and Directors. These Codes govern our corporate conduct, and each Code is specifically tailored to recognize the importance of each of these groups in maintaining a strong culture based on our values and adherence to ethical business practices. 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.

SALES PRACTICES

At BB&T, our performance is driven by our culture. Our culture is based on the central theme of “The Client Comes First.” We believe relationships are built on trust, and over time. We believe in understanding our clients’ needs and then explaining our products and services that may meet those needs. Where there is a need and we have a solution, we believe the client will decide whether to “buy” or not. We don’t want to ever incent an associate to try to make a sale happen. We do, however, as appropriate, want to reward and recognize our associates for doing the right thing (i.e., helping our clients).

Shareholder Engagement Program

 

We have a formal shareholder engagement program designed to build and maintain relationships with our largest shareholders. This engagement consists of a year-round dialogue with our shareholders, and regular reports to our Executive Management and Board of Directors. A summary of our shareholder engagement program is set forth below:

 

LOGO

 

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The goals of our shareholder engagement program include, but are not limited to:

 

    Obtaining shareholder insight into our corporate governance, executive compensation, and other policies and practices, including shareholder concerns and priorities;

 

    Communicating Board and management actions in response to shareholder feedback;

 

    Discussing current trends in corporate governance and executive compensation matters; and

 

    Providing insight into our current practices and enhancing communication with our largest shareholders.

We are committed to ongoing shareholder engagement and expect to continue our shareholder engagement program. 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 that are in the best interests of BB&T.

GOVERNANCE PROGRAM ENHANCEMENTS

Our continued engagement has led to several changes to our governance practices over the past several years.

Most recently, some of our shareholders have expressed support for proxy access, which allows director nominees of shareholders to be included with our proxy materials under certain circumstances. As a result, in 2016 we amended our bylaws to provide for proxy access.

As another example, last year we began publishing a Corporate Social Responsibility report on our website in response to shareholder requests for insight into our efforts in this area.

COMPENSATION PROGRAM ENHANCEMENTS

In addition, our engagement efforts have prompted several enhancements to our executive compensation program. Please refer to our discussion of compensation-related changes made in response to discussions with our shareholders on page 39 under “Shareholder Engagement and Changes to our Compensation Program”.

Proxy Access

 

Based on input received during our shareholder engagement process, on December 20, 2016, our Board of Directors amended our bylaws to provide for proxy access. Subject to the proxy access requirements in our amended bylaws:

 

    A single shareholder or group of up to 20 shareholders;

 

    Owning 3% of our common stock for at least 3 years;

 

    May submit director nominees for up to 25% of our board (but at least 2 board seats) for inclusion in our proxy statement.

For further information on proxy access, see “Proposals for 2018 Annual Meeting of Shareholders—Director nominations for inclusion in our proxy statement (Proxy Access).”

Nominating and Corporate Governance Committee 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,

 

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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 ensure that the overall composition of our Board is appropriate, such as occupational and geographic diversity and age. An important goal of the Board 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 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 and shareholders, subject to the requirements set forth below, and 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 Committee then reports to the Board its recommendations concerning each director nominee. The Board considers the Nominating and Corporate Governance Committee’s recommendations and selects director nominees to be submitted by BB&T to shareholders for approval at the next annual meeting of shareholders.

Pursuant to our Corporate Governance Guidelines, the Nominating and Corporate Governance Committee also will consider qualified director nominees recommended in writing by shareholders when such recommendations are submitted with the information set forth in Article II, Section 10 of the Corporation’s bylaws and policies regarding director nominations. The written notice must include the following information:

 

    the nominee’s full name, age and residential address;

 

    the principal occupation(s) of the nominee during the past five years;

 

    the nominee’s previous and/or current memberships on all public company boards of directors and the amount of all BB&T securities beneficially owned;

 

    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;

 

    any bankruptcy filings, criminal convictions, civil actions, actions by the Securities and Exchange Commission (“SEC”) or other regulatory agency or any violation of Federal or State securities law by and against the nominee or any affiliate of the nominee; and

 

    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 “Voting and Other Information-Proposals for 2018 Annual Meeting of Shareholders” below. Shareholders may submit, in writing, the names and qualifications of potential director nominees to the Corporate 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.

Corporate Social Responsibility 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. BB&T was a winner of the Financial Services Roundtable award for Corporate Social Responsibility Leadership in 2016. This award emphasizes the positive impact of companies in areas of financial education, support of social causes, products that assist the underserved, and protecting the environment.

 

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We’ve shown our commitment to these causes through the following:

 

Environmental   Education   Community Service

  Bank-wide conservation initiatives, including reducing the volume of paper used, purchasing recycled paper and environmentally-friendly cleaning products and recycling nearly 16.4 million tons of paper in 2015

 

  Through our Financial Foundations program, powered by EverFi, we teach high school students throughout our footprint how to comprehend and work with the principles of personal finance at no cost to schools or taxpayers

 

  BB&T Lighthouse Project completed more than 9,000 community service projects since 2009 (helping 13 million people), including financial help to local charities while our associates provide hands-on support for community projects including landscaping, facility renovations and meal preparation

  We are an advocate for the environment and sustainable design in new building construction, utilizing recycled content and energy efficient appliances

 

  Provide comprehensive educational opportunities to our associates through BB&T University and BB&T Banking School at Wake Forest University

 

  Launched our homeless outreach program in 2012, supporting emergency housing, food, transportation and medical care for homeless families in our community

Our full Corporate Social Responsibility Report is on our website. This publication highlights 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 political committees organized for the advancement of political candidates, including Super PACs.

Policy for Accounting and Legal Complaints

 

The Audit Committee oversees a policy that governs the reporting of:

 

    complaints regarding accounting, internal accounting controls, or auditing matters and

 

    reports of:

 

    material violations by BB&T or any of our officers, directors, associates or agents, of federal or state securities laws,

 

    material breaches of fiduciary duty arising under federal or state law, or

 

    suspected violations of any other laws or regulations that govern the Corporation’s actions.

We have engaged an independent service provider to receive and track all such complaints. Any verified complaint is referred to our General Counsel, who is responsible for reviewing those complaints in accordance with our whistleblower procedures and reporting all relevant information regarding the nature of the complaint to

 

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the Audit Committee. The 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.

Board Skills and Training Program

 

The Board Skills and Training Program provides a formal framework designed to support the directors’ performance of their responsibilities as members of the Board and Board committees. The courses are provided by both in-house experts and outside consultants on a wide range of topics to enhance the directors’ knowledge in areas important in carrying out their responsibilities as directors. 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 their performance.

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 facilitates the Board’s review and evaluation of our Executive Management succession plan. As part of the plan, our Chairman and CEO 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 the short- or long-term, and allows the Board to exercise its judgment and discretion with regard to the selection of a new CEO.

Risk Oversight

 

Our 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. Our Risk Management Organization (RMO) provides independent oversight and guidance for risk-taking across the enterprise. In keeping with the belief that consistent values drive long-term behaviors, our RMO has its own risk values that establish the guiding principles of our day-to-day activities:

 

    Managing risk is the responsibility of every associate.

 

    Proactively identifying risk and managing the inherent risks of their business is the responsibility of our business units.

 

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

 

    Measure what is managed and manage what is measured.

 

    Utilize accurate and consistent risk management practices.

 

    Thoroughly analyze risk quantitatively and qualitatively with judgments clearly identified.

 

    Realize lower cost of capital from high quality risk management.

 

    Ensure there is appropriate return for the risk taken.

 

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As illustrated below, we execute on our risk values through a risk management framework based on the following “three lines of defense:”

 

 

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 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.

We place significant emphasis on risk management and maintain a separate 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 its responsibilities, the Risk Committee monitors our risk profile, approves risk appetite statements, and provides input to management regarding our risk appetite and risk profile.

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 our 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 our organization, including strategic, compliance, credit, liquidity, market, operational, and reputation risks.

Communications with the Board of Directors

 

Any shareholder or other interested party may contact the Board of Directors or any individual director(s) may do so by written communication mailed to: Board of Directors, c/o Corporate 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 any individually named director. Unless, in the judgment of the Secretary, the matter is not intended or appropriate for the Board, the Secretary will prepare a summary of the communication for prompt delivery to the appropriate member(s) of the Board.

