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| COMPENSATION DISCUSSION AND ANALYSIS |
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ROATCE Metric — 50% Weight |
| Peer Group | Payout Opportunity for ROATCE Goal |
| Relative ROATCE (3-year Average) | Max | 75 %ile | 50% | 75% | 100% | 125% | 150% |
| Target | 50 %ile | 25% | 50% | 75% | 100% | 125% |
| Thresh. | 25 %ile | 0% | 25% | 50% | 75% | 100% |
| | | Significantly Below Target | Below Target | Slightly Below Target | Target | Above Target |
| | | Regions’ Absolute Adjusted ROATCE
(3-year average) |
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EPS Growth Metric — 50% Weight |
| Peer Group | Payout Opportunity for
EPS Growth Goal |
Relative EPS Growth
(3-year cumulative CAGR) | Max | 75 %ile | 50% | 75% | 100% | 125% | 150% |
| Target | 50 %ile | 25% | 50% | 75% | 100% | 125% |
| Thresh. | 25 %ile | 0% | 25% | 50% | 75% | 100% |
| | | Significantly Below Target | Below Target | Slightly Below Target | Target | Above Target |
| | | Regions’ Absolute Adjusted EPS Growth
(3-year cumulative CAGR) |
| | | ”CAGR” - Compound Annual Growth Rate |
Performance targets and the payout percentages generated for each level of long-term incentive performance are determined each year by the CHR Committee based on Company budgets and goals, as well as known prevailing economic conditions. We do not disclose the internal absolute performance targets set for the three-year performance period in the above matrix because such disclosure could be construed as earnings guidance. The CHR Committee believes the target levels for absolute performance are challenging, yet achievable. While we do not disclose forward-looking goals, we commit to disclosing target performance and performance achievement in the CD&A each year as performance awards vest. Though the matrix above does not include goals, it demonstrates the expectation of a zero percent payment if we do not meet approximately one-half of the cumulative amount projected, as part of our strategic planning process, for the three-year period ending December 31, 2024.
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| COMPENSATION DISCUSSION AND ANALYSIS |
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Payout of 2020-2022 Performance-Based Awards and Differences in SEC Reporting Requirements and How the CHR Committee Views Compensation |
It is important to note that the CHR Committee considers LTIP awards as compensation for the year in which the award is granted. As a result, there are multiple differences between how the CHR Committee views compensation and the SEC reporting requirements that impact this year’s Summary Compensation Table. These differences are described below: |
•The CHR Committee considers the entirety of the 2022-2024 LTIP award as compensation given to the NEOs at the time of the grant – in April 2022. In contrast, the SEC views only the equity denominated portion of the award to be 2022 compensation and will not consider the performance-based cash unit awards (PCUs) to be compensation until the end of the performance period when the LTIP awards fully vest. Due to this difference, the equity denominated awards (PSUs and RSUs) are reported in the Summary Compensation Table under the “Stock Awards” column in the year the grant is made. However, the PCUs, with the same performance period and vesting date, will not be reported as compensation until the value of the cash is earned at the end of the performance vesting period in 2024. •An additional difference between SEC reporting requirements and the CHR Committee’s view of compensation relates to the reported value of stock-based awards. The SEC rules require that companies report the value of equity-denominated awards in the “Stock Awards” column of the Summary Compensation Table in the year they are granted. This is the same way the CHR Committee considered these awards. However, there is a difference in the values noted in the table below and the values reported in the Summary Compensation Table due to the way we determine the number of shares each NEO will receive after the CHR Committee has established the monetary value of an award. To determine the number of PSUs and RSUs, we divide the monetary award value by the 30-day average closing price of Regions common stock prior to the grant date to minimize any impact of day-to-day stock price changes on the number of shares granted. The 30-day average for 2022 was $22.73. SEC rules require us to report in our tables, however, the grant date fair value of shares. For grants made in 2022, the fair value for RSUs and PSUs was the closing price on the date of grant, which was $21.47 per share. •The CHR Committee considers the entirety of the 2020-2022 LTIP award as compensation given to the NEOs at the time of the grant – in April 2020. However, the SEC requires awards denominated as cash awards (such as Regions PCUs) be reported in the year that they vest, rather than in the year they are granted. As such, the Summary Compensation Table on page 86 includes the value of the 2020 PCU awards in its totals and does not include the similar grant values from PCUs granted as a part of the 2022 grant cycle described on pages 73-74. To understand the value reported in the Summary Compensation Table related to PCU awards, following is a summary of the 2020 award. The 2020 PCU award was subject to a three-year performance period that ended at December 31, 2022. The following table sets forth the performance metrics achieved for the performance period and the percent of target earned by NEOs as of the end of 2022: |
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| | 2020 - 2022 Performance-Based Award Results | |
| Performance Metrics and Weights | Target | Performance | Payout | Weight | Payout % of Target | |
| Absolute Adjusted ROATCE (1) | 50% | 11% | 18.54% | 150% | 100% | 150% | |
| Relative ROATCE | 50% | 50th percentile | 96th percentile | |
| Final Results | 150% | |
| (1) Non-GAAP measure - see reconciliation for LTIP metrics in Appendix B. | |
| In addition to the performance metrics listed above, Regions met the standards for liquidity and capital deployment throughout the 2020-2022 vesting period; therefore, no adjustment was made to the award. | |
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| | | | Name | 2020 Target PCUs Granted ($) | Payout % of Target | Value of PCUs Received ($) | |
| | | | John M. Turner Jr. | 1,666,667 | | 150% | 2,500,001 | | |
| | | | David J. Turner, Jr. | 466,667 | | 150% | 700,001 | | |
| | | | C. Matthew Lusco | 400,000 | | 150% | 600,000 | | |
| | | | Ronald G. Smith | 300,000 | | 150% | 450,000 | | |
| | | | C. Dandridge Massey | n/a | n/a | n/a | |
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For further information, page 67 includes an alternative compensation table that details the way the CHR Committee views the compensation decisions made for 2022. |
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| COMPENSATION DISCUSSION AND ANALYSIS |
Other Benefits and Perks
In addition to the compensation elements described above, NEOs participate in limited perk programs and other benefits programs, many of which are available to all associates.
Regions Retirement Programs. Regions sponsors two types of retirement programs: defined benefit and defined contribution retirement programs, each made up of tax-qualified and nonqualified plans. The operation of these retirement plans and the value of the benefits that NEOs accrue under these plans are described below and in the discussion that accompanies the Pension Benefits and Nonqualified Deferred Compensation tables and the Summary Compensation Table.
(1) Defined benefit plans. The Regions Financial Corporation Retirement Plan for Associates (the “Retirement Plan”) and Regions Financial Corporation Post 2006 Supplemental Executive Retirement Plan (“SERP”) are defined benefit plans. While participation requirements were impacted over time due to several corporate transactions, the Retirement Plan and the SERP generally were closed to new participants as of 2007.
The Retirement Plan is a tax-qualified plan under Section 401(a) of the U.S. Internal Revenue Code of 1986 (“IRC”). NEOs participating in this plan participate on the same basis as all associates.
The SERP is a nonqualified plan that provides benefits to a limited number of senior officers of the Company, including three of our NEOs. The SERP provides benefits that serve to attract and retain high-quality senior executive talent. There are two types of retirement benefits in the SERP: a regular benefit and a benefit calculated under an alternative target formula. The regular benefit is calculated using the same formula as the Retirement Plan with the following differences: (1) uses a “final average earnings” formula that averages base earnings and short-term cash incentives over the highest three consecutive years of service out of the last 10 years of service, (2) there are no compensation limitations, and (3) allows for a maximum of 35 years of service.
The alternative target benefit includes a more generous formula for determining retirement benefits and was designed to be highly retentive as it includes significant vesting requirements as determined by the CHR Committee. The current NEOs who benefit from this formula must generally work for the Company for a minimum of 10 years and must reach age 60 before the alternative target benefits vest. Any termination of employment (except in the case of death, disability, or a change-in-control) prior to reaching age 60 with a minimum of 10 years of service will result in a forfeiture of amounts attributable to the alternative target benefit in excess of the regular benefit. A limited number of executives are eligible for an alternative target benefit in the SERP.
The following is a brief description of each NEO’s participation in these plans:
Mr. John Turner - Mr. J. Turner through his prior service is a participant in the Retirement Plan with 9 years of credited service and is no longer accruing additional benefits under that plan. Upon his rehire by the Company, Mr. J. Turner began participation in the SERP under which he has 12 years of credited service and receives the alternative target benefits
outlined above. Having met the age and years of service requirements, Mr. J. Turner is vested in the SERP as well as the previously accrued Retirement Plan.
Mr. David Turner - Mr. D. Turner has 17 years of credited service with the Company and participates in both the Retirement Plan and the SERP. His benefits are determined using the regular benefit calculations previously discussed, and he is not eligible for the alternative target benefit. Having met the age and years of service requirements, Mr. D. Turner is vested in both the Retirement Plan and the SERP.
Mr. Lusco - Mr. Lusco has 12 years of credited service. He does not participate in the Retirement Plan but does participate in the SERP. His benefit is subject to significant retentive vesting requirements and is calculated using the regular benefit calculations previously discussed. He is not eligible for the alternative target benefit. Having met the age and years of service requirements, Mr. Lusco is vested in the SERP benefit.
Mr. Smith - Mr. Smith is a participant in the Retirement Plan and was a participant in the SERP until November 2021. Mr. Smith has accrued the maximum (30) years of credited service allowed under the Retirement Plan. In November of 2021, as permitted under the SERP, Mr. Smith elected to freeze participation and to transfer the lump sum value of the benefit to a non-qualified defined contribution account under the Excess 401(k) Plan maintained by the Company. Prior to the transfer, Mr. Smith had accrued the maximum (35) years of credited service allowed under the SERP. His SERP benefits were determined using the regular benefit calculations previously discussed, and he was not eligible for the alternative target benefit. Mr. Smith is vested in the Retirement Plan and was vested in the SERP at the time of transfer.
