DEF 14A 1 d686788ddef14a.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.      )

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  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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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 30, 2019. This year’s meeting will be held in Charleston, South Carolina at Hibernian Hall, 105 Meeting Street. Shareholders as of the record date of February 20, 2019 are invited to attend.

We are again providing proxy materials to our shareholders through the Internet. This method 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 this proxy statement carefully because it contains important information about the matters we will vote on at our annual meeting.

On behalf of the Board of Directors, we would like to thank recently retired director Eric C. Kendrick for his service and support to our company. His business and governance experience has greatly contributed to our company during his sixteen years of service, beginning as a director of Branch Banking and Trust Company and later as a director of BB&T Corporation. We will miss his quality of character and commitment to our vision.

As you probably are aware, on February 7, 2019, BB&T and SunTrust announced a merger of equals. We are very excited about this combination and the opportunities we believe it will provide to our clients, associates, communities and shareholders. We will ask you at another time to vote at a special meeting to approve the transaction. In the meantime, please be assured that our unwavering commitment to our Vision, Mission and Values will continue.

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    Anna R. Cablik
Chairman and Chief Executive Officer    Independent Lead Director


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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS OF

BB&T CORPORATION

 

 

      Date:

 

      April 30, 2019

  

 

Time:

 

11:00 a.m. EDT

  

 

Place:

 

Hibernian Hall

105 Meeting Street

Charleston, SC 29401

 

AGENDA

  ·  

Election of the 15 directors named in the proxy statement, each for a one-year term expiring at the 2020 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

  ·  

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 20, 2019.

 

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.

 

 

 

   

By Order of the Board of Directors,

    LOGO
   

LOGO

    Kelly S. King
    Chairman and Chief Executive Officer

March 19, 2019

 

 

  Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting To Be
Held on April 30, 2019

 

A copy of this proxy statement is available at http://www.edocumentview.com/BBT. Also available at this website is our 2018 Annual Report, which highlights summary financial information about BB&T, and our Annual Report on Form 10-K for the year ended December 31, 2018.

 

 


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  BB&T was named on the FORTUNE “World’s Most Admired Companies®” list in the superregional bank category in 2019.

 

  BB&T has been named a 2018 Champion by the National Cyber Security Alliance & the U.S. Department of Homeland Security for National Cyber Security Awareness Month, noting our dedication to promoting a safer, more secure and trusted Internet.

 

  BB&T has the 2nd highest mobile banking app ranking by Dynatrace.

  

  BB&T has been named one of the 2019 Best Banks in America by Forbes.

 

  BB&T achieved the highest possible score of 100 on the Human Rights Campaign Foundation’s Corporate Equality Index for 2018, reflecting our adherence to policies and practices that increase inclusion for lesbian, gay, bisexual and transgender employees.

 

  In 2018, and for the 16th straight year, Training magazine recognized BB&T as one of the world’s Top 125 Organizations for Excellent Training.

 

LOGO

   LOGO    LOGO    LOGO

 

*   ©2019, Forbes Media LLC. Used with Permission. ©2019 Fortune Media IP Limited. FORTUNE and The World’s Most Admired Companies are registered trademarks of Fortune Media IP Limited and are used under license. FORTUNE and Fortune Media IP Limited are not affiliated with, and do not endorse the products or services of, BB&T.


Table of Contents

          

 

 

TABLE OF CONTENTS

 

PROXY STATEMENT SUMMARY      1  
PROPOSAL 1 – ELECTION OF DIRECTORS      5  
CORPORATE GOVERNANCE MATTERS      15  

CORPORATE GOVERNANCE GUIDELINES

     15  

DIRECTOR INDEPENDENCE

     15  

BOARD LEADERSHIP STRUCTURE

     16  

STANDING BOARD COMMITTEE MEMBERSHIP AND LEAD DIRECTOR RESPONSIBILITIES

     17  

BOARD SIZE

     20  

SHAREHOLDER ENGAGEMENT PROGRAM

     20  

COMMUNICATIONS WITH THE BOARD OF DIRECTORS

     22  

CORPORATE GOVERNANCE PRACTICES

     23  

BB&T’S CULTURE

     23  

ETHICS AT BB&T

     24  

CORPORATE SOCIAL RESPONSIBILITY REPORT

     24  

NOMINATING AND CORPORATE GOVERNANCE COMMITTEE DIRECTOR NOMINATIONS

     26  

MAJORITY VOTING AND DIRECTOR RESIGNATION POLICY

     27  

BOARD SKILLS AND TRAINING PROGRAM

     27  

BOARD REFRESHMENT AND SUCCESSION PLANNING

     28  

MANAGEMENT SUCCESSION PLANNING

     28  

STATEMENT OF POLITICAL ACTIVITY

     29  

POLICY FOR ACCOUNTING AND LEGAL COMPLAINTS

     29  

STRATEGIC DIRECTION AND PLANNING

     29  

RISK OVERSIGHT

     29  
PROPOSAL 2 – RATIFICATION OF THE APPOINTMENT OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM      31  

FEES TO INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

     31  

AUDIT COMMITTEE PRE-APPROVAL POLICY

     32  

AUDIT COMMITTEE REPORT

     32  
PROPOSAL 3 – ADVISORY VOTE TO APPROVE BB&T’S EXECUTIVE COMPENSATION PROGRAM      33  
COMPENSATION DISCUSSION AND ANALYSIS      34  

SECTION 1 – EXECUTIVE COMPENSATION
HIGHLIGHTS

     34  

SECTION 2 – OUR EXECUTIVE COMPENSATION PROGRAM ELEMENTS

     39  

SECTION 3 – OUR EXECUTIVE COMPENSATION PROGRAM PAY DECISIONS

     40  

SECTION 4 – BB&T’S EXECUTIVE COMPENSATION PROCESS

     47  

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

     50  
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION      53  
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION      53  
COMPENSATION OF EXECUTIVE OFFICERS      54  

2018 SUMMARY COMPENSATION TABLE

     54  

2018 GRANTS OF PLAN-BASED AWARDS

     56  

2018 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

     57  

OPTION EXERCISES AND STOCK VESTED IN 2018

     58  

2018 PENSION BENEFITS

     59  

2018 NON-QUALIFIED DEFERRED COMPENSATION

     60  

POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL

     61  
COMPENSATION OF DIRECTORS      65  
PAY RATIO DISCLOSURE      67  
STOCK OWNERSHIP INFORMATION      68  
RELATED PERSON TRANSACTIONS      70  
VOTING AND OTHER INFORMATION      71  

RECORD DATE AND SHARES ENTITLED TO VOTE AT THE MEETING

     71  

QUORUM REQUIREMENTS

     71  

VOTING PROCEDURES

     71  

VOTES REQUIRED, NON-VOTES, ABSTENTIONS, AND REVOCATIONS

     72  

DELIVERING PROXY MATERIALS

     72  

PROXY COSTS

     72  

PROPOSALS FOR 2020 ANNUAL MEETING OF SHAREHOLDERS

     73  

OTHER BUSINESS

     73  
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 2018 performance can be found in our Annual Report on Form 10-K.

2019 Annual Meeting of Shareholders

 

 

Time and Date

 

  

Location

 

  

Record Date

 

April 30, 2019, at 11:00 a.m. EDT

  

Hibernian Hall

105 Meeting Street

Charleston, SC 29401

   February 20, 2019

 

Proposals and Voting Recommendations

Shareholders will vote on the following three proposals:

 

Proposals

 

 

Votes Required

 

 

Board

Recommendation

 

 

Page

 

Election of 15 directors named in the proxy statement

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

Ratify the appointment of our independent registered public accounting firm

  Majority of votes cast   VOTE FOR   31

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

  Majority of votes cast   VOTE FOR   33

 

How to Vote

Shareholders may vote in the following ways:

 

Proxy Voting Methods

 

    

 

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Internet

 

 

 

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Telephone

 

 

 

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Mail

 

 

 

LOGO

In person

 

Go to  www.envisionreports.com/BBT  (record holders) or www.proxyvote.com (beneficial owners)   Call 1-800-652-VOTE (8683) (record holders) or
1-800-454-VOTE (8683)
(beneficial owners) and follow the instructions on the proxy card or your voting instruction form
   Sign, date and mail your proxy  card (record holders) or your voting instruction form (beneficial owners)   Shareholders may vote in person at the annual meeting  by filling out a ballot.

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.

 

BB&T Corporation | 2019 Proxy Statement    1


Table of Contents

Proxy Statement Summary

 

 

BB&T Board of Director Nominees

We ask you to consider the following 15 nominees to our Board of Directors. We are proud of the diverse makeup of our Board and the broad experience and dedication of each of our directors. Additional information about each director’s experiences, qualifications, and skills can be found beginning on page 6.

 

     Age   

Director

Since

   Independent   

Principal

Occupation

   BB&T Standing
Committee Memberships

Jennifer S. Banner

   59    2003       CEO of SchaadSource, LLC   

  Compensation

  Executive

  Nominating and Corporate Governance (Chair)

   

 

K. David Boyer, Jr.

  

 

67

  

 

2009

      CEO of GlobalWatch
Technologies, Inc.
  

  Risk

   

Anna R. Cablik

(Lead Director)

 

   66    2004       President of Anasteel &
Supply Company, LLC
  

  Executive

  Risk

   

 

Patrick C. Graney III

  

 

65

  

 

2018

  

 

  

 

President of PCG, Inc.

  

  Compensation

  Nominating and Corporate Governance

   

 

I. Patricia Henry

  

 

71

  

 

2013

      Retired Director of Strategic
Projects for Miller Brewing
  

  Audit

   

 

Kelly S. King

  

 

70

  

 

2008

      Chairman and CEO of
BB&T
  

  Executive

  Risk

   

 

Louis B. Lynn, Ph.D.

  

 

70

  

 

2013

      CEO of ENVIRO
AgScience, Inc.
  

  Audit

   

 

Easter A. Maynard

  

 

48

  

 

2018

  

 

   Director of Community
Investment for Investors
Management Corporation
  

  Compensation

  Nominating and Corporate Governance

   

 

Charles A. Patton

  

 

62

  

 

2013

      Manager of Patton
Holdings, LLC
  

  Audit (Chair)

  Executive

   

 

Nido R. Qubein

  

 

70

  

 

1990

      President of High Point
University
  

  Executive

  Risk

   

 

William J. Reuter

  

 

69

  

 

2015

      Retired Chairman and CEO
of Susquehanna
Bancshares, Inc.
  

  Executive

  Risk (Chair)

   

 

Tollie W. Rich, Jr.

  

 

69

  

 

2013

  

 

   Retired senior banking
executive of Branch Bank
  

  Audit

   

 

Christine Sears

  

 

63

  

 

2015

      CEO of Penn National
Insurance
  

  Audit

   

 

Thomas E. Skains

  

 

62

  

 

2009

      Retired CEO of Piedmont
Natural Gas Company, Inc.
  