 

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STOCK OWNERSHIP INFORMATION

The table below sets forth the beneficial ownership of BB&T common stock by all directors, the named executive officers in this proxy statement (or 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 15, 2017. Unless otherwise indicated, all persons listed below have sole voting and investment powers over all shares beneficially owned. Applicable percentage ownership is based on 808,517,616 shares of BB&T common stock outstanding as of February 15, 2017.

 

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

       27,869       9,007        *

K. David Boyer, Jr.

       11,920       8,620        *

Anna R. Cablik

       22,095       26,811        *

James A. Faulkner

       38,544 (3)       1,114        *

I. Patricia Henry

       14,926       1,114        *

Eric C. Kendrick

       168,102 (4)       1,114        *

Kelly S. King

       444,313 (5)       678,429        *

Louis B. Lynn, Ph.D.

       9,427       1,114        *

Charles A. Patton

       72,695       1,114        *

Nido R. Qubein

       59,563 (6)       26,811        *

William J. Reuter

       44,914       35,280        *

Tollie W. Rich, Jr.

       120,128 (7)       1,114        *

Christine Sears

       12,444       1,058        *

Thomas E. Skains

       19,787 (8)       8,620        *

Thomas N. Thompson

       556,574 (9)       22,139        *

Stephen T. Williams

       386,782 (10)       22,139        *

Daryl N. Bible

       107,815       172,483        *

Ricky K. Brown

       194,216 (11)       465,768        *

Barbara F. Duck

       105,638       118,683        *

Donna C. Goodrich

       70,307 (12)       157,731        *

Christopher L. Henson

       200,958 (13)       226,671        *

Clarke R. Starnes III

       108,872       137,772        *

Directors and Executive Officers as a group (29 persons)

           2,951,019 (14)      
2,339,664

       *

Beneficial Owners Holding More Than 5%

                               

BlackRock, Inc.(15)

55 East 52nd Street

New York, NY 10022

       50,369,498              6.23%

The Vanguard Group, Inc.(16)

100 Vanguard Blvd.

Malvern, PA 19355

       52,538,406              6.50%

 

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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). With respect to shares pledged, our Corporate Governance Guidelines limit pledging activity so that share pledges by directors and members of Executive Management are limited to those shares in excess of each individual’s shares ownership requirement (share pledges which existed prior to December 1, 2013 are exempt from this requirement).
(2)   Amount includes options to acquire shares of BB&T common stock that are or become exercisable within sixty days of February 15, 2017 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 35,011 shares held by spouse with sole investment and voting powers.
(5)   Amount includes 59,464 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 3,070 shares held by spouse as custodian for child with sole investment and voting powers.
(7)   Amount includes 57,111 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 17,287 shares jointly owned with spouse with shared investment and voting powers.
(9)   Amount includes 3,814 shares held by his son. Amount also includes 286,619 shares pledged as security.
(10)   Amount includes 12,302 shares held by Mr. Williams as trustee in trusts for his children and 878 shares held by Mr. Williams as custodian for his children. Amount also includes 355,728 shares pledged as security.
(11)   Amount includes 287 shares held by spouse with sole investment and voting powers. The information for Mr. Brown’s beneficial ownership is as of his December 15, 2016 retirement date.
(12)   Amount includes 14,550 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 667,022 shares pledged as security.
(15)   Based upon information contained in the Schedule 13G/A filed by BlackRock, Inc. (“BlackRock”) with the SEC on January 19, 2017 BlackRock beneficially owned 50,369,498 shares of common stock as of December 31, 2016, with sole voting power over 43,352,467 shares, shared voting power over no shares, sole dispositive power over 50,369,498 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, 2017, Vanguard beneficially owned 52,538,406 shares of common stock as of December 31, 2016, with sole voting power over 1,285,405 shares, shared voting power over 154,629 shares, sole dispositive power over 51,108,824 shares and shared dispositive power over 1,429,582 shares.

Section 16(a) Beneficial Ownership Reporting Compliance

 

Under the federal securities laws, our directors and executive officers subject to Section 16 (“Section 16”) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), are required to report their beneficial ownership of BB&T stock and any changes in that ownership to the SEC. Specific deadlines for such reporting have been established by the SEC. Based solely on a review of copies of such reports, and written representations from each reporting person that no other reports are required, we believe that for 2016 all reporting persons filed the required reports on a timely basis under Section 16, except that Robert J. Johnson, Jr. inadvertently filed one late Form 4 with respect to one disposition transaction in connection with a reallocation of his 401(k) plan portfolio.

 

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Proposal 2—Ratification of the Appointment of PricewaterhouseCoopers LLP as Independent Registered Public Accounting Firm For 2017    LOGO

 

 

PROPOSAL 2—RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2017

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 the 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 2017 because we value our shareholders’ views on our 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 2017, 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 2017.

Fees to Auditors

 

The following table shows the aggregate fees incurred by the Corporation for professional services by PwC for fiscal years 2016 and 2015:

 

                                     
     2016 ($)   2015 ($)

Audit Fees

    9,056,000     9,146,000

Audit-Related Fees

    2,844,000     3,558,000

Tax Fees

       269,000        176,000

All Other Fees

         51,000     4,578,000

Total

  12,220,000   17,458,000

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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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 2016 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 2016, 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

 

The Audit Committee of the Board of Directors is currently composed of five independent directors and operates under a charter adopted by the Audit Committee on January 24, 2017. 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, 2016, filed with the SEC on February 21, 2017.

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

 

Stephen T. Williams, Chair

  

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

Proposal 3 asks shareholders to approve our pay-for-performance executive compensation program. The Compensation Committee and the Board believe that our executive compensation program, as described in the Compensation Discussion and Analysis, 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, we ask that shareholders consider the following:

 

    We recently added performance share units to the long-term incentive program to comprise 50% of equity awards.

 

    We recently adjusted the long-term incentive mix to provide for an equal mix of performance share units, LTIP, and restricted stock units, resulting in two-thirds of long-term incentives being subject to robust performance criteria and 100% of long-term incentives being subject to a performance hurdle.

 

    We recently approved performance-based components (performance share units and the LTIP) that use relative Total Shareholder Return as a second performance measure (along with ROCE) requiring us to increase or decrease the award based on our relative TSR.

 

    We made no 2016 base salary increases for our 2015 NEOs.

 

    We did not increase compensation target opportunities for our 2015 NEOs.

 

    We made no 2017 increases in base salaries for our 2016 NEOs.

 

    Our executive compensation program is incentive-based and reflects a pay-for-performance culture. Approximately 86% of our CEO’s target compensation for 2016 was variable and tied to BB&T’s performance.

 

    The performance measures we use (EPS, ROA, ROCE and TSR) 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 increased the stock ownership requirement for our CEO to 6x base salary. Other NEOs must maintain stock ownership requirements of at least 3x base salary. These measures effectively align their interests with those of our shareholders and give executives a greater financial interest in our company.

 

    We greatly value shareholder engagement and will continue to incorporate feedback we receive into our compensation and corporate governance 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.”

 

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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.

 

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   

 

 

COMPENSATION DISCUSSION AND ANALYSIS

In this section we describe our performance-based executive compensation program and philosophy in the context of our compensation decisions related to the Chief Executive Officer and each of the other executive officers named in the 2016 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. Ricky K. Brown served as a member of the Executive Management team until his retirement in 2016.

 

Name   Title   Years of Service
at BB&T

Kelly S. King

  Chairman and Chief Executive Officer   44

Christopher L. Henson

  President and Chief Operating Officer   32

Ricky K. Brown

  Former Senior Executive Vice President and President, Community Banking (retired December 15, 2016)   39

Clarke R. Starnes III

  Senior Executive Vice President and Chief Risk Officer   34

Daryl N. Bible

  Senior Executive Vice President and Chief Financial Officer   9

Barbara F. Duck

  Senior Executive Vice President and Chief Information Officer   29

Donna C. Goodrich

  Senior Executive Vice President and Deposit, Payment and Operations Services Manager   31

The Compensation Discussion and Analysis is organized into five sections:

 

    Section 1—Executive Summary
    Section 2—2017 Changes to Our Compensation Program (page 44)
    Section 3—2016 Executive Compensation Program and Pay Decisions (page 46)
    Section 4—BB&T’s Executive Compensation Process (page 56)
    Section 5—Other Aspects of BB&T’s Executive Compensation Program and Governance Practices (page 60)

 

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Section 1—Executive Summary

Shareholder Engagement and Changes to our Compensation Program

 

As described under “Corporate Governance Matters—Shareholder Engagement Program,” for the past several years we have conducted a formal shareholder engagement program to discuss 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 last two annual meetings, we received a lower level of shareholder support for that proposal than in prior years. In particular, in 2016, we received 55% of votes in favor of our “say on pay” proposal.