Mr. Massey - Mr. Massey does not participate in either plan and is not accruing any pension benefit from the Company. Mr. Massey participates in the 401(k) Plan.
Pension Benefits Compensation. The Pension Benefits description and table include a more detailed description of retirement benefits and a calculation of the value of pension benefits for each NEO. In addition, the Summary Compensation Table provides a value that represents the change in the lump sum value of pension benefits from 2021 to 2022. Several factors influence the calculation of this change. For most participants, the change is a result of additional years of service, the passage of time, and changes in the discount rate and mortality table. While each contributed to different degrees to the pension benefit increases reported in the Summary Compensation Table, some of the more notable factors in this year’s change include:
•Specifically with respect to Mr. J. Turner’s pay, over time his compensation has been appropriately increased to an amount commensurate with his new role and responsibilities. Our SERP benefit formula is a “final average earnings” formula using the highest three consecutive years of eligible compensation. As a result, increases in eligible compensation can have a significant impact on the change in pension value when the years of higher pay replace lower values in the three-year average calculation.
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| COMPENSATION DISCUSSION AND ANALYSIS |
Understanding the Annual Change in Pension Value
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No additional pension benefits | •2022 annual change in pension value is not due to any modifications to the existing pension program or formulas. |
•Regions’ Retirement Plan was closed to new participants in 2007; only approximately 13 percent of our associates remain participants in the plan. |
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| Annual changes primarily driven by macroeconomic and non-performance factor changes | •For most participants, the change is a result of an additional year of service, the passage of time, and changes in the discount rate and mortality table. |
•Traditional pension plans are extremely sensitive to interest rate changes, which are macroeconomic factors out of the Company’s control. |
•Unlike the annual and long-term incentive plans, which are performance based, pension values are driven mostly by non-performance factors. |
•Our SERP benefit formula is a “final average earnings” formula using the highest three consecutive years of eligible compensation. As a result, increases in eligible compensation can have a significant impact on the change in pension value when the years of higher pay replace lower values in the three-year average calculation. |
(2) Defined contribution plans. The Regions Financial Corporation 401(k) Plan (“401(k) Plan”) and Regions Financial Corporation Non-Qualified Excess 401(k) Plan (“Excess 401(k) Plan”) are defined contribution plans that allow eligible associates to contribute a portion of their total base and annual incentive compensation on a pre-tax basis into accounts that are held and invested on a tax-deferred basis, or in a Roth account in the case of the 401(k) Plan, until termination of employment or retirement. The 401(k) Plan is a tax-qualified retirement plan under Section 401(a) of the IRC in which all eligible associates can participate, while the Excess 401(k) Plan is a nonqualified plan for certain associates whose participation in the 401(k) Plan is generally limited due to the qualified plan’s compensation and contribution limits.
The Company makes a contribution to the 401(k) Plan (and a deemed contribution to the Excess 401(k) Plan) equal to the deferral rate elected by the participant up to a maximum of 5 percent of pay. In addition to the matching contribution, the Company provides a non-contributory 2 percent of pay allocation to the 401(k) Plan (and a deemed 2 percent of pay allocation to the Excess 401(k) Plan) for any associate who does not accrue a benefit in the Retirement Plan. In 2022, Mr. J. Turner, Mr. D. Turner, Mr. Lusco, and Mr. Smith participated in these plans and received the Company matching contribution of 5 percent of pay. Mr. J. Turner and Mr. Lusco receive the 2 percent non-contributory contribution in the 401(k) Plan since they are not accruing benefits in the Retirement Plan. Though Mr. Massey participates in the 401(k) Plan, he has less than one year of credited service and was not eligible to receive the Company matching contribution of 5 percent of pay nor participate in the Excess 401(k) Plan for 2022. No NEO receives the 2 percent non-contributory contribution in the Excess 401(k) Plan.
Perquisites. Our NEOs are eligible to participate in employee benefit programs generally available to all associates. While we generally do not offer a broad range of perks to our NEOs, we have provided certain personal benefits that are not available to other associates. The CHR Committee regularly reviews the perks available to executive officers to determine whether these programs continue to serve the purpose of
benefiting the Company and has historically discontinued programs that it determines are not based on sound business rationale.
In General. In 2022, NEOs continued to be eligible for financial planning services, Company-provided security monitoring for private residences, certain relocation benefits, and enhanced coverage for annual physicals. Additionally, the Company may maintain memberships in organizations that certain executive officers may utilize for business entertainment purposes. These memberships are provided because we believe that they serve a necessary and reasonable business purpose. It is expected that executive use will always involve a bona fide business purpose. The total cost of these perquisites to the Company represents an immaterial portion of total compensation. Any special benefits our NEOs received are included in the Summary Compensation Table.
Use of Corporate Aircraft. The use of corporate aircraft is subject to a formal program, approved for 2022 by the CHR Committee and the NCG Committee, that sets forth the criteria and procedures applicable to its use.
It has long been our policy to require our CEO to use corporate-owned or other non-commercial aircraft for business travel when possible. The policy allows our CEO to use corporate-owned aircraft for personal travel up to a maximum value of $100,000 per year. In the event the value of personal use (as measured based on the incremental cost of operating the aircraft) exceeds $100,000 in any year, our policy requires the CEO to reimburse the Company the full incremental cost of operating the corporate aircraft.
Mr. J. Turner is subject to an Aircraft Time Sharing Agreement with the Company that governs the terms and conditions of personal use of the corporate aircraft. Although the policy and the agreement allow for personal use without cost up to $100,000 per year, Mr. J. Turner’s 2022 personal use of corporate aircraft was $59,250. Additionally, the Board authorized the CEO to make corporate-owned aircraft available for the personal travel of other Company associates on a limited basis, such as in the event of emergency or when personal use may be in the best interest of the Company due
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| COMPENSATION DISCUSSION AND ANALYSIS |
to either efficiency or safety concerns. No other NEO utilized the corporate aircraft for personal use in 2022.
Tax Liabilities. Any perquisites that result in a personal benefit are imputed as income to the executive in accordance with
Internal Revenue Service rules. NEOs are personally responsible for all taxes on this income. The Company does not gross up the income to cover taxes for NEOs.
Compensation Framework, Policies, Processes, and Risk Considerations
Our compensation and benefit programs operate under the guidance and oversight of the CHR Committee. The CHR Committee is composed of independent non-employee Directors, with considerable experience in executive compensation matters, and who are not eligible to participate in any of the management compensation programs or other employee benefit or compensation plans of the Company, except for grants of equity compensation under the Company’s LTIP pursuant to the Director Compensation Program. Directors who served as members of the CHR Committee during 2022 include:
Members serving the entire year:
Samuel A. Di Piazza, Jr., Chair
Ruth Ann Marshall
Timothy Vines
Members serving a partial year:
Don DeFosset - until April 20, 2022
Zhanna Golodryga - until June 30, 2022
J. Thomas Hill - beginning July 1, 2022
Joia M. Johnson - beginning July 1, 2022
Each CHR Committee member has been affirmatively determined to be independent as defined by NYSE rules, applicable SEC rules and regulations, and our Corporate Governance Principles’ considerations. The CHR Committee operates under a written charter approved by the Board. A copy of the charter is available on our website at ir.regions.com/governance.
Committee Meetings. The CHR Committee holds meetings as often as it deems necessary to perform its duties and responsibilities, but not fewer than three times a year. Although
many compensation decisions are made in the first quarter of the year, as outlined in the Compensation-Setting Process and Timeline section, the decision-making process is continuous and neither ends nor begins with any one meeting. During 2022, the CHR Committee met six times to review, discuss, and approve compensation decisions for the Company and held one joint meeting with the Risk Committee.
The CHR Committee asks its independent compensation consultant to attend all regularly scheduled meetings, as well as some of the CHR Committee’s special meetings. Other outside advisors, including legal counsel, may also attend meetings when members feel additional guidance on specific topics may be beneficial. Meetings are typically attended by the CEO, Chief Administrative and Human Resources Officer, Head of Total Rewards, and Chief Governance Officer. The CFO and CRO attend meetings when Company budget and performance information or incentive plan design is presented. As previously noted, at least one joint meeting of the CHR Committee and the Risk Committee is held each year. During this joint meeting, representatives from the Risk Management Group, including the CRO, review associate conduct and a comprehensive risk assessment of the Company’s incentive plans, including both plans that cover executive officers, as well as plans that cover other associates of the Company.
Throughout 2022, the CHR Committee heard from other executives in relation to human capital management and other topics of interest. Additionally, every CHR Committee meeting includes an executive session without the participation of any member of the executive management team. The independent compensation consultant typically participates in a portion of these executive sessions.
Compensation Consultant Disclosure
During 2022, the CHR Committee retained Frederic W. Cook & Co., Inc. (“Cook & Co.”) to provide independent information and consultation regarding the design and implementation of our executive compensation programs. Cook & Co. is a nationally recognized compensation consulting firm serving a large number of Fortune 500 companies and is engaged by and performs work solely for the CHR Committee.
It is the CHR Committee’s view that its compensation consultant and any other advisors should be able to render candid and direct advice independent of management’s influence, and numerous steps have been taken to satisfy this objective.
Annually, and most recently in December 2022, the CHR Committee considers the independence of Cook & Co. in light of current SEC rules and NYSE listing standards. The CHR Committee requested and received a letter from Cook & Co. addressing its independence, including the following factors:
•other services provided to Regions by Cook & Co.;
•fees paid by Regions as a percentage of Cook & Co.’s total revenue;
•policies or procedures maintained by Cook & Co. that are designed to prevent a conflict of interest;
•any business or personal relationships between the individual consultants involved in the engagement and a member of the CHR Committee;
•any Regions equity securities owned by the individual consultants involved in the engagement and certain of their family members; and
•any business or personal relationships between Regions’ executive officers and Cook & Co. or the individual consultants involved in the engagement.
The CHR Committee discussed these considerations and concluded that no conflict of interest exists.
