DEF 14A 1 d521176ddef14a.htm DEF 14A DEF 14A
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

(Rule 14A-101)

INFORMATION REQUIRED IN PROXY STATEMENT

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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LOGO


Table of Contents

LOGO

Dear Fellow Shareholder:

You are cordially invited to attend the Annual Meeting of Shareholders of BB&T Corporation at 11:00 a.m. (EDT) on Tuesday, April 24, 2018. This year’s meeting will be held in Winston-Salem, North Carolina at the Benton Convention Center, 301 West Fifth Street. Shareholders as of the record date of February 14, 2018 are invited to attend.

We are again providing proxy materials to our shareholders primarily through the Internet. We have found this process significantly contributes to our sustainability efforts by lowering the cost of our annual proxy campaign and saving paper. We hope this continues to offer you a convenient way to access our proxy materials. Please read the 2018 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 James A. Faulkner and Stephen T. Williams for their service and contributions to our company. Both were instrumental in guiding us through the changing economic and regulatory landscape of the financial crisis and we have greatly benefited from their reliable judgment and commitment to our vision and mission.

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 24, 2018

   11:00 a.m. EDT   

Benton Convention Center

301 West Fifth Street

Winston-Salem, NC 27101

 

AGENDA

  ·   Election of the 14 directors named in the proxy statement, each for a one-year term expiring at the 2019 Annual Meeting of Shareholders
  ·   Ratification of the appointment of our independent registered public accounting firm
  ·   Advisory vote to approve BB&T’s executive compensation program
  ·   Approval of an amendment to the BB&T Corporation bylaws eliminating supermajority voting provisions
  ·   A shareholder proposal to decrease the percentage ownership required to call a special shareholder 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 14, 2018.

 

If you are attending the meeting, you will be asked to present your admission ticket, proof of stock ownership as of the record date, 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, 2018

 

 

  Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting To Be
Held on April 24, 2018

 

A copy of this proxy statement is available at http://www.edocumentview.com/BBT. Also available at this website is the 2017 Annual Report, which highlights summary financial information about BB&T, and our Annual Report on Form 10-K for the year ended December 31, 2017.

 


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LOGO

 

Forbes ranked BB&T as the top large bank among America’s Best Large Employers for 2017. Named on the FORTUNE “World’s Most Admired Companies®” list in the superregional bank category in 2017. BB&T has been named one of the 2017 Best Banks in America by Forbes. BB&T received 24 Greenwich Excellence Awards in Small Business and Middle Market Banking from Greenwich Associates for our overall satisfaction and outstanding client service in 2017. BB&T was recognized as a ‘Contender’ in Javelin Strategy & Research’s 2017 Mobile Banking Awards in the Functionality category among the nation’s top 28 financial institutions. The U.S. Small Business Administration honored BB&T as the 2017 SBA Export Lender of the Year for large lending institutions. BB&T achieved the highest possible score of 100 on the Human Rights Campaign Foundation’s Corporate Equality Index for 2018, reflecting BB&T’s adherence to policies and practices that increase inclusion for lesbian, gay, bisexual and transgender employees. BB&T was named a 2017 Corporate Champion by the Women’s Forum of New York for having 25 percent or more women on our corporate board. BB&T is one of the top five mobile bank apps in the 2017 Global Market Intelligence Mobile Bank App ranking.


Table of Contents
TABLE OF CONTENTS

 

PROXY STATEMENT SUMMARY      1  
PROPOSAL 1 – ELECTION OF DIRECTORS      5  
CORPORATE GOVERNANCE MATTERS      14  

CORPORATE GOVERNANCE GUIDELINES

     14  

DIRECTOR INDEPENDENCE

     14  

BOARD SIZE

     15  

STRATEGIC DIRECTION AND PLANNING

     15  

BOARD LEADERSHIP STRUCTURE

     15  

STANDING BOARD COMMITTEES, MEMBERSHIP AND ATTENDANCE AND LEAD DIRECTOR RESPONSIBILITIES

     15  

SHAREHOLDER ENGAGEMENT PROGRAM

     18  

BB&T’S CULTURE

     19  

ETHICS AT BB&T

     20  

CORPORATE SOCIAL RESPONSIBILITY REPORT

     20  

NOMINATING AND CORPORATE GOVERNANCE COMMITTEE DIRECTOR NOMINATIONS

     21  

MAJORITY VOTING AND DIRECTOR RESIGNATION POLICY

     22  

BOARD SKILLS AND TRAINING PROGRAM

     22  

BOARD REFRESHMENT AND SUCCESSION
PLANNING

     23  

MANAGEMENT SUCCESSION PLANNING

     23  

STATEMENT OF POLITICAL ACTIVITY

     23  

POLICY FOR ACCOUNTING AND LEGAL COMPLAINTS

     23  

RISK OVERSIGHT

     24  

COMMUNICATIONS WITH THE BOARD OF DIRECTORS

     25  
PROPOSAL 2 – RATIFICATION OF THE APPOINTMENT OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM      26  

FEES TO AUDITORS

     26  

AUDIT COMMITTEE PRE-APPROVAL POLICY

     27  

AUDIT COMMITTEE REPORT

     28  
PROPOSAL 3 – ADVISORY VOTE TO APPROVE BB&T’S EXECUTIVE COMPENSATION PROGRAM      29  
COMPENSATION DISCUSSION AND ANALYSIS      30  

SECTION 1 – EXECUTIVE SUMMARY

     30  

SECTION 2 – OUR EXECUTIVE COMPENSATION PROGRAM ELEMENTS

     33  

SECTION 3 – OUR EXECUTIVE COMPENSATION PROGRAM PAY DECISIONS

     36  

SECTION 4 – BB&T’S EXECUTIVE COMPENSATION PROCESS

     43  

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

     46  
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION      48  
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION      48  
COMPENSATION OF EXECUTIVE OFFICERS      49  

2017 SUMMARY COMPENSATION TABLE

     49  

2017 GRANTS OF PLAN-BASED AWARDS

     51  

2017 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

     52  

OPTION EXERCISES AND STOCK VESTED IN 2017

     53  

2017 PENSION BENEFITS

     54  

2017 NON-QUALIFIED DEFERRED COMPENSATION

     55  

POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL

     56  
COMPENSATION OF DIRECTORS      60  

2017 DIRECTOR COMPENSATION TABLE

     60  
PAY RATIO DISCLOSURE      62  
PROPOSAL 4 – APPROVAL OF AN AMENDMENT TO THE BB&T CORPORATION BYLAWS ELIMINATING SUPERMAJORITY VOTING PROVISIONS      63  
PROPOSAL 5 – SHAREHOLDER PROPOSAL: DECREASE PERCENTAGE OF OWNERSHIP REQUIRED TO CALL SPECIAL MEETING      65  
STOCK OWNERSHIP INFORMATION      67  

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     68  
TRANSACTIONS WITH EXECUTIVE OFFICERS AND DIRECTORS      69  

LOANS TO EXECUTIVE OFFICERS AND DIRECTORS

     69  

RELATED PERSON TRANSACTIONS

     69  
VOTING AND OTHER INFORMATION      70  

SHARES ENTITLED TO VOTE AT THE MEETING

     70  

QUORUM REQUIREMENTS

     70  

VOTING PROCEDURES

     70  

VOTES REQUIRED, NON-VOTES, ABSTENTIONS, AND REVOCATIONS

     71  

DELIVERING PROXY MATERIALS

     71  

PROXY COSTS

     71  

PROPOSALS FOR 2019 ANNUAL MEETING OF SHAREHOLDERS

     72  

OTHER BUSINESS

     72  
ANNEX A – NON-GAAP FINANCIAL MEASURES      A-1  
ATTENDING THE ANNUAL MEETING     

 

 

 

 

 


Table of Contents

Proxy Statement Summary

 

 

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 2017 performance can be found in our Annual Report on Form 10-K.

2018 Annual Meeting of Shareholders

 

 

Time and Date

  

Location

  

Record Date

April 24, 2018, at 11:00 a.m. EDT

  

Benton Convention Center

301 West Fifth Street

Winston-Salem, NC 27101

   February 14, 2018

Proposals and Voting

 

Shareholders will vote on the following five proposals:

 

Proposals   Votes Required  

Board

Recommendation

 

More

Information

Election of 14 directors named in the proxy statement

  Majority of votes cast for each nominee   FOR EACH NOMINEE   Page 5

Ratify the appointment of our independent registered public accounting firm

  Majority of votes cast   FOR   Page 26

Advisory vote to approve BB&T’s executive compensation program

  Majority of votes cast   FOR   Page 29

Approval of an amendment to the BB&T Corporation bylaws eliminating supermajority voting provisions

  Two-thirds of the total number of shares outstanding   FOR   Page 63

Shareholder proposal: decrease percentage ownership required to call special meeting

  Majority of votes cast   AGAINST   Page 65

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  

 

LOGO

Internet

 

 

 

LOGO

Telephone

 

 

 

LOGO

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

 

BB&T Corporation | 2018 Proxy Statement    1


Table of Contents

Proxy Statement Summary

 

 

Shareholder Engagement and Compensation and Governance Highlights

 

Shareholder engagement plays an important part in our executive compensation and corporate governance programs. These discussions with our shareholders guide many of our compensation and governance actions.

 

Shareholder Engagement

For the past several years, BB&T’s shareholder engagement program has developed into a robust, year-round process including outreach to shareholders, analysis of results of the annual meeting of shareholders, board deliberations and response, and re-engagement with shareholders. We listen closely to our shareholders to understand their views and address their concerns about, and support for, our executive compensation and corporate governance programs. Our shareholder engagement program encompasses a variety of initiatives, including:

 

  Spring and fall telephonic meetings with our larger institutional shareholders.

 

  Telephonic meetings with our largest shareholders, led by the Compensation Committee Chair, the Nominating and Corporate Governance Committee Chair, or our Lead Director, and attended by members of Executive Management.

 

  In-person meetings with institutional shareholder representatives as requested.

 

  Regional President calls to retail shareholders.

 

  Responses to shareholder correspondence.

 

  Dialogue with shareholder proponents.

 

  Engagement with proxy advisory services.

 

In keeping with our commitment to an ongoing dialogue with our shareholders, in both the spring and fall of 2017 we contacted 48 of our 50 largest shareholders, representing approximately 47% of our outstanding shares. We also met with the proxy advisory firms followed by some of our largest shareholders. During these calls, we heard the following feedback on our compensation and corporate governance programs:

 

  Shareholders positively supported the recent improvements we made to our executive compensation programs, such as the addition of performance share units and elimination of stock options.

 

  Shareholders supported our approach to eliminate the supermajority vote requirements in our bylaws and to retain the supermajority vote requirements in our articles of incorporation, as set forth in Proposal 4.

 

  Shareholders supported an initiative permitting shareholders to call a special meeting and generally preferred a minimum ownership threshold level of greater than 10%, based on each issuer’s unique circumstances.

 

  Shareholders expressed general interest in a broad range of topics pertaining to our Board of Directors, including its tenure and diversity and cybersecurity/technology expertise.

 

 

2017 Executive Compensation Program Decisions

In early 2017, the Compensation Committee made substantial enhancements to our executive compensation program. These enhancements were the result of the Committee’s comprehensive review of our executive compensation program and followed a significant shareholder outreach by the Committee to better understand and address shareholder perspectives. As outlined below, the Committee’s actions further aligned our compensation philosophy with shareholders’ interests by placing additional emphasis on pay-for-performance.