Following the 2016 Annual Meeting, the Compensation Committee discussed the feedback we received from shareholders on our executive compensation program. Based on this feedback and a desire to be responsive to our shareholders, the Committee met in June and made an immediate retroactive change to our 2016-2018 LTIP. The Committee also began a comprehensive review of our executive compensation programs, including further discussions with our shareholders, in anticipation of making broader program changes in 2017. Below is a summary of the feedback we received from shareholders and the actions taken by the Committee during 2016 and 2017 in response.

 

 

What We Heard

Since receiving the results of the 2016 “say on pay” vote, we have contacted our 50 largest shareholders, representing more than 44% of our outstanding shares. We also met with proxy advisory firms followed by some of our largest shareholders. The primary purpose of these discussions was to better understand and address our shareholders’ concerns about our executive compensation programs. We received the following feedback on our compensation programs:

 

  Our shareholders wanted to see a significant portion of our long-term compensation be tied to robust performance objectives.

 

  Shareholders suggested adding an additional performance-based metric to our long-term incentive program.

 

  As a result of our asset size as compared to our peers, shareholders suggested that we consider adding larger banks to our peer group.

 

  Even though we are above the median of our peers in terms of asset size, compensation should not be targeted above the median of our peers.

 

  Shareholders expressed concerns that the 2015 Merger Incentive Award would become a regular part of our executive compensation program.

 

  Shareholders suggested that we increase our CEO stock ownership guideline.

 

 

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What We Did

As outlined below, the Compensation Committee carefully considered the constructive feedback we received during our engagement sessions and enhanced our executive compensation programs retroactively for 2016 with more substantial changes effective for 2017. These changes fit well within our overall compensation philosophy and the objectives of our executive compensation program.

 

Compensation Changes Effective in 2016

 

   In June 2016, we retroactively added Total Shareholder Return (“TSR”) as a payment modifier that can decrease payments under the previously granted 2016-2018 Long-Term Incentive Performance (“LTIP”) awards based on BB&T’s TSR performance relative to its peer group.

 

   We increased the CEO’s stock ownership requirement from 5x salary to 6x salary.

 

   We made no 2016 base salary increases for our 2015 NEOs.

 

   We did not increase compensation target opportunities for our 2015 Named Executive Officers (“NEOs”).

 

   We revised the peer group to add one bank larger than us (Wells Fargo) and one bank closer in size (Citizens Financial).

 

   We continue to reinforce that the 2015 Merger Incentive Award was a one-time event that will not be repeated.

 

Compensation Changes Effective in 2017*

 

   We added performance share units to the long-term incentive program to comprise 50% of equity awards.

 

   We eliminated the use of stock options.

 

   We adjusted the long-term incentive mix to provide for an equal mix of performance share units, LTIP, and restricted stock units, resulting in two-thirds of long-term incentives being subject to robust performance criteria and all awards being subject to a performance hurdle.

 

   We included Total Shareholder Return as a payment modifier in our long-term incentive program, that can increase or decrease the LTIP award and performance share unit award payouts based on BB&T’s TSR performance relative to its peer group.

 

   We extended our risk-based forfeiture provision to all long-term incentive awards. Awards are subject to reduction or forfeiture if the Compensation Committee determines that there has been a significant negative risk outcome.

 

   We made no increases in base salaries for our NEOs.

 

*   See “Section 2—2017 Changes to Our Compensation Program” for a detailed review of the compensation changes effective in 2017.

The Compensation Committee recognizes that executive compensation practices in the banking industry continue to evolve due to feedback from regulators and shareholders. The Compensation Committee closely monitors changes in market compensation practices and is responsive to feedback it receives on our programs. 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.

 

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2016 BB&T Performance and Achievements

 

 

 

2016 Strategic Accomplishments

 

  2016 was a strong and profitable year with record earnings, expansion into new markets and a healthy return to our shareholders. Our accomplishments in 2016 demonstrate the power of our vision, mission and values.

 

  We extended our long-standing commitment to leadership development for our clients and communities through our BB&T Leadership Institute, Lighthouse Project community service initiative, and Financial Foundations course to increase the financial proficiency of high school students.

 

  We ramped up our digital strategy by adding talent and technology to meet our clients’ evolving needs and expectations.

 

  We have continued to grow our digital platform, U by BB&T, which allows clients to do business with us wherever they are on whatever device they choose.

 

  We were able to approve a 7% increase in our quarterly dividend, achieve a 28.4% total return to

 

  

shareholders and were approved to conduct share repurchases totaling $840 million. Our dividend yield and long-term returns are among the best in the industry.

 

  We successfully integrated our National Penn acquisition and began capitalizing on our earlier acquisitions of Susquehanna Bancshares and The Bank of Kentucky, allowing us to create new capital markets relationships in Philadelphia and Cincinnati.

 

  We completed our second largest insurance acquisition – Swett & Crawford, a century-old wholesale broker with a strong and talented team of industry specialists.

 

  We made important changes in our Executive Management team, adding five new leaders, creating the new positions of chief digital officer and chief client experience officer, and appointing new leadership to the role of chief information officer.

 

  We invested approximately $1 billion in new infrastructure systems over the past three years, positioning us for future growth.

 

  
  
  
  

 

 

2016 Financial Achievements

 

  Record net income available to common shareholders of $2.3 billion.

 

  Asset growth of 4.4% year-over-year.

 

  Average non-interest bearing deposits increased 15% year-over-year, second highest growth rate in our peer group.

 

  Record revenue of $11.0 billion, up 12.3% from 2015.

 

  Nonperforming assets represented 0.57% of loan-related assets, best in our peer group (peer group average 0.99%).

 

  

  Strong capital and liquidity ratios.

 

  Credit ratings that are among the highest in our industry.

 

  Strong absolute total return to shareholders of 28.4%.

 

  Total shareholder return exceeded peer average and S&P Financials Index for the 10, 15, and 20 year periods.

 

  BB&T achieved a record stock price during the calendar year, which as of the record date was $48.26.

 

   

 

LOGO

  

 

LOGO

 

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2016 Target Pay Decisions and Significant “Performance-Based” Percentage of Compensation

 

The charts below for Kelly King and our other NEOs illustrate the target compensation established for 2016, consisting of base salary, annual incentive awards, 2016-2018 LTIP awards and RSU and stock option awards granted in 2016. The charts also show the large percentage of our NEO compensation that is variable and performance-based.

 

 

LOGO

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

 

    Earnings Per Share*

 

    Loans

 

    Net Interest Margin

 

    Return on Assets*

 

    Return on Common Equity*

 

    Total Shareholder Return*

 

    Net Charge-Offs /Average Loans

 

    Non-Performing Assets / Loans
& Other Real Estate Owned

 

    Common Equity Tier 1 Ratio

   
   

 

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

Four of these metrics are used directly in BB&T’s executive compensation program:

 

    Return on assets (“ROA”) and earnings per share (“EPS”): EPS and ROA are used in the Annual Incentive Award as clear and commonly used measures of profitability and our return on investment. 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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    Return on common equity (“ROCE”): Historically, we have used a three-year average ROCE to measure our long-term profitability for LTIP awards. Beginning in 2017, we will also use the three-year average ROCE as a metric in our performance share unit awards. 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.

 

    Total shareholder return (“TSR”): Beginning with our 2016-2018 LTIP, we use relative TSR as a payment modifier. Payments under our 2016-2018 LTIP are subject to reduction based on TSR percentile performance relative to our peer group TSR for the three-year performance period. Beginning in 2017, we will use relative TSR as a downward or upward modifier in our LTIP and performance share unit awards.

The Compensation Committee believes these metrics are key drivers of sustained and longer-term shareholder value.