Cook & Co. reports directly to the CHR Committee and engages with the CHR Committee Chair and members without
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| COMPENSATION DISCUSSION AND ANALYSIS |
the presence of management. Additionally, they work with Regions’ management, at the direction of the CHR Committee, to obtain information and further the CHR Committee’s goals. Cook & Co. does no work for executive management and provides no other services to Regions. The scope of services provided by Cook & Co. for the CHR Committee during 2022 included:
•Attending all CHR Committee meetings;
•Advising the CHR Committee regarding matters related to executive succession planning, retirement, and transition;
•Providing the CHR Committee with analysis of competitive market data to assist in establishing target levels for compensation components, such as base salary levels, annual incentives, long-term performance awards, and benefit levels for executive management;
•Assisting the CHR Committee with the evaluation and establishment of the design and construct of the short-term and long-term incentive programs for 2022, including values, opportunity levels, performance metrics, targets (including thresholds and maximums), performance
curves, peer group comparisons, and risk mitigants to be included in the plan;
•Advising the CHR Committee with respect to year-end compensation determinations based on performance evaluations and other factors, including succession planning and related considerations;
•Providing competitive market practices regarding Director compensation targets and programs;
•Advising the CHR Committee regarding regulatory and compliance issues and the development of leading best practices and market competitive information with respect to compensation guidelines established by the SEC, the Federal Reserve, and other banking regulatory bodies; and
•Providing current trend information on industry and executive compensation issues.
Other than advising the CHR Committee as described, Cook & Co. did not provide any services to the Company in 2022.
Other Policies and Practices Impacting Compensation Decisions
Use of Peer Groups for Benchmarking Purposes. The CHR Committee utilizes two peer groups: one to benchmark executive compensation and one to benchmark corporate performance. Although the peer groups are similar, the CHR Committee believes compensation measures should be reviewed against financial institutions with executive positions that are most similar in breadth and scope to Regions and represent the financial institutions that compete with Regions for our top executive talent while performance is more appropriately measured against a broad group of financial institutions that investors would consider in competition with Regions for their investment dollars. In conjunction with its independent compensation consultant, the CHR Committee reviews both peer groups each year.
Compensation Peer Group. In determining the competitiveness of compensation compared to the market, the CHR Committee, with the assistance of its independent compensation consultant, regularly reviews the compensation of our executive officers against the Company’s compensation peer group and against survey data from a larger segment of companies within the financial services industry. While we do not specifically benchmark each individual Regions position to specific job matches within these peer companies, we use the information from these peers to assist the CHR Committee in
evaluating the competitiveness of the compensation of our executive team including the NEOs covered in this proxy statement.
The CHR Committee believes that peer group construction revolves around finding a balance between including relative companies that match in size and focus and enough companies to make comparisons meaningful. The companies listed below are those that the CHR Committee believes are appropriate for compensation benchmarking purposes due to industry, asset size, revenue, and market capitalization.
When evaluating the compensation peer group for 2022 plans and pay levels, the CHR Committee’s independent compensation consultant recommended no change to the compensation peer group; however, it was noted that TD Bank Group announced the acquisition of First Horizon Corporation in February 2022. Upon close of the transaction, First Horizon Corporation will be removed from the peer group. After reviewing the existing group and recommended action, the CHR Committee elected to approve the compensation peer group as proposed. The 2022 compensation peer group is presented below:
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| COMPENSATION DISCUSSION AND ANALYSIS |
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Compensation Peer Group |
Company | 12/31/2022
Assets ($ in millions) | 12/31/2022 Market Cap ($ in millions) |
| U.S. Bancorp | 674,805 | 66,767 |
| PNC Financial Services Group, Inc. | 557,263 | 63,334 |
| Truist Financial Corporation | 555,255 | 57,093 |
Capital One Financial Corporation(1) | 455,249 | 35,446 |
| Citizens Financial Group Incorporated | 226,733 | 19,381 |
| Fifth Third Bancorp | 207,452 | 22,422 |
| M&T Bank Corporation | 200,730 | 24,556 |
| KeyCorp | 189,813 | 16,259 |
| Huntington Bancshares Incorporated | 182,906 | 20,347 |
| Regions Financial Corporation | 155,220 | 20,137 |
| Zions Bancorporation | 89,545 | 7,308 |
| Comerica Incorporated | 85,406 | 8,755 |
| First Horizon Corporation | 78,953 | 13,157 |
| Synovus Financial Corporation | 59,731 | 5,463 |
(1) Not included in the Performance Peer Group.
In addition to reviewing compensation peer group information annually, the CHR Committee’s independent compensation consultant periodically reviews the Company’s total compensation program against broader financial services industry survey data compiled by other sources (including compensation surveys prepared for the financial services industry by McLagan, a leading performance/reward consulting and benchmarking firm focused specifically on the financial services industry). All of this information is used by the CHR Committee when it considers the competitiveness and appropriateness of the amount and composition of pay at Regions.
Performance Peer Group. For purposes of measuring relative performance under our long-term incentive plan, we use a peer
group that is slightly different from the one utilized for compensation analysis. The key driver for performance peer group selection is business similarities. The CHR Committee looks for a focus on retail, consumer, and corporate banking with a regional/geographic focus. Though the CHR Committee also considers size, it is not a key determining factor due to its lack of material impact on performance comparisons, especially when related to its impact on compensation comparisons. The CHR Committee elected to approve the performance peer group without changes for 2022. The 2022 performance peer group is presented below:
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Performance Peer Group |
Company | 12/31/2022
Assets ($ in millions) | 12/31/2022
Market Cap ($ in millions) |
U.S. Bancorp | 674,805 | 66,767 |
| PNC Financial Services Group, Inc. | 557,263 | 63,334 |
| Truist Financial Corporation | 555,255 | 57,093 |
| Citizens Financial Group Incorporated | 226,733 | 19,381 |
Fifth Third Bancorp | 207,452 | 22,422 |
M&T Bank Corporation | 200,730 | 24,556 |
KeyCorp | 189,813 | 16,259 |
Huntington Bancshares Incorporated | 182,906 | 20,347 |
Regions Financial Corporation | 155,220 | 20,137 |
Zions Bancorporation | 89,545 | 7,308 |
Comerica Incorporated | 85,406 | 8,755 |
| First Horizon Corporation | 78,953 | 13,157 |
| Synovus Financial Corporation | 59,731 | 5,463 |
Hancock Whitney Corporation(1) | 35,184 | 4,159 |
(1) Not included in the Compensation Peer Group.
The above-noted peer groups are not the same as the group of companies that comprise the S&P 500 Banks Index, which is the index included in the stock performance chart presented in
Regions’ Annual Report on Form 10-K for the year ending December 31, 2022, and repeated in the Proxy Summary section of this proxy statement. Each of these peer groups
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| COMPENSATION DISCUSSION AND ANALYSIS |
represents a smaller group of financial institutions tailored primarily by asset size, core business services, geographic similarity, and alignment to the principles for each type of measurement.
Say-on-Pay. Regions understands that shareholders, regulators, and other stakeholders have a strong interest in executive compensation and attempts to balance the interests of these constituencies in the design and execution of our executive compensation program. In accordance with the vote of our shareholders, we provide an annual Say-on-Pay advisory vote regarding executive compensation. This year’s proposal is included as Proposal 3.
In our 2022 Say-on-Pay vote, 92.8 percent of votes were cast in favor of our executive compensation program. Historically, the result of Say-on-Pay votes generally indicated strong support among shareholders for our compensation framework, our pay-for-performance approach, and the overall design of our compensation program. Based on shareholder feedback, Regions made balanced enhancements to our 2022 disclosures and our incentive plans without making significant changes to our overall program. For additional information, see the Shareholder Responsiveness section on page 64.
We will continue to monitor the results of future advisory votes on compensation and take feedback from our shareholder outreach program into consideration when assessing compensation design and disclosure matters in the future.
Clawbacks. It has long been the CHR Committee’s practice to review past awards in light of any material restatement of our financial results. As such, we continue to review and strengthen our policies with respect to the recoupment of prior incentive compensation awards or adjustment of future awards in these events. The CHR Committee annually reviews a formal clawback policy that applies to each of our NEOs, as well as a number of other officers of the Company (each a “Covered Officer”). The policy permits the Company to clawback incentive compensation awarded, paid or payable, within the three years prior, ending on the triggering event under the policy.
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Regions’ Clawback Policy is
reviewed at least annually by the
CHR Committee. |
In the event the Company is required to prepare an accounting restatement due to the material noncompliance with any financial reporting requirement under either GAAP or federal securities law, or the Company subsequently finds that the financial information or performance metrics used to determine the amount of incentive compensation for a prior period is materially inaccurate, the Company may seek repayment of incentive compensation or require the forfeiture or reduction of outstanding or future cash and equity-based incentive compensation as may be determined by the CHR Committee.
In addition to allowing for clawback in the case of financial restatement or materially inaccurate performance metrics, the policy allows the Company to recoup cash and equity-based incentive compensation in the case of misconduct of a Covered Officer. In 2022, the policy was updated to also allow recoupment in the case of failure to supervise by a Covered
Officer. In either event, the Company may recoup incentive compensation regardless of whether or not there is an accompanying financial restatement, to the extent any performance or vesting period for such incentive compensation overlapped in whole or in part with, or was exercised during, the period of misconduct. Our clawback policy will be updated to comply with the final clawback rule that is adopted by the NYSE.
For purposes of the policy, misconduct is defined as: (i) knowing violation of federal, state or local law, rule, or regulation; (ii) material breach of any written Company policy or covenant between Regions and the Covered Officer; (iii) disclosure of the Company’s confidential information or trade secrets; or (iv) commission of an act of fraud, dishonesty, or recklessness in the performance of the Covered Officer’s duties, which is not in good faith and subjects the Company to excessive risk or financial loss or materially disrupts, damages, impairs, or interferes with the business of the Company. For purposes of the policy, failure to supervise is defined as a failure by the Covered Officer, in a supervisory role, to properly (i) supervise behaviors by subordinates likely to cause reputational harm or result in improper risk behavior or (ii) identify, escalate, monitor or manage a subordinate’s misconduct or risk behavior, in each case which subjects the Company to excessive risk or financial loss or materially disrupts, damages, impairs or interferes with the business of the Company.