 

  Added Performance Share Units to the Executive Compensation Program: We added performance share units, or PSUs, to the long-term incentive program which comprise 50% of equity awards.

 

  Elimination of Stock Options: We eliminated the use of stock options.

 

  Enhanced Mix of Long-Term Incentives: We adjusted the long-term incentive mix to provide for an equal mix of PSUs, LTIP awards, and restricted stock units, or RSUs, resulting in two-thirds of long-term incentives being subject to robust performance criteria and all awards being subject to a performance hurdle.

 

  Total Shareholder Return as a Payment Modifier: We included Total Shareholder Return, or TSR, as a payment modifier in our long-term incentive program, which increases or decreases the LTIP award and PSU award payouts based on BB&T’s TSR performance relative to its peer group. First introduced in our 2016-2018 LTIP as a potential negative modifier, the impact, if any, will be reflected in payouts that will be disclosed as part of 2018 executive compensation.

 

  Expanded Forfeiture Provisions to All Long-Term Awards: 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.

 

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

 

In response to these changes and enhancements, shareholders strongly approved our say-on-pay vote last year with 94% support. In addition, as described above, since the 2017 annual meeting, we contacted our largest shareholders and they continue to support the Committee’s compensation actions in 2017.

 

 

2    BB&T Corporation | 2018 Proxy Statement


Table of Contents

Proxy Statement Summary

 

 

Corporate Governance Highlights

As with our executive compensation program, we carefully consider the feedback received during our shareholder engagement sessions and in response have enhanced our governance programs over the past several years. In particular, in 2016 we adopted a proxy access bylaw, which provided our shareholders with another way to nominate directors, and began to issue an annual corporate social responsibility report addressing environmental, social and governance matters. In addition, in 2017, we continued to evolve our corporate governance program in response to shareholder feedback by amending our bylaws to grant shareholders the right to call a special meeting and by proposing to eliminate a supermajority voting provision subject to shareholder approval. These enhancements fit well within our overall philosophy and improve an already strong corporate governance framework, aspects of which are set forth below:

 

  Special Meetings: In 2017, the Board of Directors amended BB&T’s bylaws to permit shareholders owning 20% or more of our common stock to call a special meeting of shareholders.

 

  Proxy Access: Our bylaws provide for proxy access 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.

 

  Elimination of Supermajority Vote Provisions: The Board is proposing to eliminate supermajority vote requirements in our bylaws, subject to the approval of two-thirds of shares outstanding at our 2018 Annual Meeting of Shareholders.

 

  Active, Independent Board of Directors: Twelve of our fourteen directors are independent, and, in the aggregate, our directors attended over 98% of the Board and committee meetings last year in addition to Board skills and training sessions and several other BB&T events. Our directors also engaged in a comprehensive training program designed to support their responsibilities as directors. See “Corporate Governance Matters—Board Skills and Training Program.”

 

  Shareholder Engagement: We were named as a finalist for “Best Shareholder Engagement” by Corporate Secretary magazine at its 2017 Corporate Governance Awards.

 

  Corporate Social Responsibility Report: We publish annually 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.

 

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

 

  Comprehensive Board Training: Our 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

 

  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 prohibit hedging and significantly restrict pledging of our common stock by directors and Executive Management members.

 

  Annual Elections and Majority Voting for Directors: All director nominees in uncontested elections must be elected by an affirmative vote of the majority of votes cast. Each of our directors is elected for a one-year term expiring at the next Annual Meeting of Shareholders.

 

  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.

 

 

BB&T Corporation | 2018 Proxy Statement    3


Table of Contents

Proxy Statement Summary

 

 

2017 BB&T Performance and Achievements

 

 

 

2017 Achievements

   

  2017 was a strong and profitable year with record revenues, a continued drive into new markets and a healthy return to our shareholders. Our accomplishments in 2017 continue to demonstrate the power of our vision, mission and values.

 

  We continue to adapt our strategy to changing market demands, including expansion of our digital client services by adding talent and technology to meet our clients’ evolving needs and expectations.

 

  Our digital banking platform, U by BB&T, continues to expand in capabilities, including integration of Zelle®, a fast, safe and easy way to send money. We ranked 3rd for mobile banking among the 15 largest U.S. banks according to the Dynatrace Mobile Banker Scorecard.

 

  We increased our national lending businesses and expanded our Wealth and fee businesses.

 

  We strengthened our risk management team by creating the new position of a Chief Fraud Director.

 

  We successfully launched our “All we see is you” brand campaign, emphasizing our commitment to our clients, and increased our presence on social media platforms, such as Instagram and Twitter.

 

  We remain committed to diversity and inclusion and were recognized as one of the Best Places to Work for LGBT equality. We were acknowledged by the Women’s Forum of New York for having a Board of Directors comprised of at least 25% women.

 

  We see our communities as vital to our success and supported them in 2017 through our Lighthouse Project (80,000+ volunteer hours) and donations of $700,000 in the aftermath of Hurricanes Harvey, Irma and Maria.

 

  We invested $152 million of tax reform benefits into our associates and communities, through raising the minimum hourly pay rate, providing a special one-time bonus to almost three-fourths of our associates and donating $100 million to BB&T’s philanthropic fund to support charitable organizations in our communities.

 

 

 

 

2017 Financial Highlights

 

LOGO

 

  Average non-interest bearing deposits increased 7.3% year-over-year.

 

  2.65% dividend yield (second highest among our peer group) and a 10% increase in our quarterly dividend during 2017.

 

  117.9% total payout to shareholders in 2017.

 

 

 

 

  Total nonperforming assets as a percentage of total assets were 0.28% at year-end, compared to the 0.50% average of our peer group and were at the lowest level since the third quarter of 2006.

 

  Strong capital and liquidity ratios.

 

  Credit ratings that are among the highest in our industry.

 

 

4    BB&T Corporation | 2018 Proxy Statement


Table of Contents

Proposal 1—Election of Directors

 

 

PROPOSAL 1—ELECTION OF DIRECTORS

We are asking you to reelect each of the fourteen 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 2019. 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.

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.

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. Bannerà

 

 

 

LOGO

       

 

LOGO

 

 

LOGO

 

K. David Boyer, Jr.*

 

 

 

LOGO

         

 

LOGO

 

Anna R. Cablik

 

  LOGO     LOGO  

 

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   LOGO  

 

Number of Meetings Held in 2017v

 

    10

 

  7

 

  4

 

  2

 

 

11

 

 

    Chairman of the Board of Directors
  à   Independent Lead Director
  LOGO   Member
  LOGO   Chair
  *   Serves on the Trust Committee of Branch Banking and Trust Company
  **   Chairman of the Trust Committee of Branch Banking and Trust Company
  v   Does not include joint committee meetings held twice a year by the Audit, Compensation, and Risk Committees

 

BB&T Corporation | 2018 Proxy Statement    5


Table of Contents

Proposal 1—Election of Directors

 

 

Director Commitment and Skills

 

One of our Board’s goals, which is pursued through the Nominating and Corporate Governance Committee, is to include members with diverse backgrounds, skills and characteristics that, taken as a whole, will help ensure a strong and effective governing body. In particular, our Board members have a diverse skillset that demonstrates a variety of expertise that is well suited to oversee the Corporation’s strategy and closely ties to our financial institution and the banking industry as a whole. Our Board is proud of its gender and racial diversity, with 28.5% of directors being women and 28.5% of directors being minorities. The Nominating and Corporate Governance Committee regularly reviews the skillsets and composition of our Board to determine the appropriate skills, qualifications and backgrounds to match our Corporation’s needs.

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 strategic plan, founded on our vision, mission and values. In the aggregate, our Board members attended over 98% Board and Committee meetings in 2017, in addition to Board skills and training sessions and several other BB&T related events. And 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 our Board’s commitment to BB&T and diverse skillset helps promote our vision to “Create the Best Financial Institution Possible.” The following charts show the diversity and range of skillsets our directors provide to BB&T.

 

              DIRECTOR SKILLS

   

Qualifications

 

     

Experience

 

    

LOGO

 

Executive

Leadership

 

LOGO

 

Public

Company

Director

 

 

LOGO

 

Audit

Committee

Financial

Expert(1)

      

LOGO

 

Accounting

 

LOGO

 

Academia

 

LOGO

Corporate

Governance

and

Supervision

 

LOGO

Technology
or Cyber-
Security

 

 

LOGO

 

Other Bank
Director

or Bank
Executive
Experience

 

LOGO

 

Financial

Services

Jennifer S. Banner

  LOGO   LOGO         LOGO     LOGO   LOGO   LOGO   LOGO

K. David Boyer, Jr.

  LOGO           LOGO     LOGO   LOGO      

Anna R. Cablik

  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   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

 

(1)   Indicates those Audit Committee members who the Board has determined to be “Audit Committee Financial Experts’’ under applicable SEC rules.

 

LOGO

 

 

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Table of Contents

Proposal 1—Election of Directors

 

 

Nominees for Election as Directors for a One-Year Term Expiring in 2019

The names of the nominees for election to our Board of Directors and their principal occupations, experience, and key qualifications and skills are 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: 58

Lead Director

Tenure:

  BB&T since 2003

  Branch Bank since 2013

Board Committees:

  Executive

  Risk

Public Company Directorship:

  Uniti Group

 

      

 

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 Uniti Group Inc., a real estate investment trust in the communications infrastructure space. Ms Banner also brings technology and digital transformation skills through training and research participation with the MIT Center for Information Systems Research and other external sources. Ms. Banner is a frequent speaker on the role of boards in digital transformation.

    

 

K. David Boyer, Jr.

 

Oakton, VA

 

      

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Age: 66

Tenure:

  BB&T since 2009

  Branch Bank since 2013

Board Committees:

  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. Mr. Boyer is also an NACD Board Leadership Fellow and a member of the Presidential Counselors for Pennsylvania State University.

 

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 related skills to the BB&T Board.

 

 

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Proposal 1—Election of Directors

 

 

 

Anna R. Cablik

 

Marietta, GA

 

      

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LOGO

 

Age: 65

Tenure:

  BB&T since 2004

  Branch Bank since 2013

Board Committees:

  Compensation

  Executive

  Nominating and Corporate Governance (Chair)

 

      

 

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 prior service on the Board of Directors of Georgia Power Company provides her a broad understanding of corporate governance matters pertaining to public companies. 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.

    

 

I. Patricia Henry

 

Stone Mountain, GA

 

      

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LOGO

 

Age: 70

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.

 

 

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Proposal 1—Election of Directors

 

 

 

Eric C. Kendrick

 

Arlington, VA

 

      

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LOGO

 

Age: 71

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.

 

 

Kelly S. King

 

Winston-Salem, NC

 

      

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LOGO

 

Age: 69

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 36 of his 45 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 has completed more than 10,000 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 currently serves on the Board of Directors of The Financial Services Roundtable and on the Supervisory Board of The Clearing House. 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 and 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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Proposal 1—Election of Directors

 

 

 

Louis B. Lynn, Ph.D.

 

Columbia, SC

 

      

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LOGO

 

Age: 69

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 is also an Adjunct Professor of Horticulture at Clemson University and has been a member of 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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LOGO

 

Age: 61

Tenure:

  BB&T since 2013

  Branch Bank since 1998

Board Committees:

  Audit (Chair)

  Executive

 

      

 

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 BB&T director. Mr. Patton qualifies as an “audit committee financial expert” under SEC guidelines. His service on the Branch Bank board has provided him with significant institutional knowledge about BB&T, and considerable 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 Vice-Chairman of the Richard Bland College Foundation, Inc. and Chairman of the Audit and Finance Committees.