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
   pay for performance; approximately 86% of CEO, and approximately 79% of the other NEOs’ total target compensation for 2016 is based on BB&T’s performance (EPS, ROA, ROCE, TSR)    Î    we don’t offer incentives that would provide payouts for negative returns
  

beginning in 2017, two-thirds of long-term incentives, including 50% of equity awards, include robust performance criteria

   Î    we don’t reprice stock options
  

incorporate both absolute and relative performance goals into our incentive plans

   Î    we don’t provide dividends on unvested equity awards to our NEOs
   provide for adjustments of payouts and/or forfeiture of unvested awards for negative risk outcomes    Î    we don’t offer broad-based perquisites such as personal club memberships, corporate housing, and personal use of company aircraft
  

base compensation decisions on median compensation data of the peer group

   Î    we don’t gross-up payments for excise taxes
   utilize a broad-reaching clawback policy    Î    we don’t permit hedging or speculative trading of BB&T common stock

   maintain rigorous stock ownership requirements    Î    we don’t award stock options (beginning in 2017)
   restrict pledging of BB&T common stock        
   review tally sheets and risk scorecards for each executive        
   retain an independent compensation consultant who performs services solely for the Compensation Committee        
   provide a pension plan for eligible associates, which provides us with an important retention tool for our NEOs (as demonstrated by their average tenure of 30 years)          

 

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REGULATORY CONSIDERATIONS IN SETTING COMPENSATION

Banking regulators continue to 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 focused our compensation philosophy on performance-based compensation, regulatory guidance has influenced changes to our compensation programs over the last few years. The Compensation Committee continues to assess our pay practices to balance risks with our commitment to linking NEO pay to our performance while maintaining compensation programs that are market competitive and shareholder aligned.

 

Section 2—2017 Changes to Our Compensation Program

In February 2017, the Compensation Committee, taking into account shareholder feedback, made significant enhancements to our executive compensation program. These changes significantly increased the amount of long-term incentives subject to robust performance criteria and better aligned our compensation with market practice. The Compensation Committee’s changes enhance the long-term incentive program as follows:

 

Enhanced Mix of Long-Term Incentives and Elimination of Stock Options

 

The Compensation Committee enhanced the mix of the long-term incentives as follows:

 

    Granted PSUs Representing 50% of Equity Awards: In 2017, 50% of the equity awards granted are in the form of Performance Share Units (“PSUs”) with the remaining equity awards granted in the form of Restricted Stock Units (“RSUs”).  

 

    Eliminated Stock Options: In consideration of shareholder feedback and to reinforce our focus on PSUs, in 2017 we eliminated the use of stock options.  

 

    Included a TSR Payment Modifier in the LTIP: The 2017-2019 Long-Term Incentive Performance Award (“LTIP”) incorporates a total shareholder return (“TSR”) modifier that can increase or decrease payments based on BB&T’s TSR performance.  

 

    Realigned the Long-Term Incentive Mix: For 2017, two-thirds of long-term incentives (PSUs and LTIP) are subject to robust performance criteria.  

 

    Subjected 100% of Long-Term Incentives to a Performance Hurdle: For 2017, all long-term incentives are subject to a performance hurdle and risk-based vesting criteria.  

This enhanced mix in the long-term incentive program is demonstrated by the comparison of 2016 and 2017 target opportunities set forth below for our Chief Executive Officer, Kelly S. King. The target opportunities are stated as a percentage of base salary.

 

      2016    2017
Name    LTIP    RSUs    Stock Options    LTIP    RSUs    PSUs

Kelly S. King

   160%    224%    56%    146%    147%    147%

 

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New Compensation Vehicle – Performance Share Units (PSUs)

 

Our PSUs include the following design features:

 

    Performance Period: Three years.  

 

    Vesting requirements and forfeiture: Three-year cliff vesting subject to BB&T exceeding a performance hurdle and adjustments for negative risk outcomes. Before vesting, 100% of the award is subject to reduction or forfeiture if there is an aggregate operating loss for the performance period or if a negative risk outcome occurs as determined by the Compensation Committee.  

 

    Performance Metrics:

 

    Return on Common Equity: Payouts will be based on BB&T’s return on common equity (“ROCE”) performance relative to our peer group as follows (payout percentages will be interpolated for results between the 25th and 62  12 percentiles).  

2017 PSU 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%
Target   50th   100%
Maximum   62  12 or greater   125%

 

  *   In addition, BB&T must first meet or exceed a 3% average ROCE performance hurdle in order for the payout to be earned.

If the performance hurdle is met and after calculating the PSU payouts based on relative ROCE performance, the payouts are then subject to increase or decrease based on a TSR modifier measuring our TSR percentile performance relative to our peer group.

 

    Total Shareholder Return Modifier: Payouts calculated based on relative ROCE performance are subject to a TSR modifier (increase or decrease) based on our TSR percentile performance relative to our peer group for the three-year performance period. Payments under the 2017 PSUs will be adjusted as follows (modified payments would be interpolated for results between the 25th and 75th percentiles):  

 

Percentile Performance of BB&T TSR

Relative to Peer Group TSR

  TSR Modifier     
< 25th   20% reduction     
50th   No adjustment     
³ 75th   20% increase*     

 

  *   Subject to overall payout cap of 125% of the PSUs.

 

    Maximum Payments: The maximum payout level for the 2017 PSUs is 125% of the PSUs awarded.  

 

    No Dividends: Dividends are not paid on unvested PSUs.

 

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Enhanced Long-Term Incentive Performance Award (LTIP)

 

We also further enhanced our LTIP by adding the following design features:

 

    TSR Modifier: 2017-2019 LTIP awards are subject to a TSR modifier based on our TSR percentile performance relative to our peer group TSR for the three-year performance period. The 2017-2019 LTIP will continue to measure and reward BB&T’s return on common equity performance relative to the Company’s peer group over the three-year performance period. Payments are subject to increase or decrease in an identical manner as the 2017 PSUs with an overall payment cap of 125% of the target award.  

 

    Vesting and Forfeiture: Three-year cliff vesting subject to BB&T exceeding a performance hurdle and adjustment for negative risk outcomes. Before vesting, 100% of the award is subject to reduction or forfeiture if there is an aggregate operating loss for the performance period or if a negative risk outcome occurs as determined by the Compensation Committee.  

 

Other 2017 Compensation Decisions

 

    No Salary Increases: We made no increases in base salaries for our NEOs in 2017.

Section 3—2016 Executive Compensation Program and Pay Decisions

Compensation Philosophy

 

The Compensation Committee structures our overall compensation program for Executive Management with an emphasis on long-term, performance-based compensation, based on the following guiding principles:

 

    Compensation and reward systems are designed to award performance over different time horizons to support and drive our strategic goals and produce positive business results over the longer term;

 

    Total compensation is based on a mix of performance goals and aligned with shareholder interests by providing a significant percentage of compensation in equity;

 

    Significant amounts of compensation are linked to the achievement of set performance goals, to promote balance and discourage imprudent risk taking;

 

    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;

 

    Executive Management must have significant stock ownership requirements, to better align their interests with our shareholders; and

 

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

BB&T compensation programs are designed to align with BB&T’s values and objectives and assist BB&T in supporting its associate value proposition. Specifically, compensation programs are designed to accomplish the following:

 

    ensure a strong alignment of the interests of BB&T’s shareholders, associates, and the Company;

 

    pay for performance, both short-term and long-term;

 

    reward career associates;

 

    pay competitively, across salary grades and geographies;

 

    apply compensation policy in an internally consistent manner; and

 

    provide compensation opportunities that are based on relative industry performance and are aligned with internal performance and BB&T risk management and corporate governance guidelines.