Regulatory Oversight and Risk Governance. As a bank holding company, we must comply with various regulatory requirements. The Federal Reserve adopted guidelines on incentive compensation for financial institutions that include the following three main principles:
• Incentive compensation arrangements should balance risk and financial results in a manner that does not provide employees with incentives to take excessive risks on behalf of the banking organization;
• A banking organization’s risk management processes and internal controls should reinforce and support the development and maintenance of balanced incentive compensation arrangements; and
• Banking organizations should have strong and effective corporate governance to help ensure sound compensation practices including effective oversight by the Board.
In response to these guidelines, we established a governance and oversight process for the design, operation, and monitoring of our incentive plans that improves our ability to evaluate and reduce risk or to risk-adjust payouts under the plans. We created an internal cross-functional oversight committee with representation from risk management, finance, human resources, and legal to review, consider, and approve, as appropriate, certain higher risk plans. This cross-functional oversight committee also works with business group leadership to monitor the performance and effectiveness of all our incentive plans to ensure that they include features and metrics designed to discourage inappropriate risk-taking.
As a part of our oversight process, this internal oversight committee meets on a regular basis and provides a quarterly report to the CHR Committee with respect to the activities around incentive compensation management. In addition, at least once each year, the CHR Committee meets jointly with
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| COMPENSATION DISCUSSION AND ANALYSIS |
the Risk Committee, the CRO, and other members of the risk management team to receive a thorough risk assessment of each of our material incentive plans.
| | |
The risks arising from our compensation plans, policies, and practices are not reasonably likely
to have a material adverse
effect on the Company. |
In presenting the risk assessment, the CRO noted that the process of limiting risk starts with the Board setting the risk appetite of the Company, establishing policies, and implementing appropriate limits. The process then continues with management developing the policies and practices to ensure the Company operates within our risk appetite and avoids unnecessary or excessive risk. As described in the Relationship of Compensation Policies and Practices to Risk Management section, we believe that the risks arising from our compensation plans, policies, and practices are not reasonably likely to have a material adverse effect on the Company. In making this determination, we consider the impact of the: (i) Board’s role in the determination of the overall risk profile and appetite; (ii) level of controls in place; and (iii) incentive programs, procedures, and governance activities we follow.
Equity Grant Policies and Practices. A grant of equity compensation to eligible key associates is generally made on an annual basis. Although the Company does not currently issue stock option grants under the 2015 LTIP, the plan requires that the exercise price for options be no less than the closing price of Regions common stock on the date of the grant in the event this practice resumes. The CHR Committee has adopted a schedule and process of reviewing the program provisions and grant levels in the first quarter of the year to coincide with the annual performance management compensation review process established by the Company for all associates. As a part of that process each year, the CHR Committee will pre-establish a grant date for grants to eligible associates subject to the needs and business considerations of the Company. In keeping with long-standing practice, the equity grants to all eligible key associates were made on April 1, 2022.
The CHR Committee specifically approves all grants of equity compensation to executive officers and Directors, as well as other officers covered by Section 16(a) of the Exchange Act. The CHR Committee has delegated authority to the CEO to determine and approve annual grants, as well as modify outstanding grants, to other key associates within the limits and budgets established each year as part of the CHR Committee’s consideration of the annual grant program guidelines.
From time to time, the Company may find it necessary to issue special grants to new hires or other key associates outside of
the normal grant process. The CHR Committee also has delegated authority to the CEO to determine the need for and value of these grants. For these grants, the CHR Committee’s policy provides that grants will be made on the first business day of the calendar quarter following the hire date or the determination for the need to grant an award for retention purposes. This timing was chosen to prevent even an appearance that either management or the associate could manipulate the pricing date and also to reduce the administrative and accounting burden that would be created by multiple grant dates. Any grants made by the CEO are reported to the CHR Committee on a regular basis each year.
Policy on Cash versus Non-Cash and Current versus Future Compensation. The CHR Committee does not maintain a stated policy that dictates cash versus non-cash compensation or current versus future compensation. However, the allocation of cash and non-cash compensation for each of the NEOs is reviewed by the CHR Committee annually and reflects the CHR Committee’s best efforts to balance short-term and long-term objectives of the Company.
Stock Ownership Guidelines and Stock Retention Requirements. Regions has adopted stock ownership guidelines requiring executive officers and members of the Board to have a meaningful economic stake in Regions. These guidelines are designed to maintain stock ownership levels high enough to ensure our commitment to creating shareholder value. For purposes of meeting the guidelines, the following types of stock ownership are counted:
•Shares directly owned by the executive officer or Director without restriction;
•Restricted stock and stock units (except for those that may be subject to future performance requirements);
•Stock equivalents allocated through any deferred stock investment plan, as well as an executive officer’s shares held in a 401(k) Plan account and notionally held in an Excess 401(k) Plan account; and
•Shares held in trust for the benefit of the executive officer or his or her immediate family members.
Any executive officer who does not meet the ownership guidelines must retain at least 50 percent of the after-tax value of any compensatory equity grant upon vesting until such time as the ownership guidelines are met. The equity stake of our NEOs and Directors is reflected in the beneficial ownership information contained in the Security Ownership of Directors and Executive Officers subsection of Ownership of Regions Common Stock.
The table below summarizes the stock ownership guidelines for our CEO and each of the NEOs (including their compliance with the guidelines as of February 21, 2023):
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| COMPENSATION DISCUSSION AND ANALYSIS |
| | | | | | | | | | | | | | |
Name | Ownership
Requirement | Approximate Stock Value
Required to be Held | Holds
Required
Amount | Percent of Required
Amount Owned |
John M. Turner, Jr. | 6 X Base Pay | $6,450,000 | Yes | 302% |
David J. Turner, Jr. | 3 X Base Pay | $2,070,000 | Yes | 398% |
| C. Matthew Lusco | 3 X Base Pay | $1,815,000 | Yes | 222% |
| Ronald G. Smith | 3 X Base Pay | $1,725,000 | Yes | 484% |
C. Dandridge Massey (1) | 3 X Base Pay | $1,800,000 | No | 68% |
(1) Mr. Massey joined Regions effective May 9, 2022, and, upon vesting, must retain at least 50 percent of the after-tax value of any compensatory equity grant until such time as the ownership guidelines are met.
Other Policies Related to Stock Ownership (prohibitions against insider trading, hedging, and pledging of Regions securities). The Company has a long-standing General Policy on Insider Trading to guard against improper securities trading. Under the policy, no Director, executive officer, or other associate of Regions who is aware of material nonpublic information relating to the Company may, directly or through family members or other persons or entities, buy or sell securities of the Company (other than pursuant to a previously approved trading plan that complies with SEC Rule 10b5-1), or engage in any other action to take personal advantage of any material nonpublic information about Regions that they may have. | | |
Regions’ policy prohibits hedging
and the pledging of Regions equity securities as collateral. |
Our General Policy on Insider Trading prohibits all associates from engaging in short-term or speculative trading in Regions securities, including engaging in any hedging transactions or short sales of Regions securities. The policy further prohibits transactions in puts, calls, or other publicly traded options, as well as any other derivative securities transactions conducted on an exchange or in any other organized market involving Regions securities. In addition to these broader prohibitions, our General Policy on Insider Trading further prohibits our
Directors and executive officers from purchasing Regions securities on margin or holding them in a margin account, borrowing against any account in which Regions equity securities are held, or pledging Regions equity securities as collateral for a loan. The policy’s prohibitions also cover transactions in Regions securities conducted by parties related to the Regions associate, executive officer, or Director, as applicable. This policy is reviewed and approved by the Board’s NCG Committee on an annual basis. For more information, see the Anti-Hedging and Anti-Pledging subsection of Ownership of Regions Common Stock.
Accounting for Stock-Based Compensation. Regions accounts for and reports stock-based compensation under our long-term incentive plans in accordance with the requirements of Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 718, Compensation - Stock Compensation. For further disclosure of Regions’ accounting for stock-based compensation, refer to Note 16, “Share-Based Payments,” to the consolidated financial statements included in Regions’ Annual Report on Form 10-K for the year ended December 31, 2022.
Change-in-Control, Post-Termination, and Other Employment Arrangements
For competitive and fairness reasons, we believe it is important to protect key associates (including the NEOs) in the event of certain terminations of employment during a transition period following a change-in-control of Regions. The potential or actual occurrence of a change-in-control could create uncertainty regarding the continued employment of our NEOs and providing employment protection should eliminate, or at least significantly reduce, any reluctance of our executives to pursue potential transactions that may be in the best interests of our shareholders. To align the interests of our shareholders and our executives, we have entered into agreements with all NEOs that govern certain terms of their employment and compensation in the event of a qualifying termination after a change-in-control of Regions.
Change-in-Control Agreements. The change-in-control agreements entered into with our NEOs generally provide that during the two-year period following a change-in-control of Regions, if the NEO’s employment is terminated other than for “cause,” or if the NEO resigns for “good reason,” they would be paid accrued compensation and benefits, plus an amount
equal to a specified multiple times the sum of the NEO’s base salary and average annual bonus during the three years preceding the year in which the change-in-control occurs as well as a pro-rated annual bonus for the year of termination based on the average annual bonus during the three years preceding.
The Company entered into agreements that provide Mr. J. Turner with a three times multiple of pay upon termination following a change-in-control and provide Mr. D. Turner, Mr. Lusco, and Mr. Smith with a two times multiple of pay. If employment is terminated for “cause” or due to death, disability, or resignation other than for “good reason,” payments would be limited to accrued compensation and benefits under these agreements.