  Executive (Chair)

  Risk

Thomas N. Thompson

   70    2008       President of Thompson
Homes, Inc.
  

  Compensation (Chair)

  Executive

  Nominating and Corporate Governance

 

2    BB&T Corporation | 2019 Proxy Statement


Table of Contents

Proxy Statement Summary

 

 

2018 Compensation and Financial Performance Highlights

 

 

Approval of Executive Compensation

     

 

In early 2017, the Compensation Committee made substantial pay-for-performance enhancements to our executive compensation program, including:

 

  the addition of performance share units and total shareholder return as components to our long-term incentive awards, and

 

  enhancing the percentage of long-term incentives being subject to robust performance criteria.

 

Since that time, our shareholders have strongly approved our say-on-pay proposal with approximately 94% support in both 2018 and 2017.

 

Given this continued support and positive shareholder feedback, the Compensation Committee maintained the key features of our executive compensation program with limited modification. In 2018, the Compensation Committee introduced a performance component to the Annual Incentive Award to assess strategic and other performance considerations.

 

In evaluating this year’s say-on-pay proposal, we believe shareholders should consider our strong financial performance, the alignment of our executive compensation program with our financial performance and our sound pay practices that conform with our shareholders’ interests and the culture and values of BB&T.

  

CEO Target Total Direct Compensation Mix

 

 

LOGO

 

  86% of pay at risk, subject to robust performance criteria

 

  60% of pay based upon achievement of long-term performance goals

 

  Only 14% fixed pay, commensurate with skills and experience.

 

 

 

2018 Performance Highlights

LOGO

Record Taxable Equivalent Revenues ($11.7 billion) Record Net Income Available to Common Shareholders ($3.1 billion) Record Diluted Earnings Per Share ($3.91)

 

  Increased our return on average assets in 2018 to 1.47%, up from 1.09% for 2017.

 

  Increased our return on average common shareholders’ equity to 11.50%, up from 8.25% in 2017.

 

  Improved our efficiency ratio to 60.0% for 2018, down from 65.8% in 2017.

 

 

  

  Achieved historically low level of non-performing assets of 0.26% of total assets, as of December 31, 2018.

 

  Maintained strong capital and liquidity ratios.

 

  Provided 3.74% dividend yield and a 22.7% increase in our quarterly dividend during 2018.

 

BB&T Corporation | 2019 Proxy Statement    3


Table of Contents

Proxy Statement Summary

 

 

 Commitment to Sound Corporate Governance Practices

 

We have a strong corporate governance framework and regularly enhance our practices:

 

  Record of Board Refreshment

 

  53% of the Board has a tenure of six years or less, including two directors elected in 2018

 

  New Lead Independent Director for 2019

 

  Regular refreshment/rotation at Committee level, including new Nominating and Corporate Governance Committee Chair and Trust Committee Chair in 2019

 

  Annual Board and Committee self-evaluations

 

  Strong Board Diversity

 

  Women represent 33% of the Board

 

  Women hold key Board leadership positions (Lead Independent Director, Nominating and Corporate Governance Committee Chair and Trust Committee Chair)

 

  47% of the Board is represented by directors with diverse racial or gender backgrounds

 

  Board Accountability

 

  Majority voting for director elections

 

  Annual director elections

 

  Stock ownership requirements for directors

 

  Robust shareholder rights

 

  Proxy access

 

  Right to call a special meeting

 

  Elimination of supermajority voting provisions

 

  Active and Responsive Shareholder Engagement

 

  Year-round program to obtain shareholder insight into our corporate governance, executive compensation, corporate social responsibility, and other policies and practices

 

  Meetings with our largest shareholders are led by Committee Chairs or our Lead Director and are attended by members of our executive management team

 

  Corporate Social Responsibility

 

  Strong record of sustainability, community engagement, culture, diversity and education and training

 

  Corporate Social Responsibility Report details our environmental, social and governance achievements

 

  Appointed Chief Corporate Social Responsibility Officer in 2018

 

 

4    BB&T Corporation | 2019 Proxy Statement


Table of Contents

Proposal 1—Election of Directors

 

 

PROPOSAL 1—ELECTION OF DIRECTORS

We are asking you to elect each of the 15 director nominees listed below to serve on our Board of Directors for a one-year term expiring at the Annual Meeting of Shareholders in 2020. 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.

 

Board Diversity

One of our Board’s goals is to include members with diverse backgrounds. Our Nominating and Corporate Governance Committee has historically included members both racially and gender diverse, with skills and characteristics that, taken as a whole, the Committee believes will help ensure a strong and effective governing body. 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.

At BB&T, we are proud of our long commitment to diversity among our associates, members of Executive Management and our Board of Directors. Of our 15 directors, 5 are women, representing 33% of our Board, and approximately 47% of our Board is represented by directors with diverse backgrounds. Moreover, women hold key leadership positions on our Board, such as our Lead Independent Director, our Nominating and Corporate Governance Committee Chair and our Trust Committee Chair.

 

Director Commitment and Skills

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. Each director is required to be sufficiently familiar with the business of BB&T, including our strategy, financial statements, capital structure, business risks and competition, to facilitate active and effective participation in such meetings. 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.

While each of our Board members 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 chart shows the range of skillsets our directors provide to BB&T.

 

BB&T Corporation | 2019 Proxy Statement    5


Table of Contents

Proposal 1—Election of Directors

 

 

DIRECTOR SKILLS AND QUALIFICATIONS

 

    

Executive
Leadership

 

LOGO

 

Public
Company
Director

 

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Audit
Committee
Financial
Expert
Qualified(1)

 

LOGO

 

 

Accounting

LOGO

 

 

Academia

LOGO

 

 

Corporate

Governance

LOGO

 

Technology
or Cyber-

Security

 

LOGO

 

Other
Bank
Director or
Bank
Executive
Experience

 

LOGO

 

 

Financial

Services

LOGO

 

Jennifer S. Banner

  LOGO

 

  LOGO

 

    LOGO

 

    LOGO

 

  LOGO

 

 

LOGO

 

 

LOGO

 

   

K. David Boyer, Jr.

  LOGO

 

      LOGO

 

    LOGO

 

  LOGO

 

     
   

Anna R. Cablik

  LOGO

 

      LOGO

 

    LOGO

 

       
   

Patrick C. Graney Ill

  LOGO

 

  LOGO

 

        LOGO

 

   

LOGO

 

 

LOGO

 

   

I. Patricia Henry

  LOGO

 

          LOGO

 

       
   

Kelly S. King

  LOGO

 

      LOGO

 

    LOGO

 

     

LOGO

 

   

Louis B. Lynn, Ph.D.

  LOGO

 

        LOGO

 

  LOGO

 

       
   

Easter A. Maynard

  LOGO

 

          LOGO

 

       
   

Charles A. Patton

  LOGO

 

    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

Board Independence Board Tenure Board Diversity

 

6    BB&T Corporation | 2019 Proxy Statement


Table of Contents

Proposal 1—Election of Directors

 

 

Nominees for Election as Directors for a One-Year Term Expiring in 2020

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

 

      

LOGO    LOGO    LOGO    LOGO    LOGO    LOGO    LOGO

 

LOGO

 

Age: 59

Tenure:

  BB&T since 2003

  Branch Bank since 2013

Board Committees:

  Compensation

  Executive

  Nominating and Corporate Governance (Chair)

Public Company Directorship:

  Uniti Group

 

      

 

Professional Experience:

Ms. Banner has served as President and Chief Executive Officer of SchaadSource, LLC (a managerial and strategic services company) since 2006, Chief Executive Officer of Schaad Companies, LLC (a diversified holding company) from 2008 through March 2019, and Chief Executive Officer of Schaad Family Office, LLC (a diversified holding company) from 2012 through March 2019.

 

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. Ms. Banner has experience with real estate construction and development, global business, and community-oriented organizations. She serves as a director and chair of the audit committee of Uniti Group, Inc., a real estate investment trust in the telecommunications infrastructure space. Ms. Banner also serves as a director and chair of the audit committee of CDM Smith, Inc., an employee owned global engineering and construction firm. Ms. Banner brings technology and digital transformation skills through formal training and research participation with 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

 

      

   LOGO    LOGO    LOGO    LOGO

 

LOGO

 

Age: 67

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.

 

 

BB&T Corporation | 2019 Proxy Statement    7


Table of Contents

Proposal 1—Election of Directors

 

 

 

Anna R. Cablik

 

Marietta, GA

 

      

LOGO    LOGO    LOGO

 

LOGO

 

Age: 66

Lead Director

Tenure:

  BB&T since 2004

  Branch Bank since 2013

Board Committees:

  Executive

  Risk

 

      

 

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.

    

 

Patrick C. Graney III

 

Charleston, WV

 

      

LOGO    LOGO    LOGO    LOGO    LOGO

 

LOGO

 

Age: 65

Tenure:

  BB&T since 2018

  Branch Bank since 2018

Board Committees:

  Compensation

  Nominating and Corporate Governance

Public Company Directorship:

  Ramaco Resources, Inc.

 

      

 

Professional Experience:

Mr. Graney is currently a private investor and manages several real estate investment companies, including PCG, Inc., of which he is the founder and president. He is a long-standing business leader in the state of West Virginia, having previously owned both Petroleum Products, Inc., a fuel distributor, and One Stop Stores, a chain of convenience stores, each for over 25 years.

 

Qualifications and Skills:

Mr. Graney’s extensive leadership experience brings valuable strategic and managerial skills to BB&T. Mr. Graney is active in community affairs and currently serves as board chairman of the University of Charleston, chairman of the West Virginia Chamber of Commerce and is a director of the West Virginia Coal Association and the Buckskin Council of the Boy Scouts. His financial services experience includes having served as a Class B director representing West Virginia on the board of the Federal Reserve Bank of Richmond from December 2008 to December 2013. Mr. Graney also serves as a member of the board of directors of Ramaco Resources, a publicly-traded metallurgical coal company.

 

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Table of Contents

Proposal 1—Election of Directors

 

 

 

I. Patricia Henry

 

Stone Mountain, GA

 

      

LOGO    LOGO

 

LOGO

 

Age: 71

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.

 

    

 

Kelly S. King

 

Winston-Salem, NC

 

      

LOGO    LOGO    LOGO    LOGO

 

LOGO

 

Age: 70

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 37 of his 46 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 11,000 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 Bank Policy Institute and 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.

 

In 2018, Mr. King was inducted into the North Carolina Business Hall of Fame. 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 “2019 Best Banks in America” by Forbes, and one of the “World’s Most Admired Companies” by Fortune.

 

 

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Table of Contents

Proposal 1—Election of Directors

 

 

 

Louis B. Lynn, Ph.D.

 

Columbia, SC

 

      

LOGO    LOGO    LOGO

 

LOGO

 

Age: 70

Tenure:

  BB&T since 2013

  Branch Bank since 2006

Board Committees:

  Audit

 

      

 

 

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.