 

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Proposal 1—Election of Directors

 

 

 

Nido R. Qubein

 

High Point, NC

 

      

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Age: 69

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 as Starbuck’s Howard Schultz and General Colin Powell.

 

 

 

William J. Reuter

 

Lititz, PA

 

      

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Age: 68

Tenure:

  BB&T since 2015

  Branch Bank since 2015

Board Committees:

  Executive

  Risk (Chair)

      

 

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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Proposal 1—Election of Directors

 

 

 

Tollie W. Rich, Jr.

 

Cape Coral, FL

 

      

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Age: 68

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 activities.

 

 

 

Christine Sears

 

Harrisburg, PA

 

      

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Age: 62

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 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 at the University of Pennsylvania’s Wharton School of Business.

 

 

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Proposal 1—Election of Directors

 

 

 

Thomas E. Skains

 

Charlotte, NC

 

      

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LOGO

 

Age: 61

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 Chairman, 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: 69

Tenure:

  BB&T since 2008

  Branch Bank since 2013

Board Committees:

  Compensation (Chair)

  Executive

  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 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.

 

 

BB&T Corporation | 2018 Proxy Statement    13


Table of Contents

Corporate Governance Matters

 

 

CORPORATE GOVERNANCE MATTERS

The Board of Directors periodically reviews BB&T’s corporate governance program 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 under the “Corporate Governance” and “Corporate Social Responsibility” links to view the following documents:

 

  Corporate Governance Guidelines

 

  Board Committees and Written Charters for each of our Standing Committees

 

  Codes of Ethics

 

  Statement of Political Activity

 

  Accounting, Securities and Legal Violations Policy

 

  Corporate Social Responsibility Report

 

Shareholders may also request a copy of any of these documents by contacting our Corporate Secretary at: 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 other relevant direct and indirect relationships that may affect independence. Banking relationships with BB&T or any of its subsidiaries (including deposit, investment, lending and fiduciary) that are conducted in the ordinary course of business on substantially the same terms and conditions as otherwise available to nonaffiliated customers for comparable transactions are not considered material in determining independence.

After duly considering all such information, our Board of Directors has affirmatively determined that of the fourteen members of the Board, the following twelve directors have no disqualifying material relationships with BB&T or its subsidiaries and are independent: Messrs. Boyer, Kendrick, Lynn, Patton, Reuter, Rich, Skains and Thompson, 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.

 

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Corporate Governance Matters

 

 

Board Size

 

Our Board currently consists of fourteen directors. While the Board annually evaluates its size and structure, 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.

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.

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 both 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.

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.

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

 

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Corporate Governance Matters

 

 

effective participation in such meetings. During 2017, 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 2017. All of our directors attended the Annual Meeting of Shareholders in 2017.

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 2017 are shown below. Also shown below are the responsibilities of our Lead Director.

Independent Lead Director

 

 

LOGO

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 occur 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.

  Reviews the Board, Committees and individual Director self-assessment questionnaires.

  Participates in our shareholder engagement program.

Audit Committee

 

 

LOGO

Charles A. Patton

Chair

 

  

 

Committee Members:

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.

 

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Compensation Committee

 

 

LOGO

Thomas N. Thompson

Chair

 

 

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 other members of Executive Management.

  Recommends compensation and benefits for directors.

  Engages an independent compensation consultant to make recommendations relating to overall compensation philosophy, the peer 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.

  Participates in our shareholder engagement program.

Executive Committee

 

 

LOGO

Thomas E. Skains

Chair

 

 

Committee Members:

Jennifer S. Banner, Anna R. Cablik, Kelly S. King, Charles A. Patton, Nido R. Qubein, William J. Reuter, Thomas N. Thompson

 

 

  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

 

 

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.

  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.

  Participates in our shareholder engagement program.

 

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Risk Committee

 

 

LOGO

William J. Reuter

Chair

 

Committee Members:

Jennifer S. Banner, K. David Boyer, Jr., Kelly S. King, Nido R. Qubein, 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.

Shareholder Engagement Program

 

For the past several years, BB&T’s shareholder engagement program has developed into a robust, year-round process including outreach to shareholders, analysis of results of the annual meeting of shareholders, board deliberations and response, and re-engagement with shareholders. We listen closely to our shareholders so as to understand their views and address their concerns about, and support for, our executive compensation and corporate governance programs. Our shareholder engagement program encompasses a variety of initiatives and is summarized below:

 

LOGO

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 perspectives 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.

 

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We believe that our shareholder engagement program allows Executive Management and the Board to gather information about investor views and priorities 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.

In both the spring and fall of 2017, we contacted 48 of our 50 largest shareholders representing approximately 47% of our outstanding shares. During our spring engagement, representatives of BB&T, including the Chair of our Compensation Committee, sought shareholder reaction to the significant changes made to our executive compensation program in 2016 and 2017, and to the shareholder sponsored proposal to eliminate supermajority voting provisions in our governing documents. Shareholders positively supported the executive compensation improvements we made, such as the addition of PSUs and elimination of stock options, and thereafter, at the 2017 annual meeting, shareholders strongly approved our say-on-pay vote with 94% support.

During our fall engagement, representatives of BB&T, including the Chair of our Nominating and Corporate Governance Committee, discussed with our shareholders corporate governance and executive compensation issues of interest to them. Specifically, we sought feedback on the Board’s proposal to eliminate the supermajority vote requirement in the bylaws, and to retain the supermajority vote requirements in the articles of incorporation. Shareholders supported this approach as set forth in Proposal 4. In addition, we solicited our shareholders’ feedback on the right to call a special meeting, including the appropriate share ownership threshold for exercise of that right. Shareholders supported this special meeting right and in general preferred a minimum ownership threshold level of greater than 10%, based on each issuer’s unique circumstances. Finally, shareholders contacted during our engagement efforts universally supported our executive compensation program.

GOVERNANCE AND COMPENSATION PROGRAM ENHANCEMENTS

Our continued engagement has led to several changes to our governance and compensation practices over the past several years. In particular, in response to feedback from some of our shareholders, we:

 

    amended our bylaws to provide for proxy access;

 

    published a Corporate Social Responsibility report on our website in response to shareholder requests for insight into our efforts in this area;

 

    increased our CEO stock ownership requirement from 5x to 6x base salary; and

 

    amended our bylaws to provide shareholders owning 20% or more of our outstanding common stock the right to call a special meeting of shareholders.

In addition, as further described in the Compensation Discussion and Analysis section, our engagement efforts have prompted several enhancements to our executive compensation program in 2017, including:

 

    the use of PSUs;

 

    the elimination of stock options; and

 

    the use of a TSR modifier for our LTIP awards.

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;

 

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    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 overarching 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.

 

Our Board oversees Executive Management’s continual reinforcement of BB&T’s culture through a quarterly video, annual regional in-person visits and other internal communication channels.

  

            BB&T Values

 

LOGO

Ethics at BB&T

 

Ethics matter at BB&T. We believe 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. Our Chief Ethics Officer provides reports to the Board of Directors and our Nominating and Corporate Governance Committee, and underscores 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

A key tenant of BB&T’s Mission statement is to help our clients achieve economic success and financial security. Our culture and sales practices are consistent with this philosophy. BB&T Corporation’s risk culture heavily influences the design and emphasis of the sales management programs. Therefore, BB&T Corporation’s compensation and incentive programs are based on balanced performance, with appropriate controls. Sales leaders are held accountable for setting this tone from the top and championing appropriate sales behaviors, and associates are held accountable for executing their daily responsibilities in accordance with BB&T’s Code of Ethics.

Corporate Social Responsibility Report

 

We understand it is important to our shareholders that we conduct our mission in a sustainable manner, promote positive social efforts, and implement transparent governance practices. In 2016, BB&T was a winner of the Financial Services Roundtable award for Corporate Social Responsibility Leadership. 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 programs such as the following:

 

Environmental   Education and Training   Community Service

  Bank-wide conservation initiatives, including reducing the volume of paper used, purchasing recycled paper and environmentally-friendly cleaning products and recycling nearly 18 million tons of paper annually, helping to preserve more than 156,000 trees and 13.5 million pounds of CO2.

 

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

 

  We launched a multi-year, enterprise-wide conservation effort that is expected to reduce electricity consumption at our retail branches by over 20%.

 

  The BB&T Leadership Institute provides organizations with a leadership development partner that helps create dynamic and effective leaders, increase employee retention and improve the bottom line.

 

  Through the BB&T Financial Foundations program, we provide financial literacy programs to high school and college students, and adults within our footprint.

 

  Our associates are provided comprehensive educational opportunities through BB&T University and BB&T Banking School at Wake Forest University.

 

  Training magazine recognized BB&T as one of the world’s Top 125 Organizations for Excellent Training in 2017, marking the 16th consecutive year BB&T has received this coveted recognition.

 

  Through the BB&T Lighthouse Project, our associates provide hands-on support for local projects and worthy causes that benefit our communities. Since 2009, we have completed more than 10,000 community service projects and contributed more than 500,000 volunteer hours to local charities (helping 15 million people).

 

  Through our homeless outreach program, we support emergency housing, with the goal of providing long-term housing solutions. Our initiative also supports education and training for displaced families in our communities.

 

  We donated $100 million to BB&T’s philanthropic fund to support charitable organizations in our communities.

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.

Nominating and Corporate Governance Committee Director Nominations

 

The Nominating and Corporate Governance Committee is responsible for selecting as director candidates 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, strategic insights, recognized achievement in his or her respective field, an ability to contribute to our business, his or her experience in risk management, and the willingness to make the commitment of time and effort required of a BB&T director over an extended period of time. A director must be “financially literate,” as defined by the Board, and should understand the intricacies of a public company. A director should possess good judgment, strength of character, and an independent mind, as well as a reputation for integrity and the highest personal and professional ethics. Other factors will be taken into consideration to 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

 

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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 Corporate Secretary), which are summarized under the caption “Voting and Other Information-Proposals for 2019 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.

Majority Voting and Director Resignation Policy

 

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.

Board Skills and Training Program

 

Our 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.

Newly elected directors undergo an extensive Board and Committee orientation process. We view the Board and Committee orientation process as a means to impart substantive knowledge, and also to further our directors’ understanding of our culture and the Board’s role in determining the Corporation’s culture and overseeing management’s assurance of corporate integrity. Our Chief Corporate Governance Officer facilitates a detailed Board orientation session. These sessions review the Corporation’s culture, including Codes of Ethics founded on our vision, mission and values, strategic objectives and planning, risk management matters, and our corporate governance program. Additional topics included in the orientation session include the Corporation’s business structure, including regulatory oversight, laws governing directors’ duties and conduct, securities law policies, and liability insurance coverage. Sessions to integrate the new director into the team structure of the Board are also provided. Additionally, new directors and rotating directors each attend an orientation of the Committee(s) on which they serve which cover in detail the operation and duties of the relevant Committee as well as their substantive business.