Agreements issued after February 2011 do not include any tax gross up payments under the excise tax provisions of IRC Section 4999. Mr. D. Turner and Mr. Smith have change-in-control agreements that were issued in 2007 and provide that additional payments may become due to avoid a negative tax
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| COMPENSATION DISCUSSION AND ANALYSIS |
consequence to the executive in the event any payment or benefit would cause the NEO to become subject to the excise tax imposed under IRC Section 4999. Mr. J. Turner and Mr. Lusco entered into agreements after February 2011, and therefore, are not entitled to receive a payment to compensate for excise taxes. None of the NEOs’ agreements provide any type of severance benefits in connection with termination of employment at any other time. Mr. Massey is covered under the change-in-control provisions provided for in the Executive Severance Plan, as detailed below, and does not have a grandfathered change-in-control agreement. For additional information, including definitions of “cause,” “good reason,” and “change-in-control,” see the subsection entitled Potential Payments by Regions Upon Termination or Change-in-Control.
Executive Severance Plan. In an effort to increase transparency, promote fair and equitable treatment among associates in like positions, and improve executive recruiting efforts, in October 2019 the CHR Committee approved the Regions Financial Corporation Executive Severance Plan effective January 1, 2020. While existing change-in-control agreements are grandfathered, the plan provides standardized change-in-control and severance benefits for our NEOs and other associates who are eligible under the terms and conditions of the plan.
For NEOs, excluding Mr. J. Turner, the Executive Severance Plan generally provides that if the NEO’s employment is terminated by Regions other than for “cause,” they would be
paid accrued compensation and benefits, plus an amount equal to 18 months of base salary and a pro-rated annual bonus for the year of termination based on the average annual bonus during the three years preceding the year in which the termination occurred.
The Executive Severance Plan also provides that during the six-month period prior to, or the two-year period following, a change-in-control of Regions, if the eligible associate’s employment is terminated other than for “cause,” or if the
eligible associate resigns for “good reason,” they would be paid accrued compensation and benefits, plus an amount equal to a multiple of the sum of the associate’s base salary and average annual bonus during the three years preceding the year in which the change-in-control occurs as well as a pro-rated annual bonus for the year of termination based on the average annual bonus during the three years preceding. If employment is terminated for “cause” or due to death, disability, or resignation other than for “good reason,” payments would be limited to accrued compensation and benefits. The Executive Severance Plan prohibits tax gross-ups.
Mr. Massey is an eligible associate under the Executive Severance Plan which would provide him with a two times multiple of pay upon termination following a change-in-control.
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| COMPENSATION OF EXECUTIVE OFFICERS |
The following tables, narratives, and footnotes contain compensation information about our President and CEO; our CFO; and our three other most highly paid executive officers for the year ended December 31, 2022, our NEOs.
Summary Compensation Table
The Summary Compensation Table that follows contains information with respect to our NEOs. Below is a brief summary of the components of Regions’ pay programs included in each column of the Summary Compensation Table:
Salary – The “Salary” column includes the year-to-date base salary amounts for each NEO for the fiscal years indicated. New base salary amounts are generally effective on April 1 of each year.
Stock Awards – Equity awards granted in 2022 were composed of PSUs and RSUs and are reported in the “Stock Awards” column at the grant date fair value. The grant date fair value does not correspond with the amounts that may be eventually realized relative to these awards. Any benefit from these awards depends on the future value of Regions common stock, the satisfaction of time-based vesting requirements, and the attainment of performance requirements in the case of PSUs. For more detail regarding the stock awards for NEOs, see pages 71 through 75 of the CD&A and the Grants of Plan-Based Awards table.
Non-Equity Incentive Plan Compensation – The amounts in the “Non-Equity Incentive Plan Compensation” column represent annual incentives earned for 2022 performance under our annual incentive plan as described beginning on page 67 of the CD&A and paid in early 2023. Also included in this amount is the value of the 2020 PCUs for the performance period ended December 31, 2022. While the value of these PCU awards has been determined, they remain subject to service-based vesting until April 1, 2023, and will be payable as of that date. The SEC rules require us to report these values in the Summary Compensation Table for the year that represents the final performance year of the grant. However, the CHR Committee does not consider these awards as current compensation, but rather compensation for the year in which the grant was issued. For more information on how the CHR Committee views awards compared to how the SEC requires us to report awards, see page 75 of the CD&A.
Change in Pension Value and Nonqualified Deferred Compensation Earnings – This column includes the change in pension value for each NEO, which is the difference in the total present value of accrued benefit on December 31, 2022, minus the total present value of accrued benefit on December 31, 2021. For additional information about pension benefits, refer to pages 76 through 77 in the CD&A and to the Pension Benefits subsection and table. As for nonqualified deferred compensation earnings, none of the NEOs receive above-market or preferential earnings on their nonqualified deferred compensation accounts. More information regarding the provisions of the nonqualified deferred compensation plans in which the NEOs participate can be found on pages 91-92.
For most participants, the change is a result of an additional year of service, the passage of time, and changes in discount rate and mortality table. While each contributed in different degrees to the pension benefit increases reported in the Summary Compensation Table, some of the more notable factors in this year’s change include:
•Specifically with respect to our CEO, over time Mr. J. Turner’s pay has been appropriately increased to an amount commensurate with his new role and responsibilities. Our SERP benefit formula is a “final average earnings” formula using the highest three consecutive years of eligible compensation. As a result, increases in eligible compensation can have a significant impact on the change in pension value when the years of higher pay replace lower values in the three-year average calculation.
All Other Compensation – Amounts in the “All Other Compensation” column represent the aggregate dollar amount for each NEO for perquisites, other personal benefits, and additional compensation items not disclosed in other columns of the Summary Compensation Table. Items may include the value of: group term life insurance coverage, financial planning services, personal use of corporate aircraft, an enhanced executive physical, home security, relocation services, as well as matching charitable gift contributions. “All Other Compensation” also includes the value of Company contributions to the 401(k) Plan and the Excess 401(k) Plan.
Total – This column represents the sum of all columns for each of the NEOs, and includes all amounts earned by the NEO, including any amounts that may have been deferred for tax purposes.
Total Without Change in Pension Value – This column has been added to demonstrate the year-over-year impact the change in pension value had on total compensation, as determined under applicable SEC rules. The amounts reported may differ substantially from those reported in the “Total” column required by SEC rules and are not a substitute for that amount. “Total Without Change in Pension Value” represents total compensation, as determined under applicable SEC rules, minus the change in pension value reported in the “Change in Pension Value and Nonqualified Deferred Compensation Earnings” column. The change in pension value is subject to many external variables, such as years of service, the passage of time, and changes in the discount rate and mortality table, that are not related to Company performance and does not represent compensation granted or received by the NEOs in the applicable year. Therefore, we believe this additional column assists in evaluating compensation of our NEOs, including for comparative purposes between years, by excluding the impact of the year-over-year change in pension value.
| | |
| COMPENSATION OF EXECUTIVE OFFICERS |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name & Principal Position | Year | Salary
($) | Bonus ($) (1) | Stock Awards ($) (2) | Non-Equity Incentive Plan Compensation ($) (3) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) (4) | All Other Compensation ($) (5) | Total
($) | Total Without Change in Pension Value
($) * |
John M. Turner, Jr. (6) President and Chief Executive Officer | 2022 | 1,055,096 | | — | | 3,305,994 | | 6,011,572 | | 3,885,359 | | 294,344 | | 14,552,365 | | 10,667,006 | |
| 2021 | 1,000,000 | | — | | 3,767,112 | | 4,415,533 | | 4,883,636 | | 200,796 | | 14,267,077 | | 9,383,441 | |
| 2020 | 993,558 | | — | | 3,328,484 | | 2,405,050 | | 6,914,629 | | 190,795 | | 13,832,516 | | 6,917,887 | |
David J. Turner, Jr.
Chief Financial Officer | 2022 | 683,153 | | — | | 944,551 | | 2,140,840 | | — | | 126,257 | | 3,894,801 | | 3,894,801 | |
| 2021 | 664,200 | | — | | 1,203,375 | | 1,760,857 | | — | | 105,285 | | 3,733,717 | | 3,733,717 | |
| 2020 | 664,200 | | — | | 931,963 | | 1,299,922 | | 1,821,210 | | 100,843 | | 4,818,138 | | 2,996,928 | |
C. Matthew Lusco
Chief Risk Officer | 2022 | 599,493 | | — | | 755,658 | | 1,667,908 | | 317,952 | | 124,360 | | 3,465,371 | | 3,147,419 | |
| 2021 | 584,250 | | — | | 973,989 | | 1,518,881 | | 427,811 | | 94,736 | | 3,599,667 | | 3,171,856 | |
| 2020 | 584,250 | | — | | 798,840 | | 1,102,826 | | 723,405 | | 100,729 | | 3,310,050 | | 2,586,645 | |
Ronald G. Smith
Head of Corporate Banking Group | 2022 | 564,385 | | — | | 755,658 | | 1,640,344 | | — | | 508,129 | | 3,468,516 | | 3,468,516 | |
| 2021 | 535,000 | | — | | 797,503 | | 1,393,142 | | 726,782 | | 85,995 | | 3,538,422 | | 2,811,640 | |
| 2020 | 526,772 | | — | | 599,135 | | 966,396 | | 918,322 | | 83,518 | | 3,094,143 | | 2,175,821 | |
C. Dandridge Massey (7) Chief Enterprise Operations and Technology Officer | 2022 | 380,769 | | 630,000 | | 1,000,007 | | 770,239 | | — | | 57,931 | | 2,838,946 | | 2,838,946 | |
| 2021 | — | | — | | — | | — | | — | | — | | — | | — | |
| 2020 | — | | — | | — | | — | | — | | — | | — | | — | |
* The “Total Without Change in Pension Value” column has been added to demonstrate the year-over-year impact the change in pension value had on total compensation, as determined under applicable SEC rules. The amounts reported in this additional column may differ substantially from those reported in the “Total” column required by SEC rules and are not a substitute for that amount. “Total Without Change in Pension Value” represents total compensation, as determined under applicable SEC rules, minus the change in pension value reported in the “Change in Pension Value and Nonqualified Deferred Compensation Earnings” column. The change in pension value is subject to many external variables, such as mortality tables, interest rates, and discount rates, that are not related to Company performance and does not represent compensation granted or received by the NEOs in the applicable year. Therefore, we believe this additional column assists in evaluating compensation of our NEOs, including for comparative purposes between years, by excluding the impact of the year-over-year change in pension value.