 

 

Easter A. Maynard

 

Raleigh, NC

 

      

   LOGO    LOGO

 

LOGO

 

Age: 48

Tenure:

  BB&T since 2018

  Branch Bank since 2018

Board Committees:

  Compensation

  Nominating and Corporate Governance

 

      

 

 

Professional Experience:

Ms. Maynard has served as Director of Community Investment for Investors Management Corporation (“IMC”) (a diversified holding company) since 2004. She was elected to the IMC board in 2017 and is currently the chair of the board of its principal subsidiary, Golden Corral Corporation, a national restaurant chain, on which she has served since 2006. Ms. Maynard also is Executive Director of IMC’s charitable arm, the ChildTrust Foundation.

 

Qualifications and Skills:

Ms. Maynard brings extensive strategic planning, management and community service experience and skills to the BB&T Board. In addition to her role as Director of Community Investment for IMC, Ms. Maynard serves in executive and board capacities for a variety of charitable organizations. Ms. Maynard serves as executive director of IMC’s charitable arm, ChildTrust Foundation, which invests primarily in early childhood education and literacy efforts throughout North Carolina. In 2012, she helped establish Camp Corral to provide summer camp experiences for children of wounded, injured, ill and fallen military heroes. In addition, Ms. Maynard currently serves as board chair for the North Carolina Early Childhood Foundation and on the boards of the North Carolina Network of Grantmakers, Methodist Home for Children, and Boys and Girls Clubs of Wake County. She has been a member of the North Carolina State Banking Commission since December 2018.

 

 

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Proposal 1—Election of Directors

 

 

 

Charles A. Patton

 

Hopewell, VA

 

      

LOGO    LOGO    LOGO    LOGO    LOGO    LOGO

 

LOGO

 

Age: 62

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 Committee.

 

 

Nido R. Qubein

 

High Point, NC

 

      

LOGO    LOGO    LOGO    LOGO    LOGO   

 

LOGO

 

Age: 70

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.

 

 

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Table of Contents

Proposal 1—Election of Directors

 

 

 

William J. Reuter

 

Lititz, PA

 

      

LOGO    LOGO    LOGO    LOGO

 

LOGO

 

Age: 69

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.

 

 

 

Tollie W. Rich, Jr.

 

Cape Coral, FL

 

      

LOGO    LOGO    LOGO    LOGO

 

LOGO

 

Age: 69

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.

 

 

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Proposal 1—Election of Directors

 

 

 

Christine Sears

 

Harrisburg, PA

 

      

LOGO    LOGO    LOGO    LOGO    LOGO    LOGO

 

LOGO

 

Age: 63

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 noninterest 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.

 

 

 

Thomas E. Skains

 

Charlotte, NC

 

      

LOGO    LOGO    LOGO

 

LOGO

 

Age: 62

Tenure:

  BB&T since 2009

  Branch Bank since 2013

Board Committees:

  Executive (Chair)

  Risk

Public Company

Directorships:

  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.

 

 

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Table of Contents

Proposal 1—Election of Directors

 

 

 

Thomas N. Thompson

 

Owensboro, KY

 

      

LOGO    LOGO    LOGO    LOGO

 

LOGO

 

Age: 70

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.

 

 

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Table of Contents

Corporate Governance Matters

 

 

CORPORATE GOVERNANCE MATTERS

The Board of Directors regularly reviews BB&T’s corporate governance program in light of best practices, recent developments and the requirements of applicable laws and regulations.

 

 

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 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 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, recent developments and applicable laws and regulations. The Corporate Governance Guidelines address a number of matters applicable to directors, including director qualification standards and director independence requirements, share ownership guidelines, Board responsibilities, role of the independent Lead Director, retirement, meetings of non-management directors, and director compensation.

 

Director Independence

Our Board of Directors is committed to maintaining objective, independent oversight of management in upholding its responsibilities to our shareholders and in carrying out the strategic objectives of the Corporation. The value placed on the independence of our directors is seen in our corporate governance documents, board committee charters, annual independence review of our Board members and the role of our lead independent director.

In determining director independence, our Board considers the New York Stock Exchange’s (“NYSE”) bright-line independence criteria and the standards set forth in our Corporate Governance Guidelines. 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 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.

 

BB&T Corporation | 2019 Proxy Statement    15


Table of Contents

Corporate Governance Matters

 

 

After duly considering all such information, our Board of Directors has affirmatively determined that of the 15 members of the Board, the following 13 directors have no disqualifying material relationships with BB&T or its subsidiaries and are independent: Messrs. Boyer, Graney, Lynn, Patton, Reuter, Rich, Skains and Thompson, and Mmes. Banner, Cablik, Henry, Maynard and Sears. The following two directors were deemed not independent due to certain disqualifying relationships with BB&T: Messrs. King and Qubein. Each member of the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee has been determined by the Board to be “independent” in accordance with the requirements of the NYSE and our Corporate Governance Guidelines.

 

Board 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

Anna R. Cablik 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. In addition to the formal list of duties performed by our Lead Director, she also meets with regulators, participates in shareholder engagement calls and attends meetings with senior management. A more fulsome discussion of our independent lead director’s responsibilities is found in the following discussion.

 

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Corporate Governance Matters

 

 

Standing Board Committee Membership and Lead Director Responsibilities

Pursuant to BB&T’s Corporate Governance Guidelines, directors are expected to attend all Board meetings, meetings of assigned committees, and annual meetings of shareholders. All of our directors then serving attended the 2018 Annual Meeting of Shareholders.

Our Board of Directors has the following five standing committees: Audit, Compensation, Executive, Nominating and Corporate Governance and Risk. Each of these committees has a written charter available on our website at www.bbt.investorroom.com. 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. With respect to each standing committee, the current members, the principal functions and the number of meetings held in 2018 are shown below. Also shown below are the responsibilities of our Lead Director.

Each of our Board members attended more than 75% of the aggregate number of Board and Committee meetings on which they served in 2018. In addition, our Board members attend Board skills and training sessions and several other BB&T related events. During 2018, the full Board of Directors held 11 meetings.

 

             Audit           Compensation  

Nominating    

and    

Corporate    

Governance    

  Executive                Risk        

 

Jennifer S. Banner

 

   

 

LOGO

 

 

Chair

 

 

LOGO

 

 

K. David Boyer, Jr.*

 

          LOGO

 

Anna R. Cablik¨

 

        LOGO   LOGO

 

Patrick C. Graney III

 

    LOGO   LOGO    

 

I. Patricia Henry**

 

  LOGO        

 

Kelly S. King

 

        LOGO   LOGO

 

Louis B. Lynn, Ph.D.

 

  LOGO        

 

Easter A. Maynard

 

    LOGO   LOGO    

 

Charles A. Patton*

 

  Chair       LOGO  

 

Nido R. Qubein

 

        LOGO   LOGO

 

William J. Reuter

 

        LOGO   Chair

 

Tollie W. Rich, Jr.*

 

  LOGO        

 

Christine Sears

 

  LOGO        

 

Thomas E. Skains

 

        Chair  

LOGO

 

Thomas N. Thompson

 

    Chair   LOGO   LOGO  

 

  *

Serves on the Trust Committee of Branch Banking and Trust Company

  **

Chair of the Trust Committee of Branch Banking and Trust Company

  ¨   

Independent Lead Director

 

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Corporate Governance Matters

 

 

Independent Lead Director

 

 

LOGO

Anna R. Cablik

  

 

  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, and engagement with, the Chief Executive Officer on executive sessions.

  Suggests matters and issues for inclusion on the Board agenda.

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

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

Audit Committee

 

 

LOGO

Charles A. Patton

Chair

 

10 Meetings in 2018

 

  

 

Committee Members:

I. Patricia Henry, Louis B. Lynn, Ph.D., 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, including a review and evaluation of the lead audit partner.

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

Compensation Committee

 

 

LOGO

Thomas N. Thompson

Chair

 

6 Meetings in 2018

  

 

Committee Members:

Jennifer S. Banner, Patrick C. Graney III, Easter A. Maynard

 

  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.

 

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Corporate Governance Matters

 

 

Executive Committee

 

 

LOGO

Thomas E. Skains

Chair

 

4 Meetings in 2018

  

 

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

Jennifer S. Banner

Chair

 

4 Meetings in 2018

  

 

Committee Members:

Patrick C. Graney III, Easter A. Maynard, Thomas N. Thompson

 

  Reviews the qualifications and independence of members of the Board and its committees.

  Annually reviews and makes recommendations on the composition and structure of the Board and its Committees, including the chair of each Committee.

  Nominates directors for election by shareholders at the annual meeting of shareholders.

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

  Identifies and reviews qualified prospective candidates for election as directors.

  Administers BB&T’s Related Person Transactions Policy.

  Oversees the annual self-assessment of the Board and Committee members.

  Assists the Board in reviewing succession plans related to directors.

  Monitors the Board Skills and Training Program and any other director orientation and continuing education programs.

  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.

  Provides oversight of our Corporate Social Responsibility report.

 

 

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Risk Committee

 

 

LOGO

William J. Reuter

Chair

 

12 Meetings in 2018

  

 

Committee Members:

K. David Boyer, Jr., Anna R. Cablik, 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.

 

 

Board Size

Our Board currently consists of 15 directors. While the Board annually evaluates its size and structure, we believe the Board’s current size provides us with certain advantages. Financial institutions face significant regulatory and economic pressure. As a result, substantial time commitments and other demands are required of our directors and executive officers. 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.

 

Shareholder Engagement Program

GENERAL

BB&T’s shareholder engagement program is 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; and

 

   

Engagement with proxy advisory services.

 

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Our shareholder engagement program is complemented by our Investor Relations led investor events, including investor conferences and meetings, earnings calls and in 2018, an Investor Day where members of BB&T’s executive management team gave presentations on financial performance and corporate strategies.

 

 

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.

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 the past few years, our shareholder engagement outreach helped lead to several executive compensation and corporate governance changes:

 

   

the addition of performance share units and total shareholder return as components to our long-term incentive awards;

 

   

enhancing the percentage of long-term incentives being subject to robust performance criteria;

 

   

the elimination of supermajority voting provisions in our bylaws;

 

   

amendments to our bylaws to permit shareholders owning 20% or more of our common stock to call a special meeting of shareholders;

 

   

adoption of a proxy access bylaw, which provides our shareholders the ability to include shareholder Board nominees in BB&T’s proxy statement; and

 

   

the publication of an annual Corporate Social Responsibility report.