 

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Board Refreshment and Succession Planning

 

We also have a strong record of Board refreshment, which is integral to effective governance. We believe that it is important to a board’s oversight role to have an appropriate balance between experienced directors and nominees who can provide new viewpoints. We greatly value the insight of our longer tenured directors, given their detailed understanding of BB&T’s business and the banking industry. We do recognize, however, the ongoing need to consider new director candidates. Since 2013, nine independent directors have joined the BB&T Board, each bringing a unique set of skills and experience. In addition, during that time seven directors have retired from the Board either voluntarily or as a result of our mandatory age limit. This director refreshment has brought to the Board new capabilities and new perspectives. Over the next several years, we expect continued Board turnover, as our bylaws require directors to retire at the end of the year in which they turn 72 years of age, although a director may voluntarily elect to retire earlier. The average age of our director nominees is 66 years, and we currently have two director nominees who are at least 70 years old. The Board will continue to engage in regular discussion of upcoming vacancies and potential candidates in keeping with its governance responsibilities.

The Board also encourages refreshment at the Committee level and annually considers Committee changes. In 2018, for example, new Committee Chairs include Charles A. Patton (Audit) and William J. Reuter (Risk). In addition, new members of our Executive Committee include Anna R. Cablik, William J. Reuter and Thomas N. Thompson, and new members of the Bank’s Trust Committee include K. David Boyer, Jr. and Charles A. Patton. Furthermore, Jennifer S. Banner, our independent Lead Director, is expected to complete her final year in this role at the end of 2018.

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.

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 material 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 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

 

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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.

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 established the following risk values which guide principles of associates’ 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.

 

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

 

    Measuring what is managed and managing what is measured.

 

    Utilizing accurate and consistent risk management practices.

 

    Thoroughly analyzing risk quantitatively and qualitatively.

 

    Realizing lower cost of capital from high quality risk management.

 

    Ensuring there is appropriate return for the risk taken.

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

 

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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) 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 Corporate 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 Corporate Secretary will prepare a summary of the communication for prompt delivery to the appropriate member(s) of the Board.

 

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Proposal 2—Ratification of the Appointment of Our Independent Registered Public Accounting Firm

 

 

PROPOSAL 2—RATIFICATION OF THE APPOINTMENT OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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 2018 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 2018, 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 OUR INDEPENDENT REGISTERED PUBLIC

ACCOUNTING FIRM FOR 2018.

Fees to Auditors

 

The following table shows the aggregate fees incurred by the Corporation for professional services by PwC for fiscal years 2017 and 2016:

 

     2017 ($)   2016 ($)

Audit Fees

    8,410,000     9,056,000

Audit-Related Fees

    3,096,000     2,844,000

Tax Fees

       309,000        269,000

All Other Fees

               900          51,000

Total

  11,815,900   12,220,000

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.

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.

 

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All Other Fees. This category includes fees billed for advisory services provided in conjunction with the Corporation’s regulatory reporting initiatives, mortgage advisory and other advisory services.

The Audit Committee considered the compatibility of the non-audit services performed by, and fees paid to, PwC in 2017 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 2017, 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 four independent directors and operates under a charter adopted by the Audit Committee on January 23, 2018. 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 both Christine Sears and Charles A. Patton meet the requirements of an “audit committee financial expert” as defined by the SEC.

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. 1301 (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, 2017, filed with the SEC on February 21, 2018.

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

 

Charles A. Patton, Chair

   Tollie W. Rich, Jr.

I. Patricia Henry

   Christine Sears

 

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Table of Contents

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

 

 

PROPOSAL 3—ADVISORY VOTE 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 you consider the description of our executive compensation program provided in the following pages in the “Compensation Discussion and Analysis,” the compensation tables and the accompanying narratives. In particular, we note our shareholder engagement efforts, our responsiveness to shareholder concerns and the significant changes made following a comprehensive review of our executive compensation program. These changes have further aligned our compensation philosophy with shareholders by placing additional emphasis on pay-for-performance.

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

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

Your vote on this proposal, which is required by Section 14A of the Exchange Act, is “advisory,” and will serve as a non-binding recommendation to the Board. The Compensation Committee will seriously consider the outcome of this vote when determining future executive compensation arrangements.

 

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” PROPOSAL 3—ADVISORY VOTE ON BB&T’S

EXECUTIVE COMPENSATION PROGRAM.

 

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Table of Contents

Compensation Discussion and Analysis

 

 

COMPENSATION DISCUSSION AND ANALYSIS

The following Compensation Discussion and Analysis discusses how, for 2017, we compensated our named executive officers, which include the Chief Executive Officer, or CEO, and each of the other executive officers named in the 2017 Summary Compensation Table (the named executive officers or “NEOs”). The Compensation Discussion and Analysis is composed of the following sections:

 

    Section 1—Executive Summary
    Section 2—Our Executive Compensation Program Elements
    Section 3—Our Executive Compensation Program Pay Decisions
    Section 4—BB&T’s Executive Compensation Process
    Section  5—Other Aspects of BB&T’s Executive Compensation Program and Governance Practices

Section  1—Executive Summary

Our 2017 Compensation Program Enhancements

 

In early 2017, the Compensation Committee made substantial enhancements to our executive compensation program. These enhancements were the result of the Committee’s comprehensive review of our executive compensation program with the assistance of its independent compensation consultant and followed a significant shareholder outreach by the Committee to better understand and address shareholder perspectives. As outlined below, the Committee’s actions further aligned our compensation philosophy with shareholders by placing additional emphasis on pay-for-performance.

In response to these changes and enhancements, shareholders strongly approved our say-on-pay vote last year with 94% support. In addition, since the 2017 annual meeting, we have contacted 48 of our 50 largest shareholders, representing approximately 47% of our outstanding shares, and our shareholders continue to support the Committee’s actions in 2017.

 

 

2017 Executive Compensation Program Decisions

  Added Performance Share Units, or PSUs, to the Executive Compensation Program: We added PSUs to the long-term incentive program which comprise 50% of equity awards.

 

  Elimination of Stock Options: We eliminated the use of stock options.

 

  Enhanced Mix of Long-Term Incentives: We adjusted the long-term incentive mix to provide for an equal mix of PSUs, LTIP awards, and RSUs, resulting in two-thirds of long-term incentives being subject to robust performance criteria and all awards being subject to a performance hurdle.

 

  Total Shareholder Return as a Payment Modifier: We included Total Shareholder Return, or TSR, as a payment modifier in our long-term incentive program, which increases or decreases the LTIP award and PSU award payouts based on BB&T’s TSR performance relative to its peer group. First introduced in our 2016-2018 LTIP as a potential negative modifier, the impact, if any, will be reflected in payouts that will be disclosed as part of 2018 executive compensation.

 

  Expanded Forfeiture Provisions to All Long-Term Awards: 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.

 

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

 

 

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Compensation Discussion and Analysis

 

 

2017 BB&T Performance and Achievements

 

 

 

2017 Achievements

   

  2017 was a strong and profitable year with record revenues, a continued drive into new markets and a healthy return to our shareholders. Our accomplishments in 2017 continue to demonstrate the power of our vision, mission and values.

 

  We continue to adapt our strategy to changing market demands, including expansion of our digital client services by adding talent and technology to meet our clients’ evolving needs and expectations.

 

  Our digital banking platform, U by BB&T, continues to expand in capabilities, including integration of Zelle®, a fast, safe and easy way to send money. We ranked 3rd for mobile banking among the 15 largest U.S. banks according to the Dynatrace Mobile Banker Scorecard.

 

  We increased our national lending businesses and expanded our Wealth and fee businesses.

 

  We strengthened our risk management team by creating the new position of a Chief Fraud Director.

 

  We successfully launched our “All we see is you” brand campaign, emphasizing our commitment to our clients, and increased our presence on social media platforms, such as Instagram and Twitter.

 

  We remain committed to diversity and inclusion and were recognized as one of the Best Places to Work for LGBT equality. We were acknowledged by the Women’s Forum of New York for having a Board of Directors comprised of at least 25% women.

 

  We see our communities as vital to our success and supported them in 2017 through our Lighthouse Project (80,000+ volunteer hours) and donations of $700,000 in the aftermath of Hurricanes Harvey, Irma and Maria.

 

  We invested $152 million of tax reform benefits into our associates and communities, through raising the minimum hourly pay rate, providing a special one-time bonus to almost three-fourths of our associates and donating $100 million to BB&T’s philanthropic fund to support charitable organizations in our communities.

 

 

 

 

2017 Financial Highlights

 

LOGO

 

  Average non-interest bearing deposits increased 7.3% year-over-year.

 

  2.65% dividend yield (second highest among our peer group) and a 10% increase in our quarterly dividend during 2017.

 

  117.9% total payout to shareholders in 2017.

 

 

 

 

  Total nonperforming assets as a percentage of total assets were 0.28% at year-end, compared to the 0.50% average of our peer group and were at the lowest level since the third quarter of 2006.

 

  Strong capital and liquidity ratios.

 

  Credit ratings that are among the highest in our industry.

 

 

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Compensation Discussion and Analysis

 

 

Our Named Executive Officers

 

Our NEOs include the Chief Executive Officer and each of the other executive officers named in the 2017 Summary Compensation Table. Each NEO is a member of our 13 person “Executive Management” team that manages and leads BB&T’s operations.

 

Name

Title Years of Service
at BB&T

 

Kelly S. King

Chairman and Chief Executive Officer 45

 

Christopher L. Henson

President and Chief Operating Officer 33

 

Clarke R. Starnes III

Senior Executive Vice President and Chief Risk Officer 35

 

Daryl N. Bible

Senior Executive Vice President and Chief Financial Officer 10

 

Barbara F. Duck

Senior Executive Vice President and Chief Information Officer 30

 

Donna C. Goodrich

Senior Executive Vice President and Deposit, Operations and Fraud Manager 32

2017 Target Pay Program Mix

 

The significant majority of our executive pay program is performance-based. Over 85% of our CEO’s pay is based on performance and approximately 60% is based on long-term performance. In addition, two-thirds of our CEO’s long-term incentive awards vest based on robust performance criteria.

The charts below for our CEO and our other NEOs illustrate the target compensation established for 2017, consisting of base salary, annual incentive awards, 2017-2019 LTIP awards, and PSU and RSU awards granted in 2017. The charts also show the large percentage of our NEO compensation that is variable and performance-based.

 

 

LOGO

 

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Compensation Discussion and Analysis

 

 

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 our peer group.

 

Growth Metrics

 

 

Return Metrics

 

 

Capital Metrics/Credit Quality

 

  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
and Other Real Estate Owned

 

  Common Equity Tier 1 Ratio

 

*   Metrics 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 and measure growth, 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.

 

    Return on common equity (“ROCE”): We use a three-year average ROCE to measure our long-term profitability for LTIP awards and PSU 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”): We use relative TSR as a payment modifier for our LTIP and PSU awards. Payments under our 2017-2019 LTIP and 2017 PSUs are subject to a downward or upward adjustment based on TSR percentile performance relative to our peer group TSR for the three-year performance period. The Compensation Committee believes that measuring relative TSR is important to further align compensation to the performance of BB&T as compared to our peers.

The Compensation Committee believes these metrics are key drivers of sustained and longer-term shareholder value. In addition to the assessment of these performance metrics, the Compensation Committee also monitors whether our executive compensation program is consistent with the safety and soundness of the Corporation and considers whether our executive compensation program encourages unnecessary or excessive risk taking. The Compensation Committee utilizes executive risk scorecards through which compensation may be adjusted, if necessary, for risk balancing purposes. See our disclosure under “Executive Risk Scorecard” and “Risk Management” within this Compensation Discussion and Analysis.