(1) Per his employment offer letter, Mr. Massey’s 2022 compensation included a one-time $630,000 sign-on bonus, paid in cash at the time of his commencement of employment.
(2) As reflected in the following table, amounts in this column are the grant date fair value of awards computed in accordance with the FASB ASC Topic 718, Compensation - Stock Compensation.
| | | | | | | | | | | | | | | | | | | | |
| 2022 Annual Equity Grant (PSUs & RSUs) | Total Stock
Awards Value
($) |
| PSUs ($/units) (a) | | RSUs ($/units) (b) |
Name | Performance Stock Units ($) | Performance Stock Units (#) | | Restricted Stock Units ($) | Restricted Stock Units (#) |
| John M. Turner, Jr. | 1,652,997 | 76,991 | | 1,652,997 | 76,991 | 3,305,994 |
| David J. Turner, Jr. | 472,276 | 21,997 | | 472,276 | 21,997 | 944,551 |
| C. Matthew Lusco | 377,829 | 17,598 | | 377,829 | 17,598 | 755,658 |
| Ronald G. Smith | 377,829 | 17,598 | | 377,829 | 17,598 | 755,658 |
| C. Dandridge Massey | — | — | | 1,000,007 | 52,549 | 1,000,007 |
(a) The amounts in this column reflect the number of units granted and the grant date fair value of PSUs based on the probable outcome of the performance conditions (i.e., the target value of the award) and a per share value based on the NYSE closing price of our common stock on the date of grant of $21.47. Actual payout under these awards can range from 0% to 150% of target based on performance metrics of absolute and relative ROATCE and EPS Growth established at grant. The maximum award value for the PSUs (determined as described on pages 72-74) is $2,479,495 for Mr. J. Turner, $708,414 for Mr. D. Turner, $566,744 for Mr. Lusco, and $566,744 for Mr. Smith. For more detail regarding the stock awards for NEOs, see pages 71 through 75 of the CD&A and the Grants of Plan-Based Awards table.
(b) For Mr, J. Turner, Mr. D. Turner, Mr. Lusco, and Mr. Smith, the amounts in this column represent the number of units granted and the grant date fair value of RSUs that cliff vest at the end of the three-year vesting period ending April 1, 2025, and is calculated using a per share value based on the NYSE closing stock price of our common stock on the date of grant ($21.47). For Mr. Massey, the amounts in this column represent the number of units granted and the grant date fair value of RSUs that vest ratably over the three-year vesting period on July 1, 2023, July 1, 2024, and July 1, 2025, and is calculated using a per share value based on the NYSE closing stock price of our common stock on the date of grant which was $19.03.
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| COMPENSATION OF EXECUTIVE OFFICERS |
(3) This amount represents annual cash incentives for 2022 performance plus the value of the 2020 PCUs based on certification of performance goals as of the three-year period ending on December 31, 2022, and which will vest based on service effective April 1, 2023. The following table sets forth the details of these awards:
| | | | | | | | | | | |
| Non-equity Incentive Plan Compensation |
Name | 2022 Annual Cash Incentive ($) | Value of 2020 Performance Cash Units at 12/31/22 ($) (a) | Total ($) |
| John M. Turner, Jr. | 3,511,571 | 2,500,001 | 6,011,572 |
| David J. Turner, Jr. | 1,440,839 | 700,001 | 2,140,840 |
| C. Matthew Lusco | 1,067,908 | 600,000 | 1,667,908 |
| Ronald G. Smith | 1,190,344 | 450,000 | 1,640,344 |
| C. Dandridge Massey | 770,239 | — | 770,239 |
(a) This column reflects 150% of target earned at December 31, 2022. The target award value for the 2020 PCUs was $1,666,667 for Mr. J. Turner, $466,667 for Mr. D. Turner, $400,000 for Mr. Lusco, and $300,000 for Mr. Smith. Grants are subject to service vesting requirements until April 1, 2023 (the third anniversary of the date of grant). Mr. Massey was hired effective May 9, 2022 and did not receive 2020 PCUs.
(4) Amounts shown in this column represent the total change of the actuarial present value of our NEO’s accumulated benefit under our defined benefit and non-qualified deferred compensation plans which are subject to significant vesting requirements. All participating NEOs are fully vested in their benefits. Importantly, the change in pension value is not currently paid to an executive and arises from multiple factors including additional benefit accruals for another year of service, changes in compensation, and actuarial assumptions used to value plan liabilities such as mortality tables, discount rates, and interest rates. For Mr. D. Turner and Mr. Smith, the total benefit decreased year-over-year (the total change in value was -$1,323,264 and -$322,485, respectively).
(5) All other compensation consists of the following: | | | | | | | | | | | | | | | | | |
| Name | Life Insurance, Perquisites and Other Personal Benefits ($)(a) | Matching Contributions
Under Qualified
Savings Plans
($) | Matching Contributions Under Nonqualified Savings Plans ($)(b) | Non-Elective
Contributions
under the
Qualified and
Nonqualified
401(k) plans
($) | Total All Other
Compensation
($) |
| John M. Turner, Jr. | 83,254 | 15,250 | 189,740 | 6,100 | 294,344 |
| David J. Turner, Jr. | 25,989 | 15,250 | 85,017 | — | 126,257 |
| C. Matthew Lusco | 31,141 | 15,250 | 71,869 | 6,100 | 124,360 |
| Ronald G. Smith | 24,449 | 15,250 | 468,430 | — | 508,129 |
| C. Dandridge Massey | 57,931 | — | — | — | 57,931 |
(a) The 2022 amount includes the value of items such as financial planning services, personal use of the corporate aircraft, an enhanced executive physical, home security, matching charitable gift contributions, and relocation services for Mr. Massey. For Mr. J. Turner, the value for personal use of the corporate aircraft in 2022 was $59,250. Mr. Massey was provided $27,931 in relocation services and a relocation allowance of $30,000 in 2022.
(b) In November 2021, Mr. Smith elected to freeze and transfer the value of his benefit in the SERP, in accordance with the terms of the SERP, to the Excess 401(k) Plan. The Matching Contributions Under Nonqualified Savings Plans for Mr. Smith include the related transfer of Company contributions that occurred in January 2022.
(6) Mr. J. Turner’s compensation for 2021 has been corrected in the above Summary Compensation Table. When reporting the value of Mr. J. Turner’s PCUs vested and earned for 2021, the 2018-2020 value was reported in the 2022 proxy statement instead of the 2019-2021 value. As a result, Mr. J. Turner’s Non-Equity Incentive Plan Compensation and Total Compensation were underreported.
(7) Mr. Massey was hired effective May 9, 2022. As a result, Mr. Massey’s compensation for 2021 and 2020 is not included.
Grants of Plan-Based Awards
Plan-based awards made in 2022 to the NEOs included annual cash incentives, PCUs, PSUs, and RSUs.
Annual cash incentives were based on an assessment of both corporate performance and individual performance in 2022. For all of our NEOs, corporate performance measures, including profitability, credit management, and customer service, accounted for 70 percent of the incentive. Individual performance, in relation to certain strategic priorities, accounted for the remaining 30 percent.
Long-term incentive awards were issued in 2022 under the Regions 2015 LTIP in the forms of RSUs, PSUs, and PCUs. The Regions 2015 LTIP, which was approved by shareholders at the 2015 Annual Meeting, permits grants of awards in the form of stock options, stock appreciation rights, restricted stock, restricted stock units, performance-based awards,
dividend equivalents, other stock-based awards, and any other right or interest relating to stock or cash. Awards under the Regions 2015 LTIP may vest over time or upon the achievement of pre-established performance goals. Awards are paid in the event of certain terminations of employment within 24 months after a change-in-control.
The 2022 PCUs and PSUs were issued based on the Company’s absolute and relative ROATCE and EPS Growth over the three-year period from January 1, 2022, through December 31, 2024. The ultimate value of these performance awards can vary from 0 percent to 150 percent of target, depending on performance measured against goals as more fully described on pages 72 through 76 of the CD&A. The RSUs generally cliff vest three years from the date of grant; however, up to 40 percent of a grant may be forfeited if certain
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| COMPENSATION OF EXECUTIVE OFFICERS |
capital and liquidity performance thresholds are not met. Dividends and dividend equivalents accrued on both the PSUs and RSUs will be paid in cash at vesting based on the number of units actually earned.
For more information regarding the grants of plan-based awards for NEOs, see pages 67 through 75 of the CD&A.
The following table sets forth details regarding non-equity and equity plan-based awards granted to each of the NEOs in 2022: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name | Grant
Date | |
Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards | Estimated Future Payouts
Under Equity Incentive
Plan Awards | All Other Stock Awards: Number of Shares of Stock or Units (#) (2) | | | Grant Date Fair Value of Stock and Option Awards ($) (3) |
| Threshold ($) (1) | Target
($) | Maximum
($) | Threshold
(#) | Target
(#) | Maximum
(#) |
| John M. Turner, Jr. | 01/01/22 | (4) | — | | 1,899,173 | | 3,798,347 | | | | | | | | |
| 04/01/22 | (5) | — | | 1,750,000 | | 2,625,000 | | — | | 76,991 | | 115,487 | | 76,991 | | | | 3,305,994 | |
| David J. Turner, Jr. | 01/01/22 | (4) | — | | 785,626 | | 1,571,253 | | | | | | | | |
| 04/01/22 | (5) | — | | 500,000 | | 750,000 | | — | | 21,997 | | 32,996 | | 21,997 | | | | 944,551 | |
| C. Matthew Lusco | 01/01/22 | (4) | — | | 689,418 | | 1,378,835 | | | | | | | | |
| 04/01/22 | (5) | — | | 400,000 | | 600,000 | | — | | 17,598 | | 26,397 | | 17,598 | | | | 755,658 | |
| Ronald G. Smith | 01/01/22 | (4) | — | | 649,042 | | 1,298,085 | | | | | | | | |
| 04/01/22 | (5) | — | | 400,000 | | 600,000 | | — | | 17,598 | | 26,397 | | 17,598 | | | | 755,658 | |
| C. Dandridge Massey | 05/09/22 | (4)(6) | — | | 437,885 | | 875,770 | | | | | | | | |
| 07/01/22 | (7) | — | | — | | — | | — | | — | | — | | 52,549 | | | | 1,000,007 | |
(1) Threshold payout for both the annual cash incentive plan and the PCUs is $0.