 

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2018 SHAREHOLDER ENGAGEMENT

In both the spring and fall of 2018, we contacted 48 of our 50 largest shareholders representing approximately 46% of our outstanding shares. Similar to prior years, one of the primary topics discussed was our executive compensation program and recent program improvements. Given strong say-on-pay approval votes and positive shareholder feedback received during engagement, the Compensation Committee maintained the key features of our executive compensation program with limited modification, as described in the Compensation Discussion and Analysis section of this proxy statement. In addition to our executive compensation program, we heard from several of our shareholders on the following topics:

 

What we heard from shareholders

 

 

Developments

 

When asked about potential changes to BB&T’s peer group used for executive compensation, shareholders were generally supportive, indicating that the changes appeared reasonable given that they would position BB&T closer to the median of our peer group in terms of asset size and market capitalization.   In 2019, the Compensation Committee, as part of its regular review of our compensation practices, revised our peer group by replacing two of the smaller companies (Comerica and Zions) with two larger ones (Capital One and Bank of America). These peer group changes correspond with identical changes made by our Investor Relations team and will be utilized both for determining our 2019 NEO compensation and for financial performance comparisons.
Support for the diversity of our Board of Directors, both as currently composed and in BB&T’s longtime practice of appointing diverse candidates to our Board.   We have a long-time commitment to diversity and inclusion, and believe that it is imperative that our workforce and our Board of Directors reflect our clients, communities, and shareholders. In 2018, we added two new members to our Board of Directors, bringing the percentage of our Board that is comprised of directors with diverse backgrounds to 47%.
Shareholders were generally supportive of our efforts to provide Environmental, Social and Governance (ESG) disclosures. Investors encouraged the Company to consider specific standards when providing environmental information in future ESG reports.   In our Corporate Social Responsibility (CSR) report, we detail many of our community and sustainability efforts, including, among other areas, environmental sustainability and responsible growth. We have corporate sustainability targets for reducing energy and water consumption and will look at ways to improve our disclosure in future CSR reports.

 

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 Secretary

BB&T Corporation

200 West Second Street

Winston-Salem, North Carolina 27101

Any proper communication so received will be processed by the Secretary as agent for the Board or any individually named director. Unless, in the judgment of the Secretary, the matter is not intended or appropriate for the Board, the Secretary will prepare a summary of the communication for prompt delivery to the appropriate member(s) of the Board.

 

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Corporate Governance Practices

Our governance practices promote board effectiveness and shareholder interests as set forth below:

 

BB&T Corporate Governance Practices

  Strong Board Refreshment Practices: Our Board and Committees conduct self-assessments annually and committee rotation is considered annually. In addition, our mandatory retirement age for directors promotes further refreshment. Over a majority of our Board has a tenure of six years or less, including two directors elected in 2018. In addition, our Board elected a new Lead Independent Director in 2019, as well as a new Nominating and Corporate Governance Committee Chair and a new Trust Committee Chair.

 

  Special Meetings: BB&T’s bylaws 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 (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: In 2018, we eliminated the supermajority vote requirements in our bylaws.

 

  Independent Board of Directors: 13 of our 15 directors are independent, and our Audit, Compensation and Nominating and Corporate Governance committees are composed entirely of independent directors.

 

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

 

  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 strong corporate governance program. Our Nominating and Corporate Governance Committee reviews and approves the Corporate Social Responsibility report annually and oversees culture and ethics within BB&T.

 

  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.

 

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

 

  Annual Elections: 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’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

 

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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 helps us accomplish our mission: To make the world a better place to live, by:

 

   

Helping our clients achieve economic success and financial security;

 

   

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

 

   

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

 

   

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

 

We realize our vision—“to create the best financial institution possible”—by meeting our responsibilities to our clients, associates, shareholders and communities. Our 10 values represent our 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, which occurs through a quarterly video, annual regional in-person visits and other internal communication channels. We also have an internal Culture and Conduct Risk Committee, which serves as a consolidation point for existing efforts aimed at reputation risk, sales practices risk, culture, ethics, and conduct.

  

BB&T Values

 

 

 

 

LOGO

 

Ethics at BB&T

GENERAL

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 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 tenet 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. As part of our commitment to this area of increasing interest to our shareholders and the communities we serve, in 2018 we appointed a Chief Corporate Social Responsibility Officer to help focus our efforts on these important issues.

 

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We’ve shown our commitment to being responsible corporate citizens through programs such as the following:

 

BB&T Corporate Social Responsibility

Environmental Impact—2018

 

 

 

LOGO

 

 

  In 2018 we set a goal to reduce electricity consumption by 20% over 5 years. So far we have achieved a 13% reduction and are well on our way to meeting or exceeding the goal. The largest contributing factor has been a $40 million investment in LED lighting and energy management controls at many of our branch and office locations.

 

  Bank-wide conservation initiatives helped reduce the volume of paper waste by over 10% in the past two years. BB&T purchases recycled paper and environmentally-friendly cleaning products and recycled 15.6 million lbs. of paper in 2018, helping to preserve more than 131,000 trees and 11.3 million pounds of CO2.

 

 

Education and Training

 

  The BB&T Leadership Institute, which opened its new campus in 2018, offers unique leadership development programs for our associates and provides corporate executives, business owners, BB&T clients, and other organizations with a leadership development partner to help create dynamic and effective leaders. One program offered through our Leadership Institute empowers public school principals by focusing on developing conscious leadership skills, leading change and engaging teachers.

 

  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.

 

  In 2018, Training magazine once again recognized BB&T as one of the world’s Top 125 Organizations for Excellent Training.

 

 

 

 

LOGO

BB&T Leadership Institute

 

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BB&T Corporate Social Responsibility (Continued)

Community Service

 

LOGO

 

  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 11,000 community service projects and contributed more than 640,000 volunteer hours to local charities (helping more than 16.5 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.

 

  In 2018, BB&T contributed $1.75 million to hurricane relief efforts after the devastation of Hurricanes Florence and Matthew.

 

  In 2018, BB&T associates pledged more than $3.3 million in support to local United Way offices throughout our BB&T footprint.

 

  Through the BB&T Leadership Institute, we are serving our communities by offering a leadership program designed to meet the specific leadership development needs of public school administrators at no cost to participants.

 

Our full Corporate Social Responsibility Report is on our website at https://bbt.investorroom.com/corporate-social-responsibility. 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.

Director nominees are recommended to the Board of Directors by the Nominating and Corporate Governance Committee. 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. As evidenced by the composition of our Board, the Nominating and Corporate Governance Committee strives to include director candidates who are racially and gender diverse, with skills and characteristics that, taken as a whole, will help ensure a strong and effective governing body.

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 below. The Nominating and Corporate Governance Committee then reports to the Board its recommendations concerning each director nominee. The Board considers the Nominating and Corporate Governance Committee’s recommendations when appointing directors and selecting director nominees to be submitted by BB&T to shareholders for approval at the annual meeting of shareholders.

DIRECTOR QUALIFICATIONS

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, 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.

As evidenced by the composition of our Board, the Nominating and Corporate Governance Committee is committed to diversity and considers a variety of factors to ensure that the overall composition of our Board is appropriate, such as occupational and geographic diversity, race, gender 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.

 

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DIRECTOR CANDIDATES RECOMMENDED BY SHAREHOLDERS

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

 

   

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

 

   

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

 

   

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

 

   

any agreements, understandings or arrangements between the nominee and any other person or persons with respect to the nominee’s nomination or service on the Board of Directors or the capital stock or business of BB&T;

 

   

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

 

   

a signed statement by the nominee consenting to serve as a director if elected.

The written notice also must be submitted in accordance with the general procedures for shareholder nominations (including deadlines for the notice to be received by the Secretary), which are summarized under the caption “Voting and Other Information-Proposals for 2020 Annual Meeting of Shareholders” below. Shareholders may submit, in writing, the names and qualifications of potential director nominees to the Secretary, BB&T Corporation, 200 West Second Street, Winston-Salem, North Carolina 27101, for delivery to the Chair of the Nominating and Corporate Governance Committee for consideration.

 

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 “against” 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 Nominating and Corporate Governance 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. The courses offered through our training program are in addition to courses in which our Board members regularly participate in order to maintain professional credentials, including courses related to ethics.

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

 

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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 covers in detail the operation and duties of the relevant Committee as well as their substantive business.

 

Board Refreshment and Succession Planning

We have a strong record of Board refreshment, which is integral to effective governance. While we greatly value the insight of our longer tenured directors and their detailed understanding of BB&T’s business and the banking industry, we do recognize the ongoing need to consider new director candidates who can provide new viewpoints. As a result, we believe that it is important to a board’s oversight role to have an appropriate balance between experienced directors and less tenured directors. Since 2013, we have elected eleven new Board members, while seeing several directors retire from our Board voluntarily or as a result of our mandatory age limit. Currently, 53% of our directors have a tenure of six years or fewer, including two directors elected in 2018. This director refreshment has brought to the Board new capabilities, experience and perspectives. Over the next few years, we expect continued Board turnover, as our bylaws require directors to retire at the end of the year in which they turn 75 years of age, although a director may voluntarily elect to retire earlier. The average age of our director nominees is 65 years, and we currently have five 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.

In January 2019, the Board amended the Bylaws to increase the mandatory retirement age from 72 to 75. In doing so, the Board considered the ability to retain expertise and support continuity while maintaining the Board’s strong diversity and independence, as well as public company trends regarding mandatory retirement ages and/or more flexible retirement policies, peer practice and shareholder feedback. The Board also encourages refreshment at the Committee level and annually considers Committee changes. In 2019, for example, new Committee Chairs include Jennifer S. Banner (Nominating and Corporate Governance) and I. Patricia Henry (Trust). New Committee members include Louis B. Lynn, Ph.D. (Audit); and Jennifer S. Banner, Patrick C. Graney III and Easter A. Maynard (Compensation and Nominating and Corporate Governance). We have also appointed Anna R. Cablik as our new independent Lead Director.

BOARD SELF-EVALUATIONS

On an annual basis, our Board of Directors evaluates its effectiveness over the preceding year. Each director is expected to participate in the evaluation process. The evaluation process is managed by our Nominating and Corporate Governance Committee with assistance from our Secretary. During our Board evaluation process, directors are presented with a written questionnaire designed to illicit constructive feedback from each director about his or her individual service and each committee to which that director is assigned. Responses received from each director are discussed with the full Board as well as each standing Committee in executive sessions. This feedback is used to improve procedures and policies and, as appropriate, is discussed with members of Executive Management to improve efficiencies and effectiveness.

 

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.

 

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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 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.

 

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 and third quarter of each year, management provides to the Board a detailed report on our strategic plan, goals and initiatives for the upcoming year and/or our progress on those initiatives. 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.

 

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.

 

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Corporate Governance Matters

 

 

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, the point at which risk is originated and where risks must be managed. Business Unit Risk Managers in the first line identify, assess, control and report their group’s risk profile compared to its approved risk limits.

 

   

Second Line of Defense: The RMO provides independent oversight and guidance of risk-taking across the enterprise. The RMO aggregates, integrates, and correlates risk information into a holistic picture of the corporation’s risk profile and concentrations. The RMO establishes policies and limits and reports sources and amounts of risk to Executive Management and the Board of Directors.

 

   

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. Results are reported to Executive Management and the Board of Directors according to Audit Services Policy.