Section 2—Our Executive Compensation Program Elements

Compensation Philosophy

 

The Compensation Committee structures our overall executive 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 reward performance over different time horizons to support and drive our strategic objectives 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;

 

    Our executive compensation programs are designed 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 who are critical to our long-term success;

 

    Executive Management must meet significant stock ownership requirements, to closely align their interests with those of our shareholders; and

 

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

 

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Compensation Discussion and Analysis

 

 

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 Corporation;

 

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

 

    reward high-performing 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’s risk management and corporate governance guidelines.

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 80% of the other NEOs’ total target compensation for 2017 is based on BB&T’s performance (EPS, ROA, ROCE, TSR)    Î    we don’t offer incentives that would provide payouts for negative returns
        two-thirds of our long-term incentives include robust performance criteria    Î    we no longer award stock options
        incorporate both absolute and relative performance goals into our incentive plans    Î    we don’t reprice outstanding stock options
        provide for adjustments of payouts and/or forfeiture of unvested awards for negative risk outcomes    Î    we don’t provide dividends on unvested equity awards to our NEOs
        base compensation decisions on median compensation data of the peer group    Î    we don’t offer broad-based perquisites such as personal club memberships, corporate housing, and personal use of company aircraft
        utilize a broad-reaching clawback policy    Î    we don’t gross-up payments for excise taxes
        maintain rigorous stock ownership requirements    Î    we don’t permit hedging or speculative trading of BB&T common stock
        restrict pledging of BB&T common stock      
        review tally sheets and risk scorecards for each executive      
        retain an independent compensation consultant who reports directly to the Compensation Committee      
        provide a broad-based pension plan for eligible associates, and our NEOs participate in our pension plan on the same basis as other similarly situated associates      

REGULATORY CONSIDERATIONS IN SETTING COMPENSATION

Banking regulators have provided input on and influenced 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 past decisions with respect to our executive compensation programs. The Compensation Committee continues to assess our pay practices to balance risks with our commitment to link NEO pay to our performance while maintaining executive compensation programs that are market competitive and shareholder aligned.

 

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Compensation Discussion and Analysis

 

 

2017 Executive Compensation Program Elements

 

Our executive compensation program is heavily performance-based, with base salary representing the only fixed element. Below are the five primary 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

 

  Payments based on EPS (weighted at 60%) and 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

PSU Awards and LTIP Awards

 

  PSU and LTIP awards are designed to reward achievement of superior relative three-year average ROCE performance and relative TSR performance

 

  PSU awards align NEO compensation with appreciation of BB&T’s stock price over the long-term

 

  3-year performance period

 

  100% of the award is subject to forfeiture in the event of an aggregate operating loss for the performance period or if a negative risk outcome occurs

 

  Rewards performance using both an absolute ROCE performance threshold and a relative ROCE performance goal over a three-year cycle.

 

  Payment can be modified based on our TSR performance relative to our peer group

 

  Dividends are not paid on unvested PSUs

 

  LTIP Awards are usually paid in cash

RSU Awards

 

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

 

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

 

  RSUs vest ratably over 3 years

 

  100% of the unvested award is subject to forfeiture in the event of an aggregate operating loss for the performance period or if a negative risk outcome occurs

 

  Dividends are not paid on unvested RSUs

 

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Compensation Discussion and Analysis

 

 

Section 3—Our Executive Compensation Program Pay Decisions

Summary of Overall Compensation

 

The table below summarizes NEO compensation for the 2017 performance year, which consists of base salary, annual incentive awards, RSU and PSU awards granted in 2017, and 2015-2017 LTIP award payments. Additional detail for each of these items follows this table.

2017 COMPENSATION OVERVIEW TABLE

 

Name

 

Base

Salary

($)

   

Annual
Incentive
Award

($)

    Restricted
Stock Unit
Awards(1)
($)
    Performance
Share Unit
Awards(1)
($)
   

LTIP

($)

   

2017
Total(2)

($)

 

Kelly S. King

    1,075,000       2,620,313       1,580,215       1,580,215       2,137,500       8,993,243  

Christopher L. Henson

    700,000       1,137,500       755,986       755,986       871,354       4,220,826  

Clarke R. Starnes III

    590,000       848,125       578,184       578,184       660,938       3,255,431  

Daryl N. Bible

    590,000       848,125       578,184       578,184       660,938       3,255,431  

Barbara F. Duck

    510,000       637,500       392,654       392,654       493,611       2,426,419  

Donna C. Goodrich

    510,000       637,500       392,654       392,654       493,611       2,426,419  

 

(1)   Amounts reflect the value the Compensation Committee sought to deliver through the PSU awards at target and RSU awards granted in February 2017. No amounts are immediately available to the NEO as the units vest over time, are subject to performance criteria, and remain subject to forfeiture provisions.
(2)   The principal differences between this table and the Summary Compensation Table are that the Summary Compensation Table includes information on (i) the grant date fair value of PSU awards (at the maximum level of performance) and RSU awards (ii) the change in pension value and nonqualified deferred compensation earnings and (iii) all other compensation. The components included in the table above are considered by the Compensation Committee when making compensation determinations.

Base Salary

 

The base salaries for each of our NEOs for 2017 are shown in the above table. Based upon a review of market compensation levels, the NEOs did not receive salary increases in 2017.

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 2017, 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 2017.

 

    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.

 

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Compensation Discussion and Analysis

 

 

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 2017 at target level of performance. These target opportunities did not increase from 2016.

 

Name

  

2017 Target Annual    

Incentive Award    
Opportunity    

(as a % of base salary)    

Kelly S. King

   195

Christopher L. Henson

   130

Clarke R. Starnes III

   115

Daryl N. Bible

   115

Barbara F. Duck

   100

Donna C. Goodrich

   100

2017 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

  < $2.73   0%   Less than 25th Percentile   0%   Min – 0%

Threshold

  $2.73   25%   25th Percentile   50%    

Target

  $3.03   100%   50th Percentile   100%    

Maximum

  $3.18   150%(1)   75th Percentile   150%(1)   Max – 125%
         

Actual Results

  $3.18(2)   150%  

1.23%, or

84th Percentile(2)

  150%    

Weighting

      60%       40%    

Payout per Measure

  90%       60%    

Total Annual Incentive Payout: 125%(1)

 

(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:

2017 ANNUAL INCENTIVE AWARD PAYMENTS

 

Name(1)

  Payments
($)
 

Kelly S. King

    2,620,313  

Christopher L. Henson

    1,137,500  

Clarke R. Starnes III

       848,125  

Daryl N. Bible

       848,125  

Barbara F. Duck

       637,500  

Donna C. Goodrich

       637,500  

 

(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 2017 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.

 

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Compensation Discussion and Analysis

 

 

Long-Term Incentives

 

BB&T’s long-term incentive program provides compensation awarded under the BB&T Corporation 2012 Incentive Plan, as amended (the “2012 Incentive Plan”). For 2017, these awards reflected a mix of cash and equity and included: (i) PSUs, (ii) our LTIP Program and (iii) RSUs, each as discussed below.

We continue to enhance the long-term incentives for each of our NEOs. The table below sets forth the 2017 and 2016 target award opportunities for each of our NEOs:

 

 

2017 Target Long-Term Incentive Award Opportunities (as a % of base salary)

 

 

 Name

 

  

 

2017 LTI %    

 

  

 

2016 LTI %    

 

Kelly S. King

   440    440

Christopher L. Henson

   325    275

Clarke R. Starnes III

   295    248

Daryl N. Bible

   295    248

Barbara F. Duck

   230    230

Donna C. Goodrich

   230    230

For 2017, the target long-term incentive award opportunity for each NEO is allocated equally among PSUs, RSUs and LTIP awards. The Compensation Committee increased the target long-term incentive award opportunities for Messrs. Henson, Starnes and Bible based on increased job responsibilities and market alignment considerations.

NEW FOR 2017—PERFORMANCE SHARE UNITS (PSUS)

Beginning in 2017, we added a new component to our executive compensation program, PSUs. The Compensation Committee chose PSUs to increase the emphasis on performance in our long-term incentive program through linking payouts to the achievement of superior relative three-year average ROCE performance and relative TSR performance. PSUs also align NEO compensation with appreciation of BB&T’s stock price over the long-term.

Our PSUs include the following design features:

 

    Performance Period: Three years.

 

    Vesting Requirements and Forfeiture: Three-year cliff vesting, with 100% of the award being 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 Metric: Return on Common Equity (“ROCE”), with payouts based on BB&T’s ROCE performance. BB&T must first meet or exceed an average ROCE of 3% for the performance period. If this criterion is met, payouts will be based on BB&T’s ROCE relative to our peer group as follows:

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 1/2 or greater   125%

 

*   Payout percentages will be interpolated for results between the 25th and 62  12 percentiles.

After calculating the PSU payouts based on 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.

 

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    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:

 

Percentile Performance of BB&T TSR

Relative to Peer Group TSR

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

 

*   Modified payments would be interpolated for results between the 25th and 75th percentiles
**   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.

2017 PERFORMANCE SHARE UNIT AWARDS

 

Name

  Total Target Value of
PSUs ($)(1)

Kelly S. King

  1,580,215

Christopher L. Henson

     755,986

Clarke R. Starnes III

     578,184

Daryl N. Bible

     578,184

Barbara F. Duck

     392,654

Donna C. Goodrich

     392,654

 

(1)   Reflects the value the Compensation Committee sought to deliver in making the award. The 2017 PSU awards were granted on February 21, 2017. The number of PSUs granted was determined by dividing the target amount of compensation to be delivered by the closing price of BB&T’s common stock on the grant date ($47.99). For additional detail, please refer to “Compensation of Executive Officers—2017 Outstanding Equity Awards at Fiscal Year-End.”

LTIP PROGRAM

LTIP awards reward performance using both an absolute ROCE performance threshold and a relative ROCE performance goal over a three-year cycle. The performance goals and payout range are established at the beginning of the cycle. 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 67% of the NEOs’ long-term incentive compensation currently consisting of equity, it was appropriate to pay the 2015-2017 LTIP awards in cash, especially in light of the substantial BB&T common stock holdings of each of the NEOs. Beginning with the 2017-2019 LTIP awards (discussed in more detail on page 40), 100% of the award is subject to reduction or forfeiture if there is an aggregate operating loss for the performance period or if the Compensation Committee determines that there has been a significant negative risk outcome as a result of a corporate or individual action.

2015-2017 LTIP Cycle (Paid in March 2018)

Our 2015-2017 LTIP awards include the following design features:

 

    Performance Period: Three years.

 

    Vesting Requirements: Three-year cliff vesting.

 

    Performance Metric: ROCE, with payouts based on BB&T’s ROCE performance. BB&T must first meet or exceed an average ROCE of 3% for the performance period. If this criterion is met, payouts will be based on BB&T’s ROCE relative to our peer group as set forth in the 2015-2017 LTIP Cycle Performance Matrix below.

The performance matrix for the 2015-2017 LTIP awards follow. 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 2015-2017 was 9.09%, which placed us in the 63rd 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.