(2) In addition to service-vesting requirements, the RSUs included in this column are subject to performance-vesting requirements based on the Company’s achievement of certain capital and liquidity performance thresholds during each of the periods from January 1, 2022, to December 31, 2022; January 1, 2023, to December 31, 2023; and January 1, 2024, to December 31, 2024. To the extent that the capital performance threshold and/or the liquidity performance threshold has not been satisfied for each performance period, 20% for each requirement (up to a maximum of 40% total) of the RSUs awarded will be forfeited. For purposes of this award, the Company’s performance will be measured relative to the following capital and liquidity performance thresholds as certified by the CHR Committee:
(i) “Capital Performance Threshold”: Capital Action Decision Tree Status as defined in the Capital Policy must remain in either “Monitor Capital” or “Capital Deployment” status; and
(ii) “Liquidity Performance Threshold”: Total Primary Liquidity Level must remain within the limit set by the Board in its Risk Appetite Statement.
Notwithstanding the achievement of the capital and liquidity performance thresholds, in order to be eligible to receive any shares of stock under this award, employment must continue through the third anniversary of the grant date, which is April 1, 2025, except in the case of death, disability, retirement, or certain terminations following a change-in-control.
(3) The grant date fair value is determined under FASB ASC Topic 718. See footnote (2) to the Summary Compensation Table, above, for additional information on the calculations made with regard to this column.
(4) Amounts included in the “Estimated Future Payouts Under Non-Equity Incentive Plan Awards” column reflect the range of possible annual cash incentive payouts for 2022 performance. Actual amounts earned, as determined by the CHR Committee in the first quarter of 2023, are reflected in the 2022 Summary Compensation Table under the “Non-Equity Incentive Plan Compensation” column.
(5) The PCUs included in the “Estimated Future Payouts Under Non-Equity Incentive Plan Awards” column and PSUs included in the Estimated Future Payouts Under Equity Incentive Plan Awards column have equally weighted performance requirements based on absolute and relative ROATCE and EPS Growth In addition, in the event the achievement of the performance criteria for EPS Growth is less than or equal to an absolute threshold and in the bottom twenty-fifth percentile of the peer group on a relative basis and the achievement of the performance criteria for ROATCE is less than or equal to an absolute threshold and in the bottom twenty-fifth percentile of the peer group on a relative basis, the payout will be zero. The performance period for these awards is January 1, 2022, through December 31, 2024, and will fully vest on April 1, 2025. Notwithstanding the achievement of the performance requirements, in order to receive any cash payout or shares of stock under these awards, employment must continue through the third anniversary of the grant date, which is April 1, 2025, except in the case of death, disability, retirement, or certain terminations following a change-in-control. Executives were granted shares on April 1, 2022, using the 30-day average stock price to determine the number of shares granted as RSUs and PSUs.
(6) Mr. Massey’s range of possible annual cash incentive payouts for 2022 performance is pro-rated based on his hire date of May 9, 2022.
(7) On July 1, 2022, Mr. Massey received a one-time RSU grant in connection with his employment offer letter with an economic value of $1,000,000. The award will vest ratably on the first, second, and third anniversary of the date of grant. In order to be eligible to receive any shares of stock under this award, employment must continue through each of the first, second, and third anniversary of the grant date, which is July 1, 2023, July 1, 2024, and July 1, 2025, except in the case of death, disability, termination without cause, or certain terminations following a change-in-control. The number of shares granted as RSUs were determined using the stock price at close on the date of grant. This one-time grant is not subject to performance-based vesting requirements based on the Company’s achievement of certain capital and liquidity performance thresholds.
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| COMPENSATION OF EXECUTIVE OFFICERS |
Outstanding Equity Awards at December 31, 2022
Awards in the following table include:
•Grants of RSUs;
•Grants of PSUs made in 2020, 2021, and 2022 that may be paid if Regions achieves specific performance criteria and meets certain capital performance and liquidity performance thresholds; and
•Grants of RSUs made in 2020, 2021, and 2022 that will pay in full if Regions meets certain capital performance and liquidity performance thresholds.
The following table sets forth outstanding equity-based awards held by each of the NEOs as of December 31, 2022:
| | | | | | | | | | | | | | | | | |
| | Stock Awards (2) |
Name | Grant Date (1) | Number of Shares or Units of Stock That Have Not Vested (#) (a,c) | Market Value of Shares or Units of Stock That Have Not Vested
($) (a,c) | Equity Incentive Plan Awards: # of Unearned Shares, Units, or Other Rights That Have Not Vested (#) (b) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units, or Other Rights That Have Not Vested ($) (b) |
| John M. Turner, Jr. | 04/01/20 | 161,970 | | 3,492,073 | | — | | — | |
| 10/14/20 | — | | — | | 242,955 | | 5,238,110 | |
| 04/01/21 | 83,572 | | 1,801,812 | | 125,358 | | 2,702,718 | |
| 04/01/22 | 76,991 | | 1,659,926 | | 76,991 | | 1,659,926 | |
| David J. Turner, Jr. | 04/01/20 | 45,351 | | 977,768 | | — | | — | |
| 10/14/20 | — | | — | | 68,027 | | 1,466,662 | |
| 04/01/21 | 23,878 | | 514,810 | | 35,817 | | 772,215 | |
| 04/01/22 | 21,997 | | 474,255 | | 21,997 | | 474,255 | |
| C. Matthew Lusco | 04/01/20 | 38,873 | | 838,102 | | — | | — | |
| 10/14/20 | — | | — | | 58,310 | | 1,257,164 | |
| 04/01/21 | 19,102 | | 411,839 | | 28,653 | | 617,759 | |
| 04/01/22 | 17,598 | | 379,413 | | 17,598 | | 379,413 | |
| Ronald G. Smith | 04/01/20 | 29,155 | | 628,582 | | — | | — | |
| 10/14/20 | — | | — | | 43,733 | | 942,883 | |
| 04/01/21 | 15,918 | | 343,192 | | 23,877 | | 514,788 | |
| 04/01/22 | 17,598 | | 379,413 | | 17,598 | | 379,413 | |
| C. Dandridge Massey | 07/01/22 | 52,549 | | 1,132,956 | | — | | — | |
(1) In 2020, RSUs were granted on April 1, 2020, and PSUs were granted when performance goals were set by the CHR Committee on October 14, 2020. In 2021 and 2022, all awards were granted on April 1.
(2) As Company performance measured at December 31, 2022 is not projected at levels higher than target, amounts reported for the 2022 grant are calculated at 100% of target. Amounts reported for the 2021 performance grant are calculated at 150% of target and amounts reported for the 2020 grant are calculated at 150% of target. The stock value used to determine the market value of shares is $21.56, the per share closing price of Regions common stock on December 31, 2022. In addition to service-vesting requirements, RSUs and PSUs are subject to additional vesting requirements as follows:
| | | | | | | | |
Grant Date | Vesting Schedule | Restrictions |
April 1, 2020 and
October 14, 2020 | Third anniversary of the original April 1, 2020 grant date | (a) RSUs are also subject to vesting that requires meeting certain capital and liquidity thresholds |
| April 1, 2021 | Third anniversary of the April 1, 2021 grant date | (b) PSUs may be earned between 0% and 150% subject to meeting certain capital performance and liquidity performance thresholds and achieving required performance levels as follows: •For grants made on October 14, 2020, the performance period is January 1, 2020, through December 31, 2022 •For grants made on April 1, 2021, the performance period is January 1, 2021, through December 31, 2023 •For grants made on April 1, 2022, the performance period is January 1, 2022, through December 31, 2024 |
| April 1, 2022 | Third anniversary of the April 1, 2022 grant date
|
| July 1, 2022 | One-time award for Mr. Massey Ratable on the first, second, and third anniversary of the July 1, 2022 grant date | (c) RSUs granted to Mr. Massey in connection with his one-time award are not subject to vesting that requires meeting certain capital and liquidity thresholds |
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| COMPENSATION OF EXECUTIVE OFFICERS |
Option Exercises and Stock Vested
The following table sets forth the amounts realized by each of the NEOs as a result of the vesting of stock awards in 2022:
| | | | | | | | |
| Stock Awards |
Name | Number of Shares
Acquired on
Vesting (#) | Value
Realized on
Vesting ($)(1) |
| John M. Turner, Jr. | 187,485 | 4,025,303 |
| David J. Turner, Jr. | 59,996 | 1,288,114 |
| C. Matthew Lusco | 51,426 | 1,104,116 |
| Ronald G. Smith | 38,569 | 828,076 |
| C. Dandridge Massey | — | — |
(1) The value realized on vesting is determined by multiplying the number of vested RSUs and PSUs granted on April 1, 2019, by Regions’ April 1, 2022, closing stock price of $21.47.
Regions has not granted options since 2011. None of our NEOs hold any options.
Pension Benefits
The Retirement Plan is a qualified defined benefit plan providing for a lifetime monthly annuity following retirement. Benefits earned by our NEOs under the Retirement Plan are generally based on the following formula: | | | | | | | | | | | | | | |
1.3% of “Average Monthly Earnings” up to Covered Compensation | + | 1.8% of
“Average
Monthly
Earnings” in
excess of
Covered
Compensation | X | Years of
Service up to a
maximum of 30
total years |
“Average Monthly Earnings” is defined as the average of the highest five consecutive years of base compensation within the last 10 years of service, and “Covered Compensation” is defined as the estimated average maximum amount of a participant’s earnings on which Social Security benefits will be based assuming that in each year of the participant’s working career, the participant’s wages equaled the Social Security Taxable Wage Base.