Beginning in 2019, BB&T bolstered its three line of defense model with the introduction of 2nd Line of Defense Chief Risk Officers for each business segment and 1st Line of Defense Business Unit Risk Managers. The Chief Risk Officers for each business segment serve as the second line of defense independent oversight function to aggregate, integrate, and correlate all risks that occur within the business segments. As the centralized first line risk function for each Executive Manager, the Business Unit Risk Manager ensures focus for the business unit pertaining to risk and controls by providing oversight and governance regarding its control environment.

We place significant emphasis on risk management and maintain a separate Board-level Risk Committee which oversees risk reporting to the Board of Directors and functions as a significant part of our risk management framework. Among its responsibilities, the Risk Committee monitors our risk profile, approves risk appetite statements, and provides input to management regarding our risk appetite and risk profile.

The RMO is led by the Chief Risk Officer (CRO) and is responsible for facilitating effective risk management oversight, measurement, monitoring, reporting, and consistency. The CRO has direct access to our Board of Directors and Executive Management to communicate any risk issues (current or emerging) as well as the performance of the risk management activities throughout the enterprise. The CRO also chairs the Risk Management Committee (RMC), which provides oversight on a fully integrated view of risks across our organization, including strategic, compliance, credit, liquidity, market, operational, and reputation risks.

INFORMATION SECURITY AND CYBERSECURITY

We are committed to protecting personal and financial information, and our Board of Directors and Executive Management team devote a significant amount of time to information security and cybersecurity risks. Members of the Risk Committee of the Board receive regular reports from our CRO related to information technology and information security, including potential risks to our Company. The Risk Committee may retain these reports, meet throughout the year with risk management advisors, and discuss with Executive Management any recommendations received. In addition, two members of our Board of Directors (Ms. Banner and Mr. Boyer) have cybersecurity/technology experience.

The Chief Information Security Officer meets at least quarterly with the Board to provide updates on cybersecurity and information security risk, and the Board annually reviews and approves our Information Security Program and Information Security Policy. The Information Security Committee is an internal committee created to ensure that members of Executive Management overseeing multiple business units actively understand information security protections and associated risks. The Information Security Committee engages in key decisions to help set direction for information security strategy, as well as understand and prioritize information security capabilities and associated risk remediation.

 

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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

RESPONSIBILITIES

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 Audit 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.

SHAREHOLDER RATIFICATION

Our shareholders are being asked to ratify the appointment of PwC for 2019 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 2019, 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 2019.

Fees to Independent Registered Public Accounting Firm

 

The following table shows the aggregate fees incurred by the Corporation for professional services by PwC for fiscal years 2018 and 2017:

 

    

 

2018 ($)

 

 

 

                         2017 ($)                        

 

Audit Fees

 

  7,350,000

 

  8,410,000

Audit-Related Fees

 

  2,368,000

 

  3,096,000

Tax Fees

 

     274,000

 

     309,000

All Other Fees

 

       18,000

 

            900

Total

 

10,010,000

 

11,815,900

Audit Fees. This category includes fees billed for professional services for the integrated audits of our consolidated financial statements, including the audit of the effectiveness of internal control over financial reporting. This category also includes reviews of 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 other services that are reasonably related to the performance of the audits of our consolidated financial statements and effectiveness of internal control over financial reporting that are not reported under the audit fees category above. These services consist of service organization control reports, other attestation engagements traditionally performed by the independent registered public accounting firm, pre-implementation assessments of new accounting standards, due diligence services related to mergers and acquisitions, and audits of our employee benefit plans.

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

All Other Fees. This category includes fees billed for non-audit services and subscription-based services including software licenses, benchmarking services, training, and other advisory services.

The Audit Committee considered the compatibility of the non-audit services performed by, and fees paid to, PwC in 2018 and determined that such services and fees are compatible with the independence of PwC.

 

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

 

 

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 2018, all of the services provided by our independent registered public accounting firm were reviewed and approved by the Audit Committee.

 

Audit Committee Report

The Audit Committee of the Board of Directors is currently composed of five independent directors and operates under a charter adopted by the Audit Committee on January 29, 2019. 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, 2018, filed with the SEC on February 26, 2019.

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

Louis B. Lynn, Ph.D.

  

 

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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.

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 2018, we compensated our named executive officers, which include the Chief Executive Officer, or CEO, and each of the other executive officers named in the 2018 Summary Compensation Table (the named executive officers or “NEOs”). The Compensation Discussion and Analysis is composed of the following sections:

 

   

Section 1—Executive Compensation Highlights—Page 34

   

Section 2—Our Executive Compensation Program—Page 39

   

Section 3—Our Executive Compensation Program Pay Decisions—Page 40

   

Section 4—BB&T’s Executive Compensation Process—Page 47

   

Section 5—Other Aspects of BB&T’s Executive Compensation Program and Governance Practices—Page 50

Section 1—Executive Compensation Highlights

 

Our Named Executive Officers

Our NEOs include the Chief Executive Officer and each of the other executive officers named in the 2018 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

 

46

Christopher L. Henson

 

President and Chief Operating Officer

 

34

Clarke R. Starnes III

 

Senior Executive Vice President and Chief Risk Officer

 

36

Daryl N. Bible

 

Senior Executive Vice President and Chief Financial Officer

 

11

Barbara F. Duck

 

Senior Executive Vice President and Chief Information Officer

 

31

Donna C. Goodrich

 

Senior Executive Vice President and Treasurer

 

33

 

2018 BB&T Performance

 

2018 Performance Highlights

 

LOGO

Record Taxable Equivalent Revenues ($11.7 billion) Record Net Income Available to Common Shareholders ($3.1 billion) Record Diluted Earnings Per Share ($3.91)

  Increased our return on average assets in 2018 to 1.47%, up from 1.09% for 2017.

 

  Increased our return on average common shareholders’ equity to 11.50%, up from 8.25% in 2017.

 

  Improved our efficiency ratio to 60.0% for 2018, down from 65.8% in 2017.

 

 

  

  Achieved historically low level of non-performing assets of 0.26% of total assets, as of December 31, 2018.

 

  Maintained strong capital and liquidity ratios.

 

  Provided 3.74% dividend yield and a 22.7% increase in our quarterly dividend during 2018.

 

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Compensation Discussion and Analysis

 

 

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, to support and drive our strategic objectives, and to 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 program is 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;

 

   

Compensation opportunities are provided that are based on relative industry performance and are aligned with internal performance and BB&T’s risk management;

 

   

Executive Management must meet significant stock ownership requirements to more 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.

Our compensation program is designed to align with BB&T’s values and objectives and assist BB&T in supporting its associate value proposition. Specifically, the compensation program is 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 and retain high-performing 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 and internal assessments and BB&T’s risk management and corporate governance guidelines.

 

Performance Metrics

The Compensation Committee regularly considers a variety of financial and non-financial metrics when evaluating performance and making compensation decisions. By assessing several quantitative and qualitative metrics over different time 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. In particular, the Compensation Committee views the following metrics as key drivers of sustained and longer-term shareholder value and evaluates BB&T’s performance in these metrics relative to our peer group:

 

Growth

 

 

Performance

 

 

 

Credit Quality/Capital Metric/Debt
Rating

 

 

  Earnings per share growth

 

  Revenue growth

 

  Loan growth

 

 

  Return on assets

 

  Return on common equity

 

  Return on tangible common equity

 

  Efficiency ratio

 

  Total shareholder return

 

 

  Non-performing assets/assets

 

  Common Equity Tier 1 capital ratio

 

  Average debt rating

 

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Compensation Discussion and Analysis

 

 

In addition, as outlined below, the Compensation Committee uses four metrics (return on assets, earnings per share, return on common equity and total shareholder return) directly in BB&T’s short- and long-term incentive programs.

 

 

METRIC

  

 

PURPOSE

EARNINGS PER SHARE (“EPS”)

AND RETURN ON ASSETS (“ROA”)

  

 

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 the Annual Incentive Award 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”)

  

 

A three-year average ROCE is used to measure our long-term profitability for PSU and LTIP 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 PSU and LTIP awards. Payments under our 2018-2020 LTIP and 2018 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. Measuring relative TSR further aligns compensation to the performance of BB&T as compared to our peers.

 

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 an executive risk scorecard 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.

 

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Compensation Discussion and Analysis

 

 

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

 

      we practice pay for performance; approximately 86% of CEO, and approximately 80% of the other NEOs’ total target compensation for 2018 is based on BB&T’s performance

  

 

Î   we don’t offer incentives that would provide payouts for negative earnings

 

      consider multiple quantitative and qualitative factors in measuring performance of BB&T and our NEOs (EPS, ROA, ROCE, TSR and qualitative performance factors)

  

 

Î   we don’t award stock options

 

       two-thirds of our long-term incentives include robust performance criteria  

  

 

Î   we don’t reprice outstanding stock options

 

      incorporate both absolute and relative performance goals into our incentive plans

  

 

Î   we don’t provide dividends on unvested equity awards to our NEOs

 

      provide for adjustments of payouts and/or forfeiture of unvested awards for negative risk outcomes

  

 

Î   we don’t offer broad-based perquisites such as personal club memberships, corporate housing or automobile allowances

 

      base compensation decisions on median compensation data of the peer group

  

 

Î   we don’t gross-up payments for excise taxes

 

      utilize a broad-reaching clawback policy

  

 

Î   we don’t permit hedging or speculative trading of BB&T common stock

 

      maintain rigorous stock ownership requirements

  

 

      restrict pledging of BB&T common stock

  

 

      review tally sheets and a risk scorecard for our executives

  

 

      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

  

 

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Compensation Discussion and Analysis

 

 

2018 Target Pay Program Mix

 

The significant majority of our executive pay program is performance-based. Approximately 86% 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 illustrate target compensation established for 2018 for our CEO, and the average target compensation for our other NEOs. Such compensation consists of base salary, the Annual Incentive Award, and PSU, LTIP, and RSU awards granted in 2018. The charts also show the large percentage of our NEO compensation that is variable and performance-based.

 

LOGO

CEO OTHER NEOs

 

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Compensation Discussion and Analysis

 

 

Section 2—Our Executive Compensation Program

2018 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

     

 

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

 

Short-Term Incentives

 

       

 

Annual Incentive Award

 

 

  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 48%);

 

  ROA (weighted at 32%); and

 

  Qualitative performance assessment (weighted at 20%)

 

  Quantitative performance levels (threshold, target, maximum) are established relative to Board approved EPS internal forecasts and relative to our peer group ROA performance

 

  The qualitative performance component is determined by the Compensation Committee based on performance relative to strategic priorities established in early 2018

 

 

Long-Term Incentives

 

       

 

PSU 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 annual operating loss for the year or if a negative risk outcome occurs

 

  Dividends are not paid on unvested RSUs

 

 

 

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Compensation Discussion and Analysis

 

 

Our 2018 Compensation Program Updates

 

In early 2018, the Compensation Committee made limited modifications to our executive compensation program. These modifications were the result of the Compensation Committee’s comprehensive review of our executive compensation program with the assistance of its independent compensation consultant. In making limited modifications, the Compensation Committee also considered the strong support of our executive compensation program by our shareholders, who approved our say-on-pay proposal with approximately 94% support in 2018. As outlined below, the Compensation Committee’s actions further align our compensation philosophy with shareholders’ interest by placing additional emphasis on pay-for-performance.