 

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2016 Compensation Program Elements

 

Our executive compensation is heavily performance-based, with base salary representing the only fixed element. Below are the four components of our executives’ current compensation:

 

Compensation
Element
  Description/Objectives   Key Features and Metrics Used
Base Salary  

   Based on scope of leadership responsibilities, years of experience, performance and contributions to BB&T

 

   Fixed cash compensation, reviewed and adjusted annually, as appropriate

Annual Incentive

Awards

 

   Cash incentive rewarding annual corporate performance

 

   Rewards financial results that are expected to have a meaningful correlation to long-term shareholder value

 

   EPS (weighted at 60%)

 

   ROA relative to our peer group (weighted at 40%)

 

   Performance levels (threshold, target, maximum) are established relative to Board approved EPS internal forecasts and relative ROA performance

Incentive Stock

Awards

 

   Rewards sustainable, long-term appreciation of BB&T’s stock price

 

   Aligns NEO compensation with appreciation of BB&T’s stock price

 

 

   Stock options and RSUs vest ratably over 3 years

 

   Awarded 20% in stock options and 80% in RSUs (in 2017 we eliminated stock options to provide greater focus on performance share units)

 

   100% of the unvested award is subject to adjustment and/or forfeiture for any negative risk outcomes, including if the minimum performance criteria are not met

 

   Dividends are not paid on unvested RSUs

LTIP Awards  

  Rewards achievement of superior relative three-year average ROCE performance and relative TSR performance

 

  LTIP Awards are usually paid in cash

 

  Historical payments were based on BB&T ROCE performance relative to our peer group

 

  Payments under the 2016-2018 LTIP award were revised based on shareholder feedback; subject to potential reduction based on our TSR performance relative to our peer group for the performance period

See “Section 2—2017 Changes to Our Compensation Program” for a detailed review of the compensation changes effective in 2017.

 

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Summary of Overall Compensation

 

The table below summarizes the actual NEO compensation paid for the 2016 performance year, which consists of base salary, annual incentive awards, 2014-2016 LTIP awards and RSU and stock option awards granted in 2016. Additional detail for each of these items follows this table.

2016 COMPENSATION OVERVIEW TABLE

 

Name   Salary  
($)  
 

Annual  
Incentive  
Award  

($)  

  Option  
Awards(1)(2)  
($)   
  Restricted  
Stock Unit  
Awards(1)(2)  
($)  
 

LTIP  

($)  

 

2016  
Total  

($)  

Kelly S. King       1,075,000       2,253,469   601,998       2,407,982       2,087,500              8,425,949
Christopher L. Henson       700,000       978,250   244,998       979,981       856,771       3,760,000
Ricky K. Brown       666,583       931,550   244,998       979,981       842,848       3,665,960
Clarke R. Starnes III       590,000       729,388   186,437       745,747       649,688       2,901,260
Daryl N. Bible       590,000       729,388   186,437       745,747       649,688       2,901,260
Barbara F. Duck       507,083       545,115   147,052       588,200       466,944       2,254,394
Donna C. Goodrich       507,083       545,115   147,052       588,200       466,944       2,254,394

 

(1)   Amounts reflect the value the Compensation Committee sought to deliver through the restricted stock unit and stock option awards granted in February 2016. 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.
(2)   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 and includes 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.

Base Salary

 

The following table shows base salaries for each of our NEOs for 2016. Based upon a review of market practices salaries remain unchanged from 2015, except for Ms. Duck and Ms. Goodrich (both new NEOs in 2016), whose salaries were increased effective February 2016 to reflect their additional responsibilities.

 

Name  

2016  
Base Salary  

($)  

 

%  
Increase  

Kelly S. King   1,075,000  
Christopher L. Henson   700,000  
Ricky K. Brown   700,000  
Clarke R. Starnes III   590,000  
Daryl N. Bible   590,000  
Barbara F. Duck   510,000   7.4
Donna C. Goodrich   510,000   7.4

 

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Annual Incentive Award

 

Our Annual Incentive Award is a cash incentive based on the achievement of annual corporate performance goals established by the Compensation Committee. Performance goals are based upon our internal earnings plan and performance relative to our peer group.

 

    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 2016, EPS was weighted at 60%, while ROA was weighted at 40%.

 

    Our EPS target goal is based on our internal earnings plan, with a maximum goal set at 5% above the target, and a minimum goal set at 10% below the target.

 

    Our ROA target goal is based on BB&T’s ROA relative to the ROA of our peers for 2016.

 

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

Each of our named executive officers has a target award opportunity which represents the amount of Annual Incentive Award received if we achieve the performance goals at the target performance level. The table below summarizes the Annual Incentive Award opportunity for 2016 at target level of award. For 2016, target opportunities did not increase from 2015, except for Mrs. Duck and Mrs. Goodrich, whose targets were adjusted to reflect increased responsibilities.

 

Name   

2016 Target Annual

Incentive Opportunity

(as a % of base salary)

Kelly S. King    195%
Christopher L. Henson    130%
Ricky K. Brown    130%
Clarke R. Starnes III    115%
Daryl N. Bible    115%
Barbara F. Duck    100%
Donna C. Goodrich    100%

 

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2016 ANNUAL INCENTIVE AWARD PERFORMANCE MATRIX

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

 

     EPS (60% of Annual Incentive
Award)
  ROA (40% of Annual Incentive Award)     

Level of

Achievement

  Performance  

Payout as %

of Participant’s

Target Award
Opportunity

 

Performance

Relative to Peer

Group

 

Payout as %

of Participant’s

Target Award
Opportunity

 

Total Payout as

% of Target
Award Opportunity

Below Threshold

  Less than $2.65   0%   Less than 25th Percentile   0%   Min – 0%

Threshold

  $2.65   25%   25th Percentile   50%    

Target

  $2.95   100%   50th Percentile   100%    

Maximum

  $3.10   150%(1)   75th Percentile   150%(1)   Max – 125%
           

Actual Results

  $2.87(2)   79.2%   1.16%, or 92nd Percentile(2)   150%    

Weighting

      60%       40%    

Payout per Measure

  47.5%       60%    
 

Total Annual Incentive Payout: 107.5%

 

(1)   Annual Incentive Award combines EPS and ROA performance, with the final payout capped at 125% of the target award opportunity.
(2)   The EPS and ROA performance presented herein includes adjustments to BB&T’s GAAP net income by the Compensation Committee. For additional detail regarding these adjustments, please refer to Annex A.

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

2016 ANNUAL INCENTIVE AWARD PAYMENTS

 

Name(1)   2016
($)
Kelly S. King   2,253,469

Christopher L. Henson

    978,250
Ricky K. Brown(2)     931,550

Clarke R. Starnes III

    729,388
Daryl N. Bible     729,388

Barbara F. Duck

    545,115
Donna C. Goodrich     545,115

 

(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 2016 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 5.
(2)   Amounts for Mr. Brown reflect his retirement effective December 15, 2016.

Long-Term Incentives

 

BB&T’s long-term incentive program provides compensation awarded under the BB&T Corporation 2012 Incentive Plan (the “2012 Incentive Plan”). For 2016, these awards reflected a mix of cash and equity and include the Incentive Stock Program and LTIP Program, as discussed below.

 

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INCENTIVE STOCK PROGRAM

The 2016 Incentive Stock Awards for each NEO included nonqualified stock options (20% of award) and RSUs (80% of award). The 2016 Incentive Stock Awards are subject to reduction or 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. Other features of our RSUs and stock options are described below:

Restricted Stock Units: 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 over the past several years. The RSUs have the following features:

 

    Granted as a contingent share of BB&T common stock that is not earned or issued until specific conditions are met

 

    No dividends are paid on the shares underlying the RSUs until the units vest and shares are issued

 

    Consistent with peer group practices, RSU awards 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

Stock Options: Stock options awarded for 2016 have the following characteristics:

 

    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

 

    Expire on the tenth anniversary of the date of grant

 

    Consistent with peer group practices, stock options have three-year vesting schedule

 

    Exercise price is the market closing price on the date of grant

2016 INCENTIVE STOCK AWARDS

 

 

Name  

Total Delivered Value of

  Stock Options and  

RSUs ($)(1)

Kelly S. King   3,009,980
Christopher L. Henson   1,224,979
Ricky K. Brown   1,224,979
Clarke R. Starnes III   932,184
Daryl N. Bible   932,184
Barbara F. Duck   735,252
Donna C. Goodrich   735,252

 

(1)   Reflects the value the Compensation Committee seeks to deliver in making the award. The 2016 stock option and restricted stock unit awards were granted on February 23, 2016. 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 ($3.87). 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 ($32.10). For additional detail, please refer to “Compensation of Executive Officers—2016 Outstanding Equity Awards at Fiscal Year-End.”