 

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2015-2017 LTIP CYCLE PERFORMANCE MATRIX

 

Level of Achievement

 

Percentile Performance of

BB&T ROCE Relative

to Peer Group ROCE

 

Payout Percent of Participant’s

Target Award Opportunity

Threshold

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

Target

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

Maximum

  62  12 or greater   125%

Actual Performance

  9.09%, or 63rd percentile   125%

The 2015-2017 LTIP awards were calculated as follows:

 

LOGO

Based on these results, executives received the following 2015-2017 LTIP payouts:

2015-2017 LTIP CYCLE PAYMENTS

 

Name

 

Actual LTIP Payment, Based on  

2015-2017 Performance($)(1)

Kelly S. King

  2,137,500

Christopher L. Henson

     871,354

Clarke R. Starnes III

     660,938

Daryl N. Bible

     660,938

Barbara F. Duck

     493,611

Donna C. Goodrich

     493,611

 

(1)   Paid in March 2018. Under the approved formula, the actual payment is based on the actual average salary paid over the three-year performance cycle.

2017-2019 LTIP (Payable in 2020):

The 2017-2019 LTIP awards will continue to measure and reward BB&T’s return on common equity performance relative to the Corporation’s peer group over the three-year performance period subject to BB&T meeting or exceeding 3% average ROCE for the performance period. The entire 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. The 2017-2019 LTIP awards also are subject to a TSR modifier as follows, based on our TSR percentile performance relative to our peer group for the three-year performance period, with an overall payment cap of 125% of the target award:

 

Percentile Performance of BB&T TSR

Relative to Peer Group TSR

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

 

*   Modified payments would be interpolated for results between the 25th and 75th percentiles.
**   Subject to overall payout cap of 125%.

 

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As a result, the 2017-2019 LTIP will be calculated as follows:

 

 

 Target Award Opportunity 

 (as % of base salary)

 

    X    

 

3-Year Average Salary

 

    X    

 

Performance Scale

Payout %

 

    +/–    

 

% Increase/Reduction Based on
Relative TSR Performance

 

RESTRICTED STOCK UNITS (RSUS)

The RSUs have the following features:

 

    Vesting Period: The RSUs vest ratably over 3 years.

 

    Vesting Requirements and Forfeiture: The 2017 RSUs are subject to reduction or forfeiture if BB&T has incurred an annual operating loss for the year or the Compensation Committee determines that there has been a significant negative risk outcome as a result of a corporate or individual action.

 

    No Dividends: Dividends are not paid on unvested RSUs.

2017 RESTRICTED STOCK UNIT AWARDS

 

Name

 

Total Delivered Value of

RSUs ($)(1)

Kelly S. King

  1,580,215

Christopher L. Henson

     755,986

Clarke R. Starnes III

     578,184

Daryl N. Bible

     578,184

Barbara F. Duck

     392,654

Donna C. Goodrich

     392,654

 

(1)   Reflects the value the Compensation Committee sought to deliver in making the award. The 2017 RSU awards were granted on February 21, 2017. The number of RSUs granted was determined by dividing the target amount of compensation by the closing price of BB&T’s common stock on the grant date ($47.99). For additional detail, please refer to “Compensation of Executive Officers—2017 Outstanding Equity Awards at Fiscal Year-End.”

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.

 

    Throughout the year, the Compensation Committee reviews projected results and items for possible adjustment. In February, the Compensation Committee receives final 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.

 

    A reconciliation of adjustments that the Committee made for the purposes of certifying 2017 performance is included in Annex A to this proxy statement.

Unless otherwise indicated, discussions of 2017 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 executive compensation program. Our NEOs do not receive perquisites such as personal club memberships, corporate housing or personal travel on the company’s aircraft.

 

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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 45 years of service at BB&T.

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 2017, 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 2017 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 2017, 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 are part of the strong value proposition we offer our associates in furtherance of our mission, and 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, in a manner consistent with our mission, vision and values. 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, PSUs, RSUs and LTIP award opportunities.

In making compensation decisions, the Compensation Committee uses several resources and tools, including the services of the Compensation Committee’s 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 is also 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 accordingly, he 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, with consideration 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. Meridian Compensation Partners attends and participates in Committee meetings 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, PSUs and RSUs)
       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), PSUs and RSUs
       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

July Meeting

       Joint meeting among the Compensation, Audit and Risk Committees
         Conduct a mid-year review of current executive risk scorecards

October Meeting

       Receive risk management update on risk appetite and events that could impact incentive compensation
       Review projected financial results with proposed adjustments for incentive plans
         Review of Executive Management compensation with the Compensation Committee’s independent compensation consultant, Meridian Compensation Partners

December Meeting

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

Role of Compensation Consultant

 

The Compensation Committee engages an independent compensation consultant to provide market reference perspective and serve as an advisor. The independent compensation consultant serves at the request of, and reports directly to, the Compensation Committee. Further, the Compensation Committee has the sole authority to approve the independent compensation consultant’s fees and other retention terms, including the authority to limit the amount of fees the independent compensation consultant may earn from other services provided to BB&T. 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 2017 changes to our executive compensation program were made after extensive discussions and counsel from Meridian Compensation Partners.

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.

 

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During 2017, 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 2017;

 

    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 executive compensation program or refine recommendations before finalizing its reports to the Compensation Committee.

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, the Compensation Committee considered a number of factors, including asset size and market capitalization, and determined that no changes were needed for 2017. Given the limited number of banks of our size and market cap, we are positioned near the 75th percentile of our peer group on both measures.

 

BB&T 2017 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 PSUs and LTIP (ROCE, TSR). The Committee also reviewed the incentive plan design practices of this group when evaluating potential changes to our program for 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. 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, while giving consideration for each executive’s performance, experience and responsibilities.

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 Corporation.

 

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Executive Risk Scorecard

 

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

 

    presents the positive and negative risk outcomes that have influenced each risk category, if necessary, 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 2017 was 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 policies and practices ensure strong governance of our executive compensation program and promote alignment of our executives’ interests with those of 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            

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 an executive compensation program to encourage prudent risk management and discourage inappropriate risk-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.

 

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The Compensation Committee believes that having market-competitive fixed base salaries discourages inappropriate risk-taking. In addition, executives have a significant proportion of compensation provided in the form of equity awards that have performance and vesting features that extend over several years, as well as stock ownership requirements; this ensures our executives have significant value tied to long-term stock price performance which discourages imprudent risk-taking. Additionally, LTIP and PSU 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. Our clawback and forfeiture provisions, discussed below, also discourage imprudent risk-taking.

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 make 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. For the 2017 PSU and RSU awards, the Compensation Committee used the closing price of our common stock on the grant date to determine the number of PSU and RSU 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 PSUs and RSUs) in our income statement over the award’s minimum required service period.

Pledging/Hedging of Shares

 

Our Codes of Ethics and Insider Trading Policy prohibit all associates, including our directors and members of Executive Management, 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 director’s or NEO’s ability to conduct short-term trading, thus encouraging long-term ownership of common stock. Our Corporate Governance Guidelines contain a similar restriction and also prohibit directors and Executive Management members from entering into hedging strategies that protect against downside risk in our common stock. Under our Corporate Governance Guidelines, directors and Executive Management members may only pledge shares held in excess of each individual’s share ownership requirements. In addition, the Corporate Governance Guidelines contain a grandfather provision that permits any pledge that existed prior to December 1, 2013.

Tax Considerations

 

2017 Compensation

Our compensation philosophy and policies are generally intended to comply with Section 162(m) to the extent the Compensation Committee determines appropriate. Prior to enactment of the Tax Cuts and Jobs Act of 2017, section 162(m) generally disallowed 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 qualified as performance-based. When establishing and administering our executive compensation programs for 2017, the Compensation Committee generally intended that performance-based compensation be deductible under Section 162(m). For 2017, our Annual Incentive Award, LTIP award and PSU award programs were intended to be eligible for the performance-based exemption available under Section 162(m) and therefore be deductible for federal income tax purposes. We are evaluating the impact of the Tax Cuts and Jobs Act as it relates to the deductibility of our 2017 long-term incentive plans. Due to the complexities of Section 162(m), however, there can be no guarantee that all amounts intended to comply with the requirements of Section 162(m) will so qualify.

 

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For the Annual Incentive Award discussed in Section 3 above, the Compensation Committee employed a performance-based compensation structure 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, the Annual Incentive Awards for the covered employees were paid from a 162(m) Pool equal to 1.5% of BB&T’s 2017 income before taxes (pre-tax income), pursuant to a percentage of the pool assigned, within the first 90 days of 2017, to each covered employee including the following NEOs: (37.4% for Mr. King, 16.3% for Mr. Henson, 12.1% for Mr. Starnes and 9.1% for Ms. Duck). Under the BB&T Corporation 2012 Incentive Plan, as amended, each covered employee’s Annual Incentive Award payment was also subject to a $7.5 million cap on the size of each individual payment.

Impact of Tax Cuts and Jobs Act of 2017

For taxable years beginning on and after January 1, 2018, the Tax Cuts and Jobs Act generally eliminated the “performance-based” compensation exception under 162(m), and expanded the $1 million per covered employee annual limitation on deductibility to a larger group of named executive officers. In addition, the new tax law also provides that any named executive officer who was a covered employee in taxable years beginning on and after January 1, 2017, will continue to be a covered employee for all subsequent taxable years (including taxable years after his or her death). As a result, the Corporation may no longer take an annual deduction for any compensation paid to its expanded number of covered employees in excess of $1 million per covered employee unless “performance-based” compensation is paid pursuant to a written binding contract which was in effect on November 2, 2017, and which was not modified in any material respect on or after such date. We are still evaluating the impact of this new law on our executive compensation practices.

Conclusion

 

BB&T and the Compensation Committee review all elements of our executive 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 executive compensation program, we have taken great care to select elements that are performance-based and to use a variety of performance metrics that, on the whole, will encourage the achievement of short-term and long-term shareholder value while enabling us to retain our talented executives. We believe the total compensation for each NEO is reasonable, and we continue to improve upon our program so that its components and features are consistent with shareholder expectations, market standards and comparable programs of the peer group. The executive 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 executive compensation program, both for the NEOs and for all of our associates, for the foreseeable future.

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 executive 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, 2017.

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 2017 were Anna R. Cablik, Eric C. Kendrick, Louis B. Lynn, Ph.D. and Thomas N. Thompson. None of the individuals who served as a member of the Compensation Committee during 2017 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.