 

2018 Executive Compensation Program Modifications

  Added a Qualitative Performance Component to our Annual Incentive Award: The Compensation Committee firmly believes that in addition to formulaic metrics, it is critical to consider a broad scope of assessment criteria in determining a balanced perspective of overall Corporate performance. Beginning in 2018, the Compensation Committee incorporated a qualitative performance component in our Annual Incentive Award that is based on the Compensation Committee’s assessment of the Corporation’s performance in consideration of its strategic priorities. As outlined below, this qualitative performance component is targeted at 20% of the Annual Incentive Award.

 

  Modest Base Salary Increases: The Compensation Committee approved a 2% increase in base salary for each of our NEOs, consistent with the overall Corporation’s merit increase practices.

 

Section 3—Our Executive Compensation Program Pay Decisions

Summary of Overall Compensation

 

The table below summarizes NEO compensation for the 2018 performance year, which consists of base salary, the Annual Incentive Award, RSU and PSU awards granted in 2018, and 2016-2018 LTIP award payments. Additional detail for each of these items follows this table.

2018 COMPENSATION OVERVIEW TABLE

 

           

Name

 

Base

Salary

($)

   

Annual

Incentive

Award

($)

   

Restricted

Stock Unit

Awards(1)

($)

   

Performance

Share Unit

Awards(1)

($)

   

LTIP

($)

   

2018

Total(2)

($)

 

Kelly S. King

    1,091,125       2,659,617       1,603,930       1,603,930       1,400,857       8,359,459  

Christopher L. Henson

    710,500       1,154,563       767,294       767,294       570,116       3,969,767  

Clarke R. Starnes III

    598,850       860,847       586,841       586,841       432,474       3,065,853  

Daryl N. Bible

    598,850       860,847       586,841       586,841       432,474       3,065,853  

Barbara F. Duck

    517,650       647,063       398,580       398,580       352,395       2,314,268  

Donna C. Goodrich

    517,650       647,063       398,580       398,580       352,395       2,314,268  

 

(1)   Amounts reflect the value the Compensation Committee sought to deliver through the PSU awards at target and RSU awards granted in February 2018. Amounts are not immediately available to the NEO as the units vest over time, are subject to performance criteria, and remain subject to forfeiture provisions.
(2)   The Summary Compensation Table differs from this table because the Summary Compensation Table includes information on (i) the grant date fair value of PSU awards (at the target 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.

 

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Compensation Discussion and Analysis

 

 

2018 TARGET AWARD OPPORTUNITIES

Each of our NEOs has a target award opportunity for annual and long-term goals, which represents the amount of award received if we achieve the performance goals set by the Compensation Committee. The table below summarizes the award opportunities for 2018 at target level of performance, which remain unchanged from 2017.

 

2018 Target Award Opportunities (as a % of base salary)
  Name  

Annual

         Incentive Award         

Opportunity

 

         Long-Term Incentive          

Award Opportunity*

Kelly S. King

  195   440

Christopher L. Henson

  130   325

Clarke R. Starnes III

  115   295

Daryl N. Bible

  115   295

Barbara F. Duck

  100   230

Donna C. Goodrich

  100   230

 

*   For 2018, the target long-term incentive award opportunity for each NEO is allocated equally among PSUs, RSUs and LTIP awards.

Base Salary

 

Effective April 1, 2018, the Compensation Committee approved a 2% increase in base salary for each NEO, consistent with the overall Corporation’s merit increase practices.

Short-Term Incentives

 

ANNUAL INCENTIVE AWARD

Our Annual Incentive Award is a cash incentive based on the following three components:

 

 

EPS (48%)

 

 

 

LOGO

 

 

 

ROA (32%)

 

 

 

LOGO

 

 

 

Qualitative Performance (20%)

 

The quantitative corporate performance goals are established annually by the Compensation Committee and include an EPS target goal based on our internal earnings plan and an ROA target goal based on our ROA performance relative to our peers. The qualitative performance component is based on the Compensation Committee’s assessment of the attainment of key strategic priorities during the performance period.

While payouts based upon the EPS component and the ROA component are independent from one another, a payout under the qualitative performance component requires the Company to meet threshold performance of either the EPS component or the ROA component. Although payouts under each component of our Annual Incentive Award range from 0% to 150%, the maximum combined amount that may be paid to NEOs is limited to 125% of the target award opportunity.

 

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Compensation Discussion and Analysis

 

 

The features of the Annual Incentive Award and 2018 payouts under each component can be seen below:

 

EPS component:

 

    Weighted at 48% of the Annual Incentive Award.

 

    Target is set based on preset internal performance goals, with a maximum goal set at 5% above the target, and a minimum goal set at 10% below the target.

 

Payout Target and % of Target Award Opportunity
Threshold    Target        Maximum           Actual      
     

$3.56

   $3.96        $4.16           $4.03*      
     

25%

   100%        150%           117.06%      

 

ROA component:

 

    Weighted at 32% of the Annual Incentive Award.

 

    Target goal is based on BB&T’s ROA relative to our peer group.

 

  Payout Target and % of Target Award Opportunity
Threshold       Target       Maximum          Actual      

25th   

Percentile   

  

50th   

Percentile   

  

75th      

Percentile      

  

1.51% or      

79th      

Percentile*      

     

50%   

   100%       150%          150%      
 

 

   *   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.  

 

 

Qualitative performance component:

 

   

Weighted at 20% of the Annual Incentive Award.

 

 

   

Payouts under the qualitative performance component are not dependent on obtaining a threshold assessment level, but are dependent on meeting either threshold EPS performance or threshold ROA performance.

 

 

Payout Target and % of Target Award Opportunity
Minimum    Target    Maximum         Actual     
     

0%

   100%    150%         150%     

 

   

Strategic priorities were defined by the Compensation Committee early in 2018 at the same time as the financial goals.

 

 

   

Early in 2019, the Compensation Committee evaluated performance on the defined strategic priorities as well as other considerations. Based on its assessment, the Compensation Committee felt strongly that 2018 was an extraordinary year for BB&T and determined the qualitative component was earned at 150% of target. The Compensation Committee recognized that due to the overall award payment cap of 125% of target, the achievement of 150% of target for the qualitative component would not materially impact executive payouts; however, based on the Company’s strong performance, the Compensation Committee determined that a score of 150% of target for the qualitative component was appropriate.

 

 

   

The primary strategic priorities and other factors that led to the Compensation Committee’s decision are set forth below; note that the Compensation Committee did not assign particular weights to any single category:

 

 

   

Enhancements in Technology and Cybersecurity: Enhancing our digital capabilities to meet tomorrow’s challenges is critical to our success. In 2018, we continued to expand the implementation and utilization of robotics and automation technology, while also enhancing our cybersecurity and fraud detection capabilities.

 

 

   

Focus on the “Perfect Client Experience”: We are committed to keeping the customer first and foremost in decisions we make. In 2018, we launched our enterprise-wide Voice of the Client program, which provides us near real-time feedback from our clients. We also introduced our Financial Insights platform to perform customized analysis for clients without in-house financial expertise. In addition, we successfully opened a state-of-the-art BB&T Leadership Institute facility, designed to help client executives lead more effectively.

 

 

   

Achievements in Financial Performance Measures and Market Results: We are focused on providing excellent returns for our shareholders. In 2018, BB&T reported record annual earnings, and increased our 2018 relative TSR performance, as compared to 2017, by achieving the highest TSR performance in our peer group. Our strong results met our profit plan and expense management goals.

 

 

   

Successful Risk and Compliance Initiatives and Results: The successful management of risk is essential to achieving our vision and mission. In 2018, we continued enhancement of our Anti-Money Laundering controls. We optimized our risk management framework and managed overall risk levels within Board-approved risk appetite.

 

 

   

Other Corporate Events: We achieved several other milestones in 2018, including successfully completing the acquisition of Regions Insurance Group. We utilized our “Disrupt to Thrive” initiative to assist with organizational simplification and improved diversity and inclusion through corporate initiatives, including new internal business resource groups. Through programs such as our Lighthouse Project and BB&T Financial Foundations, we continued to strengthen the communities we serve.

 

 

 

    2018 Payout:
  After combining the results for the EPS, ROA and the qualitative performance component, the total 2018 Annual Incentive Award for the NEOs was capped at 125% of the target award opportunity.  

 

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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 2018, these awards reflected a mix of cash and equity and included: (i) PSUs, (ii) our LTIP Program and (iii) RSUs, each as discussed below.

PERFORMANCE SHARE UNITS (PSUS)

PSUs have been a component to our executive compensation program since 2017. The Compensation Committee chose PSUs to increase the emphasis on performance in our long-term incentive program by linking payouts to 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 2018 PSUs include the following features:

 

   

Performance Period: Three years.

 

 

   

Vesting Requirements and Forfeiture: Three-year cliff vesting, to be paid out in March 2021, 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 significant 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 over the three-year performance period. 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:

 

2018 PSU Performance Matrix

 

 

BB&T ROCE Relative to Peer Group ROCE*

and % of Target Award Opportunity

 

 

Threshold

 

 

 

Target

 

 

 

Maximum

 

 

25th Percentile

 

 

 

50th Percentile

 

 

 

62 12 Percentile

 

 

50%

 

 

 

100%

 

 

 

125%

 

 

  *   Our ROCE performance includes adjustments to our GAAP net income approved by the Compensation Committee. Please refer to Annex A for a GAAP reconciliation. 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.

 

   

TSR Modifier: Payouts calculated based on relative ROCE performance are subject to a potential 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 2018 PSUs will be adjusted as follows:

 

 

 

 

Percentile Performance of BB&T TSR

Relative to Peer Group TSR

 

 

 

Percent Reduction
in Payout*

 

 

< 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 2018 PSUs is 125% of the PSUs awarded.

 

 

   

No Dividends: Dividends are not paid on unvested PSUs.

 

 

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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 Compensation Committee believes that with approximately 67% of the NEOs’ long-term incentive compensation currently consisting of equity, it was appropriate to pay the 2016-2018 LTIP awards in cash, especially in light of the substantial BB&T common stock holdings of each of the NEOs.