 

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LTIP PROGRAM

LTIP awards reward performance using both an absolute performance goal for ROCE performance and a relative ROCE performance goal over a three-year cycle. Each year begins a new three-year performance cycle, and performance measures and payout range are established at the beginning of the cycle. We must achieve an average absolute ROCE of at least 3% for the three-year performance period. Only if this absolute performance goal is reached is ROCE performance relative to the peer group measured. Payouts are determined in accordance with the performance matrix set forth below. As described in more detail below, the 2016-2018 LTIP was retroactively adjusted and payments are subject to reduction based on TSR performance relative to our peer group for the performance period.

LTIP awards have historically been paid in cash, but at the discretion of the Compensation Committee, may be paid in shares of BB&T common stock, cash or both. The Committee believes that with approximately 64% of the NEOs’ long-term incentive compensation currently consisting of equity, it was appropriate to pay the 2014-2016 LTIP awards in cash, especially in light of the substantial BB&T common stock holdings of each of the NEOs. The 2014-2016 LTIP award is calculated as follows:

 

 Target Award Opportunity 
(as % of base  salary)   

    X      3-Year Average Salary      X     Performance Scale Payout %

2014-2016 LTIP Cycle (Paid in March 2017)

The performance matrix for the 2014-2016 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. Our average ROCE performance for 2014-2016 was 9.14%, which placed us in the 64th percentile of our peer group and generated a payout of 125% 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.

2014-2016 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%

Actual Performance

  9.14%, or 64th percentile   125%

 

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Based on these results, executives received the following 2014-2016 LTIP payouts:

2014-2016 LTIP CYCLE PAYMENTS

 

Name  

Actual LTIP Payment, Based on  

2014-2016 Performance($)(1)

Kelly S. King

  2,087,500

Christopher L. Henson

  856,771

Ricky K. Brown

  842,848

Clarke R. Starnes III

  649,688

Daryl N. Bible

  649,688

Barbara F. Duck

  466,944

Donna C. Goodrich

  466,944

 

(1)   Under the approved formula, the actual payment is based on the actual average salary paid over the three-year performance cycle.

Changes to our 2016-2018 LTIP (Payable in 2019)

In June 2016, we made a retroactive change to our 2016-2018 LTIP. This change was made as part of our Compensation Committee’s commitment to strengthen our pay-for-performance program and based on input received from shareholders as part of our shareholder engagement program. Several shareholders recommended that we incorporate an additional performance measure into our long-term compensation program. In response to this feedback, the Compensation Committee, in consultation with our compensation consultant, retroactivity approved a change to our 2016-2018 LTIP originally granted on February 23, 2016.

As modified, payments under the 2016-2018 LTIP are subject to reduction based on our TSR percentile performance relative to our peer group TSR for the three-year performance period. Consistent with prior LTIP awards, the 2016-2018 LTIP will continue to measure and reward our ROCE performance relative to our peer group over the three-year performance period. Payments under the 2016-2018 LTIP are subject to reduction only, based on our performance relative to our peer group as follows:

 

Percentile Performance of BB&T TSR

Relative to Peer Group TSR

   Percent Reduction in Payout
< 25th    20% reduction
³ 25th and < 40th    10% reduction
³ 40th    no reduction

As a result, the 2016-2018 LTIP award will be calculated as follows:

 

 Target Award Opportunity 
 (as % of base  salary)

    X      3-Year Average Salary      X     Performance Scale

Payout %

    –     % Reduction Based on
Relative TSR Performance

Also consistent with the 2014-2016 LTIP awards, the maximum payout level for the 2016-2018 LTIP awards is 125% of the target award opportunity.

 

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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 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 Committee made for the purposes of certifying 2016 performance are included in Annex A to this proxy statement.

Unless otherwise indicated, discussions of 2016 performance for compensation purposes in this proxy statement include these adjustments made by the Compensation Committee.

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. Our NEOs do not receive perquisites such as personal club memberships, corporate housing or personal travel on the company’s aircraft.

 

Retirement Benefits

 

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 offer a traditional pension plan for our employees. This is a benefit we believe provides a competitive advantage for attracting and retaining talent.

 

    We also provide 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 ensure 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 both plans 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.

 

    Five of the six active NEOs have spent substantially all of their professional careers at BB&T and have built up significant benefits under the Pension Plan. For example, Mr. King has 44 years of service at BB&T.

 

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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 BB&T prior to retirement. The Compensation Committee believes that while the overall retirement benefits provided to the NEOs are reasonable relative to 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.

 

ASSOCIATE BENEFIT PLANS

During 2016, we maintained various associate 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 2016 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 Internal Revenue Code (during 2016, 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;

 

    disability insurance which, in the event of disability, pays an associate 50% of his or her monthly compensation, subject to a cap of $35,000 per month, however, if the coverage percentage exceeds the monthly cap, we would provide supplemental payments to a member of Executive Management to bring the monthly payment up to the percentage coverage level; and

 

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

The associate 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 associate benefits are generally on par with benefits provided by our peer group and consistent with industry standards.

 

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Section 4—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, 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.

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. In addition, the Compensation Committee regularly reviews the minutes of the Risk Committee of the Board of Directors. The purpose of these reports and review 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 members of Executive Management, other than himself, 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. Ultimately, however, decisions about individual compensation elements and total compensation of all members of Executive Management are made by the Compensation Committee, based primarily on the executive officer’s performance and our 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 regularly receives updates with respect to our on-going shareholder engagement efforts. 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 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
           Review tally sheets

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

 

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authority to limit the amount of fees the independent compensation consultant may earn from other services provided to BB&T. The Compensation Committee has retained Meridian Compensation Partners to act as the Committee’s independent compensation consultant. In this capacity, Meridian Compensation Partners performed a review of our executive compensation programs, provided peer group analyses, and advised on regulatory developments, corporate governance and best practice trends.

The Compensation Committee determined that, based on its review, Meridian Compensation Partners is independent and that its engagement did not present any conflicts of interest. In making this determination, the Compensation Committee noted that Meridian Compensation Partners (a) provides no other services to BB&T other than compensation consulting, (b) has no personal or business relationships with members of our Board or executive officers, (c) does not directly own any shares of BB&T stock, and (d) retains a written policy designed to avoid conflicts of interest that may arise. Meridian Compensation Partners 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 2016, the compensation consultant 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, including the changes approved in 2016 and 2017 as set forth under “—Shareholder Engagement and Changes to our Compensation Program”;

 

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

 

    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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Peer Group and Competitive Analyses

 

The Compensation Committee uses a peer group to perform competitive assessments of executive compensation as well as to measure performance under our annual and long-term incentive plans. The Compensation Committee approves a group of publicly-traded banks or financial services holding companies each year to serve as the peer group. In evaluating our peer group for 2016, the Compensation Committee considered a number of factors, including asset size and market capitalization. Given the limited number of banks of our size and market cap, we are positioned in the top quartile of our peer group. Based on feedback received from our shareholders and our independent compensation consultant’s advice, the Compensation Committee added two banks to the group in 2016: one larger bank (Wells Fargo) and one bank closer to BB&T in size (Citizens Financial Group). Even with the addition of the two new banks, we remain near the 75th percentile of the peers in both asset size and market capitalization.

 

BB&T 2016 PEER GROUP
v Citizens  Financial         v PNC
v Comerica         v Regions
v Fifth  Third         v SunTrust
v Huntington         v U.S.  Bancorp
v KeyCorp         v Wells Fargo

v M&T

       

v Zions

The Compensation Committee determined that this group would be used for the relative performance comparisons in our annual incentive awards (ROA) and our LTIP (ROCE, TSR). The Committee also reviewed the incentive plan design practices of this group when evaluating potential changes to our program for 2016 and 2017.

The compensation structure for Executive Management, which includes the NEOs, emphasizes variable pay based on performance. We generally compare each element of compensation as well as total compensation relative to the peer group. The Compensation Committee carefully considers its benchmarking practices. Our shareholders have told us that they prefer that compensation opportunities generally not be targeted above the median of the peer group, irrespective of our relative size. Accordingly, the Compensation Committee considers the peer compensation practices with a goal of targeting market median. Based on this goal and our prior benchmarking analyses, the Compensation Committee did not increase the target compensation for any 2015 NEOs in 2016.