 

48    BB&T Corporation | 2018 Proxy Statement


Table of Contents

Compensation of Executive Officers

 

 

COMPENSATION OF EXECUTIVE OFFICERS

2017 SUMMARY COMPENSATION TABLE

 

Name and

Principal Position

(a)

  Year    

Salary

($)(1)

   

Stock

Awards

($)(2)

   

Option

Awards

($)(2)

   

Non-Equity

Incentive

Plan

Compensation  

($)(3)

 

Change in

Pension

Value &

Non-Qualified

Deferred

Compensation  

Earnings

($)(4)

 

All Other

Compensation  

($)(5)

 

Total

($)

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

Kelly S. King

    2017       1,075,000       3,134,169           4,757,813   3,382,618   325,096     12,674,696  

Chairman and Chief

    2016       1,075,000       2,122,925       601,998     4,340,969   3,189,647   279,544     11,610,083  

Executive Officer

    2015       1,056,250       2,583,019       591,499     4,096,763   3,070,931   298,430     11,696,892  

Christopher L. Henson

    2017       700,000       1,499,400           2,008,854   2,832,746   152,101     7,193,101  

President and Chief

    2016       700,000       863,971       244,998     1,835,021   1,975,680   150,858     5,770,528  

Operating Officer

    2015       691,250       1,069,201       241,938     1,741,055   1,173,107   136,024     5,052,575  

Clarke R. Starnes III

    2017       590,000       1,146,759           1,509,063   2,020,281   118,145     5,384,248  

Senior Executive Vice

    2016       590,000       657,466       186,437     1,379,076   1,704,775   103,852     4,621,606  

President and Chief

Risk Officer

    2015       582,500       810,227       184,069     1,308,360   1,139,457   109,304     4,133,917  

Daryl N. Bible

    2017       590,000       1,146,759           1,509,063      827,608   118,145     4,191,575  

Senior Executive Vice

    2016       590,000       657,466       186,437     1,379,076      583,745   103,852     3,500,576  

President and Chief

Financial Officer

    2015       582,500       810,227       184,069     1,308,360      408,120   109,304     3,402,580  

Barbara F. Duck

    2017       510,000       778,763           1,131,111   1,405,185     91,324     3,916,383  

Senior Executive Vice

President and Chief

Information Officer

    2016       507,083       518,569       147,052     1,012,059      850,478     76,598     3,111,839  

Donna C. Goodrich

    2017       510,000       778,763           1,131,111   1,635,409     91,324     4,146,607  

Senior Executive Vice
President and Deposit,
Operations and Fraud
Manager

 

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

 

(1)   Salary as a percentage of total annual compensation for each of the NEOs in 2017 was as follows: Mr. King (8.5%), Mr. Henson (9.7%), Mr. Starnes (11.0%), Mr. Bible (14.1%), Mrs. Duck (13.0%) and Mrs. Goodrich (12.3%).
(2)   The amounts in column (d) reflect the grant date fair value of the RSUs ($43.87) in 2017. The assumptions used in the calculation of the amounts in column (d) with respect to RSUs are included in Note 9 “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, 2017. PSUs shown in column (d) are valued using the Monte Carlo simulation model. Actual expense assumes a maximum payout of 125% of awarded shares with a fair value per share of $41.05. The value of the relative TSR modifier was calculated based on the percentile rank of BB&T’s TSR relative to the peer group. A separate relative TSR modifier was developed for each level of ROCE vesting between 50% and 125% of target, in 1.0% increments. The price of a share of BB&T common stock used when calculating the vesting date value of a PSU assumed an annual dividend yield of 2.50% over the remaining performance measurement period. The vesting date value of a PSU was discounted to February 21, 2017, using the risk free rate to calculate the grant date present value of the award. As discussed in the Compensation Discussion and Analysis, the outstanding PSUs, RSUs and stock options remain subject to vesting criteria and accordingly, the NEO may never receive any value from such award.

 

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Compensation of Executive Officers

 

 

(3)   Column (f) contains Annual Incentive Award and LTIP payments, as indicated in the below 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.

 

Name

  

  2017 Annual

  Incentive

  Award

  ($)

    

  2015-2017

  LTIP

  ($)

 

Kelly S. King

     2,620,313            2,137,500      

Christopher L. Henson

     1,137,500            871,354      

Clarke R. Starnes III

     848,125            660,938      

Daryl N. Bible

     848,125            660,938      

Barbara F. Duck

     637,500            493,611      

Donna C. Goodrich

     637,500            493,611      

 

(4)   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. 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.
(5)   The detail relating to “All Other Compensation” for 2017 identified in column (h) to the Summary Compensation Table is as follows:

 

Name

  

401(k)  

Matching  

Contribution($)  

  

NQDC      

Matching      

Contribution($)      

  

Perquisites    

($)*    

Kelly S. King

   16,200    308,896        —    

Christopher L. Henson

   16,200    135,901        —    

Clarke R. Starnes III

   16,200    101,945        —    

Daryl N. Bible

   16,200    101,945        —    

Barbara F. Duck

   16,200      75,124        —    

Donna C. Goodrich

   16,200      75,124        —    

 

*   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.

 

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Compensation of Executive Officers

 

 

2017 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)(6)(7)(8)
 

Grant Date Fair
Value of Stock
Awards ($)(9)

(i)

 

Name

(a)

 

Grant

Date

(b)

 

Threshold

($)

(c)

   

Target

($)

(d)

   

Maximum

($)

(e)

   

Threshold

(#)

(f)

   

Target

(#)

(g)

   

Maximum

(#)

(h)

 

Kelly S. King

               

Performance Share Units

  2/21/2017                       13,172       32,928     41,160     1,689,618  

Restricted Stock Units

  2/21/2017                             32,928         1,444,551  

Annual Incentive Award

  2/21/2017     314,438       2,096,250       2,620,313                      

2017-2019 LTIP(1)

  2/21/2017     648,978       1,622,444       2,028,055                      

Christopher L. Henson

               

Performance Share Units

  2/21/2017                       6,301       15,753     19,691     808,316  

Restricted Stock Units

  2/21/2017                             15,753         691,084  

Annual Incentive Award

  2/21/2017     136,500       910,000       1,137,500                      

2017-2019 LTIP(1)

  2/21/2017     315,495       788,738       985,923                      

Clarke R. Starnes III

               

Performance Share Units

  2/21/2017                       4,820       12,048     15,060     618,213  

Restricted Stock Units

  2/21/2017                             12,048         528,546  

Annual Incentive Award

  2/21/2017     101,775       678,500       848,125                      

2017-2019 LTIP(1)

  2/21/2017     241,522       603,804       754,755                      

Daryl N. Bible

               

Performance Share Units

  2/21/2017                       4,820       12,048     15,060     618,213  

Restricted Stock Units

  2/21/2017                             12,048         528,546  

Annual Incentive Award

  2/21/2017     101,775       678,500       848,125                      

2017-2019 LTIP(1)

  2/21/2017     241,522       603,804       754,755                      

Barbara F. Duck

               

Performance Share Units

  2/21/2017                       3,273       8,182     10,227     419,818  

Restricted Stock Units

  2/21/2017                             8,182         358,944  

Annual Incentive Award

  2/21/2017     76,500       510,000       637,500                      

2017-2019 LTIP(1)

  2/21/2017     160,270       400,675       500,844                      

Donna C. Goodrich

               

Performance Share Units

  2/21/2017                       3,273       8,182     10,227     419,818  

Restricted Stock Units

  2/21/2017                             8,182         358,944  

Annual Incentive Award

  2/21/2017     76,500       510,000       637,500                      

2017-2019 LTIP(1)

  2/21/2017     160,270       400,675       500,844                      

 

(1)   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” column of this table. When the threshold, target and maximum payments were established in 2017 for the LTIP, such payments were based on each executive’s base salary for 2017 with assumptions made for increases in base salary for subsequent years in the performance cycle. Actual payments will be based on the actual average salary over the three-year performance cycle. For our 2017-2019 LTIP, payouts are subject to increase/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 threshold payment level under the applicable award. For the Annual Incentive Award, the threshold payment is 15% of the target amount, which is presented in column (d). For the LTIP, the threshold payment is 40% of the target amount (assuming maximum reduction based on TSR performance), which is presented in column (d).
(3)   The amounts shown in column (d) reflect the target payment level under the applicable 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).
(5)   If the performance and vesting criteria for PSUs and RSUs are not met, awards are subject to reduction, forfeiture, or nonpayment.
(6)   PSUs vest on March 15, 2020 and each PSU represents the right to receive one share of common stock on the vesting date. The ultimate number of PSUs that will vest will be determined by BB&T’s performance over the three-year performance period. PSUs are subject to increase/reduction based on TSR percentile performance relative to our peer group TSR for the three-year performance period. The amounts shown in column (f) reflect the threshold payment level of 40% of the target amount (assuming maximum reduction based on TSR performance).
(7)   The amounts shown in column (g) reflect the target payment level under the applicable award.
(8)   The amounts shown in column (h) reflect the maximum payment level possible under the applicable award. For PSUs, the maximum payout level is 125% of the target amount.
(9)   This column reflects the grant date fair value, computed in accordance with SEC rules, of PSUs and RSUs granted in 2017. Please refer to Note (2) in the Summary Compensation Table for additional detail on the grant date fair value of awards.

 

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Compensation of Executive Officers

 

 

2017 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

 

    OPTION AWARDS   STOCK AWARDS

Name (a)

 

Number of

Securities

Underlying

Unexercised

Options

Exercisable

(#) (b)

 

Number of

Securities

Underlying

Unexercised

Options

Unexercisable

(#) (c)

 

Equity

Incentive

Plan

Awards:

Number of

Securities

Underlying

Unexercised

Unearned

Options(1)
(#) (d)

 

Option

Exercise

Price

($) (e)

 

Option

Expiration

Date (f)

 

Number of

Shares or

Units of

Stock that

Have Not

Vested

(#) (g)

 

Market

Value of

Shares or

Units of

Stock That

Have Not

Vested ($)
(h)

 

Equity

Incentive Plan

Awards:

Number of

Unearned

Shares, Units

or Other

Rights

That Have Not

Vested(2)

(#) (i)

 

Equity

Incentive Plan

Awards:

Market or

Payout

Value of

Unearned

Shares,

Units or

Other

Rights that

Have Not

Vested

($) (j)

Kelly S. King

      60,000                   27.73       2/22/2021                
      180,789                   30.09       2/21/2022                
      101,806                   30.08       2/26/2023                
      71,611                   37.55       2/25/2024                
      80,475             40,239       38.22       2/24/2025                
      51,851             103,704       32.10       2/23/2026                
                                              145,583       7,238,387

Christopher L. Henson

      29,763                   37.55       2/25/2024                
      32,917             16,458       38.22       2/24/2025                
      21,102             42,205       32.10       2/23/2026                
                                              64,267       3,195,355

Clarke R. Starnes III

      22,629                   37.55       2/25/2024                
      25,043             12,522       38.22       2/24/2025                
      16,058             32,117       32.10       2/23/2026                
                                              48,960       2,434,291

Daryl N. Bible

      56,158                   30.09       2/21/2022                
      32,147                   30.08       2/26/2023                
      22,629                   37.55       2/25/2024                
      25,043             12,522       38.22       2/24/2025                
      16,058             32,117       32.10       2/23/2026                
                                              48,960       2,434,291

Barbara F. Duck

      36,455                   30.09       2/21/2022                
      21,587                   30.08       2/26/2023                
      15,396                   37.55       2/25/2024                
      17,667             8,833       38.22       2/24/2025                
      12,665             25,333       32.10       2/23/2026                
                                              35,051       1,742,736

Donna C. Goodrich

      8,505                   27.73       2/22/2021                
      36,455                   30.09       2/21/2022                
      21,587                   30.08       2/26/2023                
      15,396                   37.55       2/25/2024                
      17,667             8,833       38.22       2/24/2025                
      12,665             25,333       32.10       2/23/2026                
                                      35,051       1,742,736

 

(1)   Column (d) Unearned and Unvested Stock Options

 

Stock Options Unearned and Unvested at Year-End

 

Grant Date

Vesting

Date

(Subject to
performance)

Mr. King Mr. Henson Mr. Starnes Mr. Bible Ms. Duck Ms. Goodrich

2/24/2015

3/15/2018 40,239 16,458 12,522 12,522     8,833     8,833

2/23/2016

3/15/2018 51,852 21,103 16,059 16,059     12,666     12,666
3/15/2019 51,852 21,102 16,058 16,058     12,667     12,667

If the performance criteria are not met, up to 100% of the unvested portion of the stock options is subject to forfeiture. For the 2017 fiscal year, the Compensation Committee determined that the performance criteria had been met.