 

2018-2020 LTIP Cycle (Payable in 2021)

The 2018-2020 LTIP awards will continue to measure and reward BB&T’s ROCE performance relative to the Corporation’s peer group over the three-year performance period, subject to BB&T meeting or exceeding an average ROCE of 3% 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 significant negative risk outcome occurs as determined by the Compensation Committee. The 2018-2020 LTIP awards also are subject to a TSR modifier 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:

2018-2020 LTIP Performance Matrix

 

 

BB&T ROCE Relative to Peer Group ROCE*

and % of Target Award Opportunity

 

 

Threshold

 

 

 

Target

 

 

 

Maximum

 

 

25th Percentile

 

 

 

50th Percentile

 

 

 

62 12 Percentile

 

 

50%

 

 

 

100%

 

 

 

125%

 

 

  *   Our ROCE performance includes adjustments to our GAAP net income approved by the Compensation Committee. Please refer to Annex A for a GAAP reconciliation. Payout percentages will be interpolated for results between the 25th and 62 12 percentiles.  

 

 

 

Percentile Performance of BB&T TSR

Relative to Peer Group TSR

 

 

 

Percent Increase or
Reduction in Payout*

 

 

< 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%.

As a result, payouts on the 2018-2020 LTIP will be calculated as follows:

 

Target Award Opportunity

(as % of base salary)

 

LOGO

  3-Year  Average Salary  

LOGO

 

Performance Scale Payout %,

Adjusted as Necessary Based

on Relative TSR Performance

 

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2016-2018 LTIP Cycle (Paid in March 2019)

Our 2016-2018 LTIP awards include the following 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 significant negative risk outcome occurs as determined by the Compensation Committee.

 

 

   

Performance Metric: ROCE, with payouts based on BB&T’s ROCE performance over the three-year performance period. 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 LTIP Cycle Performance Matrix below. Under the matrix, our actual ROCE performance relative to the peer group translates to a corresponding payout percentage on a simple interpolation basis.

 

The 2016-2018 LTIP awards were calculated as follows:

 

Target Award Opportunity

(as % of base salary)

 

LOGO

  3-Year  Average Salary  

LOGO

 

 

Performance Scale Payout %,

Adjusted as Necessary Based

on Relative TSR Performance

 

2016-2018 LTIP Cycle Performance Matrix

 

 

BB&T ROCE Relative to Peer Group ROCE*

and % of Target Award Opportunity

 

Threshold

 

 

 

Target

 

 

 

Maximum

 

 

 

Actual**

 

 

25th Percentile

 

 

 

50th Percentile

 

 

 

62 12 Percentile

 

 

 

9.83%, or 40 12 Percentile

 

 

50%

 

 

 

100%

 

 

 

125%

 

 

 

81.04%

 

 

  *   Our ROCE performance includes adjustments to our GAAP net income approved by the Compensation Committee. Please refer to Annex A for a GAAP reconciliation.  
  **   Payout percentages will be interpolated for results between the 25th and 62 12 percentiles.  

 

   

TSR Modifier: Payouts calculated based on relative ROCE performance were subject to a potential TSR modifier (reduction only) based on our TSR percentile performance relative to our peer group for the three-year performance period, as follows:

 

 

 

 

Percentile Performance of BB&T TSR

Relative to Peer Group TSR

 

 

 

Percent Reduction in
Payout

 

 

< 25th

 

 

 

20% reduction

 

 

³ 25th and < 40th

 

 

 

10% reduction

 

 

³ 40th

 

 

 

no reduction

 

Actual relative TSR performance over the performance period resulted in no reduction to the 2016-2018 LTIP award.

RESTRICTED STOCK UNITS (RSUS)

 

The 2018 RSUs have the following features:

 

   

Vesting Period: The RSUs vest ratably over 3 years.

 

 

   

Vesting Requirements and Forfeiture: The 2018 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.

 

 

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Performance Adjustments and Considerations

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

 

   

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 Compensation Committee may also make adjustments to the reported performance of peer group members for awards that measure our performance relative to the peer group.

 

   

A reconciliation of adjustments that the Compensation Committee made for the purposes of certifying 2018 performance is included in Annex A to this proxy statement.

Unless otherwise indicated, discussions of 2018 performance for compensation purposes in this proxy statement include these adjustments made by the Compensation Committee.

 

Perquisites Practices

Our NEOs receive limited perquisites and other personal benefits that the Compensation Committee believes are reasonable and consistent with our overall executive compensation program. Such perquisites generally include residential security services, executive physical wellness examinations, occasional use of sports tickets, and spousal participation in limited corporate events. Our NEOs do not receive perquisites such as personal club memberships, corporate housing or automobile allowances.

 

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 generally increasing substantially as a participant approaches retirement.

 

   

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. 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 46 years of service at BB&T.

Moreover, we view the Pension Plan and the Excess Plan as important retention tools for the NEOs and other highly compensated associates. 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 2018, 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 2018 permitted associates to contribute up to 50% of their cash compensation, on a tax-deferred, or after tax 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;

 

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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 2018, 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.

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 the executive compensation program 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 (“Meridian”). The Compensation Committee also considers summary analyses of total compensation delineating each compensation element (“tally sheets”), an executive risk scorecard 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 attends and participates in Compensation 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 an executive risk scorecard for the prior year

   

   Review projected financial results with proposed adjustments for incentive plans and consider qualitative performance component for the Annual Incentive Award

   

   Receive an 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

   Assess qualitative performance for the Annual Incentive Award

   

   Determine payments/vesting for incentive plans with performance periods completed the prior year (Annual Incentive Award, LTIP, PSUs and RSUs)

   

   Approve our peer group for the current year

   

   Determine compensation for the current year—base salary increases (if any), cash incentive plans (Annual Incentive Award 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 and consider qualitative performance component for the Annual Incentive Award

 

 

July Meeting

 

 

   Joint meeting among the Compensation, Audit and Risk Committees

   

   Conduct a mid-year review of the current executive risk scorecard

 

 

October Meeting

 

 

   Receive a risk management update on risk appetite and events that could impact incentive compensation

   

   Review projected financial results with proposed adjustments for incentive plans and consider qualitative performance component for the Annual Incentive Award

   

   Review of Executive Management compensation with the Compensation Committee’s independent compensation consultant, Meridian

 

 

December Meeting

 

 

   Review projected financial results with proposed adjustments for incentive plans and consider qualitative performance component for the Annual Incentive Award

   

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

The Compensation Committee determined that, based on its review, Meridian is independent and that its engagement did not present any conflicts of interest. In making this determination, the Compensation Committee noted that Meridian (a) provides no other services to BB&T other than compensation consulting, (b) has no personal or business relationships with

 

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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 also determined that it was independent from our management and confirmed this in a written statement delivered to the Chair of the Compensation Committee.

During 2018, 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 relative to peers and advised the Compensation Committee of plans or practices that may be changed to improve effectiveness;

 

   

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

 

   

reviewed, and advised the Compensation Committee on, the composition of our peer group;

 

   

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, for 2018, no changes were needed. Given the limited number of banks of our size and market cap, we are among the largest of our peers, and positioned near the 75th percentile of our peer group on both measures.

 

BB&T 2018 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 Award (ROA) and our PSUs and LTIP (ROCE, TSR). The Compensation Committee also reviewed the incentive plan design practices of this group when evaluating potential changes to our program for 2018.

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.

 

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In addition to the external peer group analysis, the Compensation Committee also reviews detailed tally sheets for each executive and reviews the total compensation for each member 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.

2019 PEER GROUP CHANGES

For 2019, as part of its annual review of our executive compensation program, the Compensation Committee replaced the two members of our peer group below $100 billion in assets with two larger financial institutions by making the following changes:

 

Outgoing Peers

  

Incoming Peers

Comerica

  

Capital One

Zions

  

Bank of America

In making these changes, the Compensation Committee considered that the addition of the two larger financial institutions will position BB&T closer to the median of our peer group in terms of asset size and market capitalization. Under the updated peer group, as of December 31, 2018, BB&T would be positioned at approximately the 58th percentile in both asset size and market capitalization. As noted earlier, shareholders we contacted were supportive of these changes.

 

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 Compensation 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 2018 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.

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.

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.

 

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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        

 

$6,579,000

Christopher L. Henson

 

3x Base Salary        

 

$2,142,000

Clarke R. Starnes III

 

3x Base Salary        

 

$1,805,400

Daryl N. Bible

 

3x Base Salary        

 

$1,805,400

Barbara F. Duck

 

3x Base Salary        

 

$1,560,600

Donna C. Goodrich

 

3x Base Salary        

 

$1,560,600

 

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. In addition, the Compensation Committee meets twice annually in a joint session with the Audit and Risk Committees.

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 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 an executive risk scorecard 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

 

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when the grants and all key terms are approved by the Board or the Compensation Committee, as the case may be. For the 2018 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

Prior to the implementation of the Tax Cuts and Jobs Act of 2017 (“Tax Cut Act”), our compensation philosophy and policies were generally intended to comply with Section 162(m) to the extent the Compensation Committee determined appropriate. 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”).

For taxable years beginning on and after January 1, 2018, the Tax Cut Act generally eliminated the “performance-based” compensation exception under 162(m). The Tax Cut Act also expanded the $1 million per covered employee annual limitation on deductibility to a larger group of named executive officers. In addition, the Tax Cut Act also provided 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 of the Tax Cut Act, we expect that the Corporation may no longer take an annual deduction for any compensation paid to any of its covered employees in excess of $1 million per executive officer. We also expect that equity awards granted under arrangements entered into or materially modified after November 2, 2017 generally will not be deductible to the extent they result in compensation to our covered employees that exceeds $1 million in any one year for any such officer.

Due to the continued importance and benefit to the Corporation and our shareholders of awarding compensation that is structured to properly incentivize our executive officers, the Compensation Committee believes that it is in our best interests to retain the flexibility in awarding compensation that is not subject to limitations imposed by the tax laws, even if some awards may be non-deductible compensation expenses to the Corporation.

 

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.

 

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Compensation Committee Report on Executive Compensation

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

The Compensation Discussion and Analysis section of this proxy statement is management’s report on BB&T’s 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, 2018.

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

 

  Thomas N. Thompson, Chair               Patrick C. Graney III  
  Jennifer S. Banner               Easter A. Maynard  

 

Compensation Committee Interlocks and Insider Participation

The directors who constituted the Compensation Committee during some or all of 2018 were Anna R. Cablik, Patrick C. Graney III, Louis B. Lynn, Ph.D., Eric C. Kendrick, Easter A. Maynard and Thomas N. Thompson. None of the individuals who served as a member of the Compensation Committee during 2018 was at any time an officer or an employee of BB&T or any of its subsidiaries had any relationship with us requiring disclosure under SEC regulations.