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 associates based upon their level of responsibility within the Company.

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 (including 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;

 

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    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 2016 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 5—Other Aspects of BB&T’s Executive Compensation Program and Governance Practices

In addition to the key components of our executive compensation program described 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

Kelly S. King

  6x Base Salary   $6,450,000
Christopher L. Henson   3x Base Salary   $2,100,000

Ricky K. Brown

  3x Base Salary   $2,100,000
Clarke R. Starnes III   3x Base Salary   $1,770,000

Daryl N. Bible

  3x Base Salary   $1,770,000
Barbara F. Duck   3x Base Salary   $1,530,000

Donna C. Goodrich

  3x Base Salary   $1,530,000

Risk Management

 

The Compensation Committee annually considers whether our executive compensation program encourages unnecessary or excessive risk taking. In reviewing the program for risk, the goal of the Compensation Committee is to design a compensation program to encourage prudent risk management and discourage inappropriate risk-

 

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taking by granting a diverse portfolio of compensation to our NEOs 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 having fixed base salaries discourages inappropriate risk-taking. In addition, by having a significant proportion of compensation provided in the form of equity awards that have performance and retention features that extend over several years, the Compensation Committee believes that these awards do not encourage imprudent risk-taking because their ultimate value is tied to our stock price. Also, because awards are subject to long-term vesting schedules they help ensure that the NEOs have significant value tied to long-term stock price performance. Additionally, LTIP awards are based on our performance over a three-year period, encouraging our 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.

Compensation Clawbacks and Forfeiture Provisions

 

Our Board believes that the current structure of BB&T’s incentive compensation recoupment practices is appropriate, effective, 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 makes all awards under the 2012 Incentive Plan subject to recoupment, forfeiture or reduction 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. 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 executive risk scorecards and other reports, provided by our Chief Risk Officer and our Chief Compliance 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.

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. Consistent with prior years, the exercise price for each stock option grant in 2016 was the market closing price on the date of grant. For the 2016 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 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

 

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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.

Tax Considerations

 

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 federal income 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 (referred to as “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 Committee generally intends that performance-based compensation will be deductible under Section 162(m). However, our Compensation Committee retains the flexibility to pay compensation that is not deductible under Section 162(m) if the Committee determines it is in our best interest to do so. For 2016, our Annual Incentive Award and LTIP award programs are intended to be eligible for the performance-based exemption available under Section 162(m) and therefore be deductible for federal income tax purposes. 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.

As referenced in Section 3 above, the Compensation Committee employed a performance-based compensation structure for the Annual Incentive Award that we refer 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, with the exception of Ms. Duck, the Annual Incentive Awards for the covered employees were paid from a 162(m) Pool equal to 1.5% of BB&T’s 2016 income before taxes (pre-tax income), pursuant to a percentage of the pool assigned, within the first 90 days of 2016, to each covered employee (45.6% for Mr. King, 19.8% for Mr. Henson, 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. Through its exercise of negative discretion, for 2016, the Compensation Committee approved Annual Incentive Award payment amounts to covered employees that were below each covered employee’s assigned percentage of the 162(m) Pool. Because the 2016 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.

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

 

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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 we continue to improve upon our program so that its components and features are consistent with market standards and 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 our 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 independence 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 BB&T’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 year ended December 31, 2016.

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

 

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

Compensation Committee Interlocks and Insider Participation

 

The directors who constituted the Compensation Committee during some or all of 2016 were Anna R. Cablik, Eric C. Kendrick, Louis B. Lynn, Ph.D., Thomas N. Thompson and Edwin H. Welch, Ph.D. None of the individuals who served as a member of the Compensation Committee during 2016 was at any time an officer or an employee of BB&T or any of its subsidiaries or, except as set forth under “Transactions With Executive Officers and Directors—Related Person Transactions,” had any relationship with us requiring disclosure under SEC regulations.

 

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COMPENSATION OF EXECUTIVE OFFICERS

2016 SUMMARY COMPENSATION TABLE

 

Name and

Principal Position

(a)

 

  Year    

Salary

($)

   

Stock
Awards

(1)

($)

   

Option
Awards

(1)

($)

   

Non-Equity
Incentive

Plan
Compensation

(2)

($)

 

Change in
Pension
Value &
Non-Qualified
Deferred
Compensation
Earnings

(3)

($)

 

All Other
Compensation

(4)
($)

  Total
($)
  (b)     (c)     (d)     (e)     (f)   (g)   (h)   (i)
Kelly S. King     2016       1,075,000       2,122,925       601,998     4,340,969   3,189,647   279,544   11,610,083
Chairman and Chief     2015       1,056,250       2,583,019       591,499     4,096,763   3,070,931   298,430   11,696,892
Executive Officer     2014       1,000,000       2,050,870       559,998     3,400,276   6,803,966   303,653   14,118,763
Christopher L. Henson     2016       700,000       863,971       244,998     1,835,021   1,975,680   150,858   5,770,528
President and Chief     2015       691,250       1,069,201       241,938     1,741,055   1,173,107   136,024   5,052,575
Operating Officer     2014       665,000       852,383       232,747     1,350,812   2,863,816   142,711   6,107,469
Ricky K. Brown     2016       666,583       863,971       244,998     1,774,398   2,127,763   130,958   5,808,671
Senior Executive Vice     2015       691,250       1,069,201       241,938     1,741,055   1,574,421   136,024   5,453,889
President and President, Community Banking (Retired)(5)     2014       665,000       852,383       232,747     1,350,812   3,561,848   142,711   6,805,501
Clarke R. Starnes III     2016       590,000       657,466       186,437     1,379,076   1,704,775   103,852   4,621,606
Senior Executive Vice     2015       582,500       810,227       184,069     1,308,360   1,139,457   109,304   4,133,917

President and Chief

Risk Officer

    2014       560,000       648,063       176,959     1,071,738   2,794,286   114,974   5,366,020
Daryl N. Bible     2016       590,000       657,466       186,437     1,379,076      583,745   103,852   3,500,576
Senior Executive Vice     2015       582,500       810,227       184,069     1,308,360      408,120   109,304   3,402,580

President and Chief

Financial Officer

    2014       560,000       648,063       176,959     1,071,738      647,239   114,974   3,218,973
Barbara F. Duck     2016       507,083       518,569       147,052     1,012,059      850,478      76,598   3,111,839

Senior Executive Vice

President and Chief

Information Officer

                                               
Donna C. Goodrich     2016       507,083       518,569       147,052     1,012,059   1,052,288      76,598   3,313,649

Senior Executive Vice

President and Deposit, Payment and Operations

                 
Services Manager                                                

 

(1)   The amounts in column (d) and (e) reflect the grant date fair value of the restricted stock unit ($28.30 per RSU in 2016) and stock option ($3.87 per option in 2016) awards, respectively, received in each year. The assumptions used in the calculation of these amounts for awards granted in 2016, 2015, and 2014 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, 2016. 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.

 

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(2)   Column (f) contains Annual Incentive Award and LTIP payments, as indicated in the following table. 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.

2016 Information

 

Name   

2016 Annual
Incentive
Award

($)

    

2014-2016
LTIP

($)

 

Kelly S. King

     2,253,469        2,087,500  

Christopher L. Henson

     978,250        856,771  

Ricky K. Brown

     931,550        842,848  

Clarke R. Starnes III

     729,388        649,688  

Daryl N. Bible

     729,388        649,688  

Barbara F. Duck

     545,115        466,944  

Donna C. Goodrich

     545,115        466,944  

 

(3)   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.
(4)   The detail relating to “All Other Compensation” for 2016 found in column (h) to the Summary Compensation Table is as follows:

 

Name    401(k)     
Matching     
Contribution($)     
   NQDC     
Matching     
Contribution($)     
   Perquisites     
($)*      

Kelly S. King

   15,900             263,644             —         

Christopher L. Henson

   15,900            

117,063         

   17,895         

Ricky K. Brown

   15,900            

115,058         

   —         

Clarke R. Starnes III

   15,900               87,952             —         

Daryl N. Bible

   15,900               87,952             —         

Barbara F. Duck

   15,900               60,698             —         

Donna C. Goodrich

   15,900               60,698             —         

 

*   Pursuant to SEC rules, we have not reported perquisites to those NEOs where the value of the perquisites, in aggregate, is less than $10,000. Mr. Henson’s perquisites for 2016 consist of (a) the installation and maintenance of a residential security system and (b) spousal participation in limited corporate events, including travel.
(5)   Retired, effective December 15, 2016.