 

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Compensation of Executive Officers

 

 

(2)   Column (i) Unearned and Unvested Restricted Stock Units and Performance Share Units

 

Unearned and Unvested Restricted Stock Units at Year-End

 

  Grant Date

Vesting Date

(Subject to
performance)

Mr. King Mr. Henson Mr. Starnes Mr. Bible Ms. Duck Ms. Goodrich

2/24/2015

  3/15/2018   20,635   8,441   6,421   6,421   4,530   4,530

12/31/2015

  2/15/2018   4,540   1,984   1,477   1,477   970   970
  2/15/2019   4,541   1,983   1,477   1,477   970   970

2/23/2016

  3/15/2018   25,005   10,177   7,744   7,744   6,108   6,108
  3/15/2019   25,006   10,176   7,745   7,745   6,109   6,109

2/21/2017

  3/15/2018   10,975   5,250   4,015   4,015   2,727   2,727
  3/15/2019   10,976   5,251   4,016   4,016   2,728   2,728
  3/15/2020   10,977   5,252   4,017   4,017   2,727   2,727

Included in this column are RSUs granted in 2017 that are unearned and outstanding at year-end. If the performance criteria are not met, up to 100% of the unvested portion of the RSUs is subject to forfeiture. For the 2017 fiscal year, the Compensation Committee determined that the performance criteria had been met.

Unearned and Unvested Performance Share Units at Year-End

 

  Grant Date Performance
Period
Mr. King Mr. Henson Mr. Starnes Mr. Bible Ms. Duck Ms. Goodrich

2/21/2017

2017-2019 32,928 15,753 12,048 12,048 8,182 8,182

Also included in this column are the target number of PSUs granted in 2017 that are unearned and outstanding at year-end. If the performance criteria are not met, up to 100% of the unvested portion of the PSUs is subject to forfeiture.

OPTION EXERCISES AND STOCK VESTED IN 2017(1)

 

     Option Awards    Stock Awards

Name

Number of Shares

Acquired on Exercise

(#)

Value Realized on

Exercise

($)

Number of Shares

Acquired on Vesting

(#)

Value Realized on
Vesting(2)

($)

Kelly S. King

356,728 4,400,252 70,064 3,343,219

Christopher L. Henson

297,256 4,405,147 28,863 1,377,326

Clarke R. Starnes III

146,387 1,669,295 21,924 1,046,194

Daryl N. Bible

101,902    921,892 21,924 1,046,194

Barbara F. Duck

160,595 1,787,748 15,882    757,681

Donna C. Goodrich

140,152 1,626,816 15,882    757,681

 

(1)   This table presents gross share amounts, without accounting for cashless exercises or shares withheld upon vesting for payment of taxes.
(2)   Based on the $47.87 closing price of BB&T’s common stock on February 14, 2017, $48.11 on February 24, 2017, and $47.53 on March 14, 2017, the trading days immediately prior to the vesting dates.

 

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2017 PENSION BENEFITS(1)

 

Name

   Plan Name(2)   

Number of Years

Credited Service(3)

(#)

  

Present Value of

Accumulated Benefit

($)

  

Payments During

Last Fiscal Year

($)

Kelly S. King

   Q    35      3,648,958   
    

NQ

   35    31,882,014   

Christopher L. Henson

   Q    33      2,436,728   
    

NQ

   33    10,562,183   

Clarke R. Starnes III

   Q    35    2,486,648   
    

NQ

   35    8,828,564   

Daryl N. Bible

   Q    10    2,186,954   
    

NQ

   10       932,618   

Barbara F. Duck

   Q    30    1,999,736   
    

NQ

   30    3,452,347   

Donna C. Goodrich

   Q    33    2,303,527   
  

NQ

   33    4,608,103   

 

(1)   The 2017 Pension Benefits table shows the estimated present value of accumulated benefits payable to each of the NEOs, including the number of years of service credited to each such NEO, determined using the measurement date, interest rate and mortality rate assumptions consistent with those used in BB&T’s financial statements. For these purposes, the credited years of service and present value of accumulated benefits were measured as of December 31, 2017.
(2)   Q = BB&T Corporation Pension Plan.
       NQ = BB&T Corporation Non-Qualified Defined Benefit Plan.
(3)   Each plan limits the years of credited service to a maximum of 35 years.

NARRATIVE TO 2017 PENSION BENEFITS TABLE

We maintain the BB&T Corporation Pension Plan (the “Pension Plan”) and the BB&T Corporation Non-Qualified Defined Benefit Plan (the “Non-Qualified Defined Benefit Plan”). For a discussion of the valuation methods and material assumptions applied in quantifying the present value of the current accrued benefit under each of these plans, as set forth in the table above, please refer to Note 12 “Benefit Plans” in the “Notes to Consolidated Financial Statements” included with the Annual Report on Form 10-K for the year ended December 31, 2017, and filed with the SEC on February 21, 2018. A discussion of each of these plans is set forth below.

Tax-Qualified Defined Benefit Plan. The Pension Plan is a tax-qualified defined benefit pension plan for eligible associates. Most associates of BB&T and its subsidiaries who have attained age 21 are eligible to participate in the Pension Plan after completing one year of service. Our contributions to the Pension Plan are computed on an actuarial basis. No participant contributions are permitted. A participant’s annual normal retirement benefit under the Pension Plan at age 65 is an amount equal to 1.0% of the participant’s final average compensation plus 0.5% of the participant’s final average compensation in excess of Social Security covered compensation, multiplied by the number of years of creditable service completed up to a maximum of 35 years. A participant’s final average compensation is his or her average annual cash compensation, including salary, wages, overtime, bonuses and incentive compensation, for the five consecutive years in the last ten years in which he or she receives compensation that produces the highest average.

Non-Qualified Defined Benefit Plan. The Non-Qualified Defined Benefit Plan is an excess benefit plan designed to provide supplemental pension benefits for certain highly compensated associates, including the NEOs, to the extent that their benefits under the Pension Plan are curtailed due to IRS compensation and benefit limitations. Benefits under the Non-Qualified Defined Benefit Plan are included in the table above.

Retirement. Mr. King, Mr. Henson, Mr. Starnes, Mr. Bible and Mrs. Goodrich have met the requirements for retirement under the Pension Plan and the Non-Qualified Defined Benefit Plan; Mrs. Duck currently is not eligible for retirement. Associates with at least 10 years of service who have attained age 55 are eligible to retire and begin receiving a reduced pension immediately. If an associate begins pension payments prior to normal retirement age, the payments are reduced based on a plan-specified reduction schedule.

 

54    BB&T Corporation | 2018 Proxy Statement


Table of Contents

Compensation of Executive Officers

 

 

2017 NON-QUALIFIED DEFERRED COMPENSATION

 

Name

Executive

Contributions

in 2017

($)(1)

BB&T

Contributions

in 2017

($)(2)

Aggregate

Earnings

in 2017

($)(3)

Aggregate

Withdrawals/

Distributions

($)

Aggregate

Balance at

12/31/2017

($)(4)

Kelly S. King

  308,896   308,896   561,934   9,151,000

Christopher L. Henson

  159,452   135,901   451,165   4,014,912

Clarke R. Starnes III

  119,835   101,945   254,619   2,081,303

Daryl N. Bible

  231,969   101,945   264,192   2,918,144

Barbara F. Duck

  75,124   75,124   127,246   1,610,556

Donna C. Goodrich

  75,124   75,124   159,836   1,283,572

 

(1)   Executive contributions were based on each NEO’s deferral elections and the salaries, Annual Incentive Award and LTIP payments received by each NEO in 2017.
(2)   This column represents BB&T’s matching contributions credited to the accounts of the NEOs during 2017 in respect of the NEO’s contributions. These values are also reflected in the “All Other Compensation” column of the 2017 Summary Compensation Table.
(3)   This column reflects earnings or losses on plan balances in 2017. Earnings may increase or decrease depending on the performance of the elected deemed investment options. These earnings are not above-market or preferential and thus are not reported in the 2017 Summary Compensation Table.
(4)   This column represents each NEO’s year-end balance under the Non-Qualified Defined Contribution Plan. These balances include the NEO’s and BB&T’s respective contributions that were included in the summary compensation tables in previous years. Amounts in this column include earnings that were not previously reported in the summary compensation table because they were not above-market or preferential earnings.

NARRATIVE TO 2017 NON-QUALIFIED DEFERRED COMPENSATION TABLE

The BB&T Corporation Non-Qualified Defined Contribution Plan (the “Non-Qualified Defined Contribution Plan”) is an excess benefit plan that provides supplemental benefits to certain highly-compensated associates, including the NEOs, to the extent that their benefits under the BB&T Corporation 401(k) Savings Plan are curtailed due to the application of certain IRS benefit and compensation limitations. During 2017, eligible associates were permitted to defer up to 50% of their cash compensation under the Non-Qualified Defined Contribution Plan, with certain participants, including each NEO, eligible to receive a matching contribution up to 6% of his or her compensation. All cash compensation is eligible for deferral unless prohibited under Code Section 409A. Plan participants may select deemed investment funds under the Non-Qualified Defined Contribution Plan that are identical to the investment funds offered under the 401(k) Plan with the exception that no deemed investments of BB&T common stock are permitted. Participants make an election upon entering the Non-Qualified Defined Contribution Plan regarding the timing of plan distributions. The two allowable distribution elections are distribution upon termination or distribution upon reaching age 65. The Non-Qualified Defined Contribution Plan also allows for an in-service hardship withdrawal based on facts and circumstances that meet Internal Revenue Service guidelines. The Non-Qualified Defined Contribution Plan also provides participants in our incentive compensation plans with an effective means of electing to defer, on a pre-tax basis, a portion of the payments that they are entitled to receive under such plans.

 

BB&T Corporation | 2018 Proxy Statement    55


Table of Contents

Compensation of Executive Officers

 

 

POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL

The potential payments to the NEOs pursuant to existing plans and arrangements in the event of their termination or a change of control at December 31, 2017 are shown in the table below. BB&T has entered into employment agreements with each member of Executive Management, including each of the NEOs. Several of the important provisions of these employment agreements are discussed below, including the noncompetition and nonsolicitation conditions, which generally are a prerequisite to receiving termination payments under the employment agreements.

 

   

Voluntary /

  Retirement  

($)

   

For

Cause

($)

   

Death /

Disability

($)

   

Other than Just Cause

or for Good Reason

($)

   

Change of

Control

($)

 

Kelly S. King

                                       

Severance

                      14,693,769       14,693,769  

LTIP(1)

                            3,807,333  

PSUs(1)

                            1,637,180  

Stock Options and RSUs(2)(3)

    7,891,220             7,891,220       7,891,220       7,891,220  

Welfare Benefits(4)

                      39,255       39,255  

Outplacement

                      20,000       20,000  

Reduction Per Employment Agreement(5)

                             
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

    7,891,220             7,891,220       22,644,244       28,088,757  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Christopher L. Henson

                                       

Severance

                      7,605,064       7,605,064  

LTIP(1)

                            1,592,354  

PSUs(1)

                            783,239  

Stock Options and RSUs(2)(3)

    3,345,035             3,345,035       3,345,035       3,345,035  

Welfare Benefits(4)

                      36,453       36,453 &n