 

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COMPENSATION OF EXECUTIVE OFFICERS

2018 SUMMARY COMPENSATION TABLE

 

   Name and

   Principal Position

 

 

Year

 

   

Salary

($) (1)

 

   

Stock

Awards

($) (2)

 

   

Option

 Awards 

($) 

 

 

Non-Equity

Incentive

Plan

 Compensation 

($) (3)

 

 

 

Change in

Pension

Value &

Non-Qualified

Deferred

 Compensation 

Earnings

($) (4)

 

 

All Other

 Compensation 

($) (5)

 

 

Total

($)

 

Kelly S. King     2018       1,091,125       3,067,442       4,060,475     365,634     8,584,676   
Chairman and Chief     2017       1,075,000       3,134,169       4,757,813   3,382,618   325,096     12,674,696  

Executive Officer

 

   

 

2016

 

 

 

   

 

1,075,000

 

 

 

   

 

2,122,925

 

 

 

  601,998

 

  4,340,969

 

  3,189,647

 

  279,544

 

   

 

11,610,083

 

 

 

Christopher L. Henson     2018       710,500       1,467,414       1,724,679     163,161     4,065,754  
President and Chief     2017       700,000       1,499,400       2,008,854   2,832,746   152,101     7,193,101  

Operating Officer

 

   

 

2016

 

 

 

   

 

700,000

 

 

 

   

 

863,971

 

 

 

  244,998

 

  1,835,021

 

  1,975,680

 

  150,858

 

   

 

5,770,528

 

 

 

Clarke R. Starnes III     2018       598,850       1,122,306       1,293,321     126,475     3,140,952  
Senior Executive Vice     2017       590,000       1,146,759       1,509,063   2,020,281   118,145     5,384,248  

President and Chief

Risk Officer

 

    2016       590,000       657,466     186,437   1,379,076   1,704,775   103,852     4,621,606  
Daryl N. Bible     2018       598,850       1,122,306       1,293,321        67,350   126,475     3,208,302  
Senior Executive Vice     2017       590,000       1,146,759       1,509,063      827,608   118,145     4,191,575  

President and Chief

Financial Officer

 

    2016       590,000       657,466     186,437   1,379,076      583,745   103,852     3,500,576  
Barbara F. Duck     2018       517,650       762,266          999,458     98,926     2,378,300  
Senior Executive Vice     2017       510,000       778,763       1,131,111   1,405,185   91,324     3,916,383  

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     2018       517,650       762,266          999,458     98,926     2,378,300  
Senior Executive Vice     2017       510,000       778,763       1,131,111   1,635,409   91,324     4,146,607  

President and Treasurer

 

   

 

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 2018 was as follows: Mr. King (12.7%), Mr. Henson (17.5%), Mr. Starnes (19.1%), Mr. Bible (18.7%), Ms. Duck (21.8%) and Ms. Goodrich (21.8%).
(2)   The amounts in the “Stock Awards” column reflect the grant date fair value of the PSUs and RSUs awarded during the year shown. For 2018, RSUs were valued using the grant price of $54.60 less the present value of projected future dividends of $3.17, or $51.43; consistent with the approach for ASC 718 expensing. For 2018, PSUs were valued using the Monte Carlo simulation assuming a probable payout as of the grant date of target performance and the fair value associated with a probable payout of target ($52.99 per share). At the maximum level of performance, the value of PSUs awarded in 2018 would be: $1,945,793 for Mr. King; $930,822 for Mr. Henson; $711,921 for Mr. Starnes; $711,921 for Mr. Bible; $483,534 for Ms. Duck; and $483,534 for Ms. Goodrich. As discussed in the Compensation Discussion and Analysis, the outstanding PSUs and RSUs remain subject to vesting criteria and accordingly, the NEO may never receive any value from such award.
(3)   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

 

 

2018 Annual

Incentive

Award

($)

 

2016-2018

LTIP

($)

 

Kelly S. King

 

 

 

 

 

2,659,617

 

 

 

 

 

 

 

1,400,857

 

 

 

 

Christopher L. Henson

 

 

 

 

 

1,154,563

 

 

 

 

 

 

 

570,116

 

 

 

 

Clarke R. Starnes III

 

 

 

 

 

860,847

 

 

 

 

 

 

 

432,474

 

 

 

 

Daryl N. Bible

 

 

 

 

 

860,847

 

 

 

 

 

 

 

432,474

 

 

 

 

Barbara F. Duck

 

 

 

 

 

647,063

 

 

 

 

 

 

 

352,395

 

 

 

 

Donna C. Goodrich

 

 

 

 

 

647,063

 

 

 

 

 

 

 

352,395

 

 

 

 

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(4)   The amounts listed 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. There were certain reductions in the present value of the accumulated benefit under these plans from December 31, 2017 to December 31, 2018. In accordance with SEC regulations, these decreases in the present value are reflected as zero amounts. For the BB&T Corporation Pension Plan, the reductions were as follows: Mr. Henson ($117,924); Mr. Starnes ($140,551); Mr. Bible ($113,886); Ms. Duck ($171,157); and Ms. Goodrich ($141,425). For the BB&T Corporation Non-Qualified Defined Benefit Plan, the reductions were as follows: Mr. King ($2,938,793); Mr. Henson ($341,748); Mr. Starnes ($599,516); Ms. Duck ($83,970); and Ms. Goodrich ($34,573). For the BB&T Corporation Pension Plan, the value for Mr. King increased by $14; for the BB&T Corporation Non-Qualified Defined Benefit Plan, the value for Mr. Bible increased by $181,236. 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 2018 is as follows:

 

Name

 

  

 

401(k)

Matching

Contribution($)

 

  

 

NQDC

Matching

Contribution($)

 

  

Perquisites

($)*

 

 

Kelly S. King

 

  

 

16,500

 

  

 

334,574

 

  

 

14,560

 

 

Christopher L. Henson

 

  

 

16,500

 

  

 

146,661

 

  

 

 

 

Clarke R. Starnes III

 

  

 

16,500

 

  

 

109,975

 

  

 

 

 

Daryl N. Bible

 

  

 

16,500

 

  

 

109,975

 

  

 

 

 

Barbara F. Duck

 

  

 

16,500

 

  

 

82,426

 

  

 

 

 

Donna C. Goodrich

 

  

 

16,500

 

  

 

82,426

 

  

 

 

 

*   Pursuant to SEC rules, we have not reported perquisites to those NEOs where the value of the perquisites, in aggregate, is less than $10,000. Mr. King’s perquisites for 2018 consisted of: (a) expenses related to an executive physical examination, including travel; (b) the maintenance of a residential security system; (c) spousal participation in a corporate event, including travel; and (d) a cash benefit adjustment pursuant to an election to opt out of BB&T’s group term life insurance coverage.

 

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2018 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(2)(5)(6)(7)

Grant Date Fair

Value of Stock

Awards ($)(8)

Name

Grant

Date

Threshold

($)

Target

($)

Maximum

($)

Threshold

(#)

Target

(#)

Maximum  

(#)

Kelly S. King

Performance Share Units

2/20/2018         11,751   29,376 36,720     1,556,634

Restricted Stock Units

2/20/2018           29,376   1,510,808

Annual Incentive Award

2/20/2018   255,323   2,127,694   2,659,617      

2018-2020 LTIP(1)

2/20/2018   639,310   1,598,274   1,997,843      

Christopher L. Henson

Performance Share Units

2/20/2018         5,621   14,053 17,566     744,668

Restricted Stock Units

2/20/2018           14,053   722,746

Annual Incentive Award

2/20/2018   110,838   923,650   1,154,563      

2018-2020 LTIP(1)

2/20/2018   310,795   776,988   971,235      

Clarke R. Starnes III

Performance Share Units

2/20/2018         4,300   10,748 13,435     569,537

Restricted Stock Units

2/20/2018           10,748   552,770

Annual Incentive Award

  2/20/2018     82,641   688,678   860,847      

2018-2020 LTIP(1)

2/20/2018   237,924   594,809   743,511      

Daryl N. Bible

Performance Share Units

2/20/2018         4,300   10,748 13,435     569,537

Restricted Stock Units

2/20/2018           10,748   552,770

Annual Incentive Award

2/20/2018   82,641   688,678   860,847      

2018-2020 LTIP(1)

2/20/2018   237,924   594,809   743,511      

Barbara F. Duck

Performance Share Units

2/20/2018         2,920   7,300 9,125     386,827

Restricted Stock Units

2/20/2018           7,300   375,439

Annual Incentive Award

2/20/2018   62,118   517,650   647,063      

2018-2020 LTIP(1)

2/20/2018   157,882   394,706   493,383      

Donna C. Goodrich

Performance Share Units

2/20/2018         2,920   7,300 9,125     386,827

Restricted Stock Units

2/20/2018           7,300   375,439

Annual Incentive Award

2/20/2018   62,118   517,650   647,063      

2018-2020 LTIP(1)

2/20/2018   157,882   394,706   493,383      

 

(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 2018 for the LTIP, such payments were based on each executive’s base salary for 2018 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 and are subject to increase/reduction based on TSR percentile performance relative to our peer group TSR for the three-year performance period.
(2)   For a discussion of the terms of the PSUs, RSUs, Annual Incentive Awards, and LTIP awards, see “Compensation Discussion and Analysis—Section 3—Our Executive Compensation Program Pay Decisions.”
(3)   For the Annual Incentive Award, the threshold payment is 12% of the target amount. For the LTIP, the threshold payment is 40% of the target amount (assuming maximum reduction based on TSR performance).
(4)   For the Annual Incentive Award and the LTIP, the maximum payment is 125% of the target amount.
(5)   If the performance and vesting criteria for PSUs and RSUs are not met, awards are subject to reduction, forfeiture, or nonpayment. 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.
(6)   For PSUs the threshold payment is 40% of the target amount (assuming maximum reduction based on TSR performance).
(7)   For PSUs, the maximum payment is 125% of the target amount.
(8)   This column reflects the grant date fair value, computed in accordance with SEC rules, of PSUs and RSUs granted in 2018. 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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2018 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   100,000     30.09   2/21/2022    
  101,806     30.08   2/26/2023    
  71,611     37.55   2/25/2024    
  120,714     38.22   2/24/2025    
  103,703   51,852   32.10   2/23/2026    
143,180 6,202,558
Christopher L. Henson   29,763     37.55   2/25/2024    
  49,375     38.22   2/24/2025    
  21,103   21,102   32.10   2/23/2026    
66,521 2,881,690
Clarke R. Starnes III    37,565     38.22   2/24/2025    
  32,117   16,058   32.10   2/23/2026    
50,799 2,200,613
Daryl N. Bible   22,629     37.55   2/25/2024    
  37,565     38.22   2/24/2025    
  32,117   16,058   32.10   2/23/2026    
50,799 2,200,613
Barbara F. Duck   15,396     37.55   2/25/2024    
  26,500     38.22   2/24/2025    
  25,331   12,667   32.10   2/23/2026    
35,316 1,529,889
Donna C. Goodrich   21,587     30.08   2/26/2023    
  15,396     37.55   2/25/2024    
  26,500     38.22   2/24/2025    
  25,331   12,667   32.10   2/23/2026    
35,316 1,529,889

 

(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
2/23/2016 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 2018 fiscal year, the Compensation Committee determined that the performance criteria had been met.

 

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(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

12/31/2015

  2/15/2019   4,541   1,983   1,477   1,477   970   970

2/23/2016

  3/15/2019   25,006   10,176   7,745   7,745   6,109   6,109

2/21/2017

  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

2/20/2018