NARRATIVE TO 2016 SUMMARY COMPENSATION TABLE

As indicated in the 2016 Summary Compensation Table, salary as a percentage of total annual compensation for each of the NEOs in 2016 was as follows: Mr. King—9.3%; Mr. Henson—12.1%; Mr. Brown—11.5%; Mr. Starnes—12.8%; Mr. Bible—16.9%; Mrs. Duck—16.3%; and Mrs. Goodrich—15.3%.

Employment Agreements. We have entered into employment agreements with each member of Executive Management, including each NEO, to secure the services of key talent within the highly competitive financial services industry. Generally, the employment agreements are structured to carefully balance the individual financial goals of the executives relative to the needs of BB&T and its shareholders. The employment agreements

 

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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.

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.”

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. 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. 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.

 

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2016 GRANTS Of PLAN-BASED AWARDS

 

         

Estimated Future Payouts Under

Non-Equity Incentive Plan
Awards(2)(3)(4)

    Estimated Future Payouts Under
Equity Incentive Plan Awards(5)
  Exercise
or Base
Price of
Option
Awards
($/Sh)(6)
   

Grant Date Fair

Value of Stock

and Option

Awards ($)(7)

 
Name  

Grant

Date

  Threshold
($)
   

Target

($)

    Maximum
($)
    Threshold
(#)
    Target
(#)
    Maximum
(#)
   
(a)   (b)   (c)     (d)     (e)     (f)     (g)     (h)   (k)     (l)  
Kelly S. King                    
Stock Options   2/23/2016             155,555         $32.10       601,998  
Restricted Stock Units   2/23/2016             75,015           2,122,925  
Annual Incentive Award   2/23/2016     314,438       2,096,250       2,620,313              
2016-2018 LTIP(1)   2/23/2016     711,208       1,778,021       2,222,526                                      
Christopher L. Henson                    
Stock Options   2/23/2016             63,307         $32.10       244,998  
Restricted Stock Units   2/23/2016             30,529           863,971  
Annual Incentive Award   2/23/2016     136,500       910,000       1,137,500              
2016-2018 LTIP(1)   2/23/2016     289,445       723,613       $904,516                                      
Ricky K. Brown                    
Stock Options   2/23/2016             63,307         $32.10       244,998  
Restricted Stock Units   2/23/2016             30,529           863,971  
Annual Incentive Award   2/23/2016     136,500       910,000       1,137,500              
2016-2018 LTIP(1)   2/23/2016     289,445       723,613       904,516                                      
Clarke R. Starnes III                    
Stock Options   2/23/2016             48,175         $32.10       186,437  
Restricted Stock Units   2/23/2016             23,232           657,466  
Annual Incentive Award   2/23/2016     101,775       678,500       848,125              
2016-2018 LTIP(1)   2/23/2016     219,565       548,913       686,141                                      
Daryl N. Bible                    
Stock Options   2/23/2016             48,175         $32.10       186,437  
Restricted Stock Units   2/23/2016             23,232           657,466  
Annual Incentive Award   2/23/2016     101,775       678,500       848,125              
2016-2018 LTIP(1)   2/23/2016     219,565       548,913       686,141                                      
Barbara F. Duck                    
Stock Options   2/23/2016             37,998         $32.10       147,052  
Restricted Stock Units   2/23/2016             18,324           518,569  
Annual Incentive Award   2/23/2016     76,063       507,083       633,854              
2016-2018 LTIP(1)   2/23/2016     178,919       447,297       559,121                                      
Donna C. Goodrich                    
Stock Options   2/23/2016             37,998         $32.10       147,052  
Restricted Stock Units   2/23/2016             18,324           518,569  
Annual Incentive Award   2/23/2016     76,063       507,083       633,854              
2016-2018 LTIP(1)   2/23/2016     178,919       447,297       559,121                                      

 

(1)   LTIP awards are a component of the 2012 Incentive Plan. LTIP awards may be paid in the form of cash or stock at the discretion of the Compensation Committee. However, since 1996 awards have been paid only in cash. For that reason, LTIP awards are disclosed under the “Estimated Future Payouts Under Non-Equity Incentive Plan Awards” columns of this table. When the threshold, target and maximum payments were established in 2016 for the LTIP, such payments were based on each executive’s base salary for 2016 with assumptions made for increases in base salary for subsequent years in the performance cycle. The actual payment, if any, will be based on the actual average salary over the three-year performance cycle. For a discussion of the LTIP target award opportunities, please see the Compensation Discussion and Analysis. For our 2016-2018 LTIP, any payouts will be subject to reduction based on TSR percentile performance relative to our peer group TSR for the three-year performance period.
(2)   The amounts shown in column (c) reflect the minimum payment level possible under the applicable award. For the Annual Incentive Award, the minimum payment is 15% of the target amount, which is presented in column (d). For the LTIP, the minimum payment is 40% of the target amount, which is presented in column (d). Please see the Compensation Discussion and Analysis for additional details on the structure of the LTIP and Annual Incentive Award.
(3)   The amounts shown in column (d) reflect the target payment level under the applicable award. Please see the Compensation Discussion and Analysis for additional detail on the structure of the LTIP and Annual Incentive Award.
(4)   The amounts shown in column (e) reflect the maximum payment level possible under the applicable award. For the Annual Incentive Award and the LTIP, the maximum payment is 125% of the target amount, which is presented in column (d). Please see the Compensation Discussion and Analysis for additional detail on the structure of the LTIP and Annual Incentive Award.
(5)   If the performance criteria applicable to 2016 RSUs and stock option awards are not met, up to 100% of the unvested portion of the award is subject to forfeiture.
(6)   In accordance with the 2012 Incentive Plan, the option exercise price is the closing price of BB&T Common Stock on the date of grant.
(7)   This column reflects the grant date fair value, computed in accordance with SEC rules, of stock options and restricted stock units granted in 2016. Please refer to Note (1) in the Summary Compensation Table for additional detail on the grant date fair value of awards.

 

68    BB&T Corporation | 2017 Proxy Statement


Table of Contents
Compensation of Executive Officers    LOGO

 

 

2016 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

 

    OPTION AWARDS   STOCK AWARDS
Name  

Number of

Securities

Underlying

Unexercised

Options

Exercisable

(#)

   

Number of

Securities

Underlying

Unexercised

Options

Unexercisable

(#)

   

Equity

Incentive

Plan

Awards:

Number of

Securities

Underlying

Unexercised

Unearned

Options

(#)

   

Option

Exercise

Price

($)

   

Option

Expiration

Date

   

Number of

Shares or

Units of
Stock that

Have Not
Vested

(#)

   

Market

Value of

Shares or

Units of

Stock That
Have Not
Vested ($)

   

Equity
Incentive Plan

Awards:
Number of
Unearned

Shares, Units
or Other
Rights
That Have Not
Vested
(#)

   

Equity

Incentive Plan

Awards:

market or

Payout

Value of

Unearned

Shares,

Units or

Other

Rights that

Have Not

Vested

($)

 
(a)   (b)     (c)     (d)     (e)     (f)     (g)     (h)     (i)     (j)  

Kelly S. King

    126,294           44.15       2/20/2017           19,886 (4)      935,040  
      164,062           27.75       2/23/2020           41,270 (5)      1,940,515  
      126,372           27.73       2/22/2021           13,620 (6)      640,412  
      180,789           30.09       2/21/2022           75,015 (7)      3,527,205  
      101,806           30.08       2/26/2023            
      47,738         23,873 (1)      37.55       2/25/2024            
      40,237         80,477 (2)      38.22       2/24/2025            
      0               155,555 (3)      32.10       2/23/2026                                  

Christopher L. Henson

    52,362           44.15       2/20/2017           8,264 (4)      388,573  
      71,875           27.75       2/23/2020           16,881 (5)      793,745  
      57,010           27.73       2/22/2021           5,950 (6)      279,769  
      73,776           30.09       2/21/2022