Any accrued benefit under the Retirement Plan is generally 100 percent vested after five years of service. While the Retirement Plan defines normal retirement age as age 65, there is no reduction in benefits due to age after a participant has reached age 62. Upon separation of service, benefits are payable as early as age 55, although between age 55 and 62, benefits are subject to a reduction for early payment.
Mr. D. Turner and Mr. Smith participate in the Retirement Plan. While Mr. J. Turner has a vested benefit in the Retirement Plan that he earned during a previous period of employment, he is no longer accruing additional benefits because he was rehired subsequent to the closure of the Retirement Plan. Mr. Lusco and Mr. Massey do not participate in the Retirement Plan.
The SERP is an unfunded nonqualified defined benefit plan that was created to supplement benefits provided through the Retirement Plan. The SERP restores benefits that would otherwise have been provided to participants under the Retirement Plan but were limited because of tax code limitations on qualified plan benefits. In addition to these restorative benefits, the SERP provides benefits that serve to attract and retain high quality senior executive talent for the
Company. There are two types of retirement benefits in the SERP: a regular benefit and an alternative target benefit.
The regular benefit is available to all eligible SERP participants and is calculated using the same formula as the Retirement Plan with the following differences: (1) instead of averaging base earnings over five years of service, it averages base and short-term cash incentives over the highest three consecutive years of service out of the last 10 years of service, (2) there are no compensation limitations, and (3) the maximum years of service used in the calculation of the regular benefit is 35 years of service instead of 30.
Mr. D. Turner and Mr. Lusco participate in the SERP, accruing benefits under the regular benefit formula. Mr. Smith participated in the SERP and accrued benefits under the regular benefit formula until he froze his benefit in November 2021 and transferred the value of the benefit to the Excess 401(k) Plan. As a result, Mr. Smith is no longer an active participant in the SERP.
The alternative target SERP benefit is available to a select group of senior officers. The alternative target SERP benefit provides a benefit using the following formula:
| | | | | | | | |
4% of “Average Monthly Earnings” for the first 10 Years of Service | + | 1% of “Average
Monthly
Earnings” for every year in
excess of 10 Years of
Service up to a maximum of
an additional 25 Years of
Service (for a maximum
benefit of 65% of
“Average
Monthly Earnings” with
35 Years of Service) |
For purposes of this formula, “Average Monthly Earnings” has the same definition as the regular SERP benefit. |
Regions’ alternative target benefit is offset by both the benefit under the Retirement Plan, as well as Social Security. The alternative target benefit is also subject to significant retentive vesting requirements. Participants will receive the benefit following termination of employment after reaching age 60 and completing a minimum of 10 years of service, except in the
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| COMPENSATION OF EXECUTIVE OFFICERS |
case of death, disability, or change-in-control. Termination of employment for any other reason prior to age 60 and completion of 10 years of service will result in forfeiture of the alternative target benefit. If a participant who is eligible for both the regular benefit and the alternative target benefit retires prior to meeting the alternative target benefit’s vesting requirements,
the participant will receive a regular benefit. Mr. J. Turner participates in the alternative target benefit under the SERP and is fully vested.
Mr. Massey does not participate in the SERP.
The following Pension Benefits table reflects the actuarial present value of the benefits from the Retirement Plan and the SERP: | | | | | | | | | | | | | | |
| Pension Benefits |
Name | Plan Name | Number of
Years Credited
Service (#) | Present Value
of Accumulated
Benefit ($) (1) | Payments During
Last Fiscal Year
($) |
| John M. Turner, Jr. | Regions Retirement Plan for Associates (2) | 9 | | 86,815 | | — | |
| Regions Post 2006 SERP (3) | 12 | | 30,064,113 | | — | |
| David J. Turner, Jr. | Regions Retirement Plan for Associates | 17 | | 853,864 | | — | |
| Regions Post 2006 SERP | 17 | | 5,302,932 | | — | |
| C. Matthew Lusco | Regions Retirement Plan for Associates (4) | N/A | N/A | N/A |
| Regions Post 2006 SERP | 12 | | 5,683,352 | | — | |
| Ronald G. Smith | Regions Retirement Plan for Associates (5) | 30 | | 1,336,808 | | — | |
| Regions Post 2006 SERP (6) | N/A | N/A | N/A |
| C. Dandridge Massey | Regions Retirement Plan for Associates (4) | N/A | N/A | N/A |
| Regions Post 2006 SERP (7) | N/A | N/A | N/A |
(1) In 2009, future benefit accruals under the Retirement Plan and the SERP were suspended for all participants. Even during the suspension, participants continued to earn service toward vesting and eligibility for early retirement benefits. Effective January 1, 2010, benefit accruals were resumed for Retirement Plan and SERP participants. The present value of the accumulated Retirement Plan benefits is calculated as of December 31, 2022, and was determined using a 5.41% discount rate and the Pri-2012 employee (or retiree) and non-disabled annuitant mortality tables, no collar, with generational projection based on scale MSS-2022 for participants and for future beneficiaries respectively. The present value of the accumulated SERP benefits is calculated as of December 31, 2022, and was determined using a 5.36% discount rate (1.95% to calculate expected lump sum distributions), and the 2023 Pension Protection Act lump sum mortality table. For purposes of the present value calculation, no pre-retirement mortality was assumed, and the payment date was assumed to be the earliest unreduced retirement date under both plans. The payment age of 62 (life only) was assumed for the Retirement Plan and the payment age of 60 was assumed for the SERP for Mr. J. Turner and age 62 for Mr. D. Turner, Mr. Lusco, and Mr. Smith.
(2) Mr. J. Turner’s years of credited service in the Retirement Plan are from a previous period of employment; he is fully vested in the Retirement Plan and is not currently accruing additional benefits.
(3) Mr. J. Turner is fully vested in the SERP benefits.
(4) Mr. Lusco and Mr. Massey do not participate in the Retirement Plan.
(5) Mr. Smith is fully vested in the Retirement Plan and has reached the maximum years of credited service.
(6) In November 2021, Mr. Smith elected to freeze and transfer the value of his benefit in the SERP, in accordance with the terms of the SERP, to the Excess 401(k) Plan.
(7) Mr. Massey does not participate in the SERP.
Nonqualified Deferred Compensation
Regions maintains the Excess 401(k) Plan, which is a nonqualified deferred compensation plan. The Excess 401(k) Plan is an excess contribution plan primarily open to NEOs and other highly compensated individuals whose compensation exceeds the annual tax code limit on compensation that can be taken into account for purposes of contributions to the 401(k) Plan. Under the Excess 401(k) Plan, participants may make contributions of up to 80 percent of base salary and cash incentive pay on a nonqualified basis. Regions’ contribution under the plan is limited to 5 percent of base salary and incentive compensation, provided the NEO has elected a deferral rate on base or annual incentive compensation of at least 5 percent for the year. Most of the NEOs participated in the Excess 401(k) Plan during 2022 with the exception of Mr. Massey who has less than one year of credited service and was not yet eligible to participate.
Benefits under the Excess 401(k) Plan are held in notional accounts on the Company’s balance sheet. Earnings and losses are credited to accounts based on notional investment elections made by participants. Notional investments available to participants are generally the same investments available under the 401(k) Plan. None of these notional investments provide for above market or preferential earnings that require us to report earnings in the “Change in Pension Value and Nonqualified Deferred Compensation Earnings” column of the Summary Compensation Table.
Benefits under the Excess 401(k) Plan are fully vested upon contribution and are payable only upon separation from service according to the IRC Section 409A compliant distribution election made by the NEO upon participation in the plan.
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| COMPENSATION OF EXECUTIVE OFFICERS |
The following table sets forth the NEOs’ contributions; Regions’ contributions; and the aggregate earnings, withdrawals, and balances during 2022 under the Excess 401(k) Plan:
| | | | | | | | | | | | | | | | | | | | |
| Nonqualified Deferred Compensation |
Name | | Executive
Contributions
in 2022 ($) (1) | Company
Contributions
in 2022 ($) (2) | Aggregate
Earnings (Losses)
in 2022 ($) (3) | Aggregate
Withdrawals/
Distributions
($) (4) | Aggregate
Balance at
December 31, 2022 ($) (5) |
| John M. Turner, Jr. | Excess 401(k) Plan | 347,609 | 189,740 | (626,771) | — | 2,828,789 |
| David J. Turner, Jr. | Excess 401(k) Plan | 93,881 | 85,017 | (560,061) | — | 3,059,074 |
| C. Matthew Lusco | Excess 401(k) Plan | 81,501 | 71,869 | (179,368) | — | 1,403,640 |
Ronald G. Smith (6) | Excess 401(k) Plan | 758,985 | 468,430 | (171,707) | — | 13,153,955 |
C. Dandridge Massey (7) | Excess 401(k) Plan | — | — | — | — | — |
(1) This column represents amounts deferred from base salary and annual incentive, if applicable. Although deferred, these amounts are included in the “Salary” and “Non-Equity Incentive Plan Compensation,” if applicable, columns of the Summary Compensation Table.
(2) This column includes Company contributions under the Excess 401(k) Plan. These amounts are included in the “All Other Compensation” column of the Summary Compensation Table.
(3) This column includes total earnings/losses on amounts held in the Excess 401(k) Plan.
(4) This column includes withdrawals/distributions from the Excess 401(k) Plan.
(5) The December 31, 2022, aggregate balances do not include true-up Company contributions that were made in early 2023 based on 2022 deferral elections. These contributions are included, however, in the “Company Contributions in 2022”. The aggregate balance at December 31, 2022, reflects the balance in the Excess 401(k) Plan. The aggregate balance as of December 31, 2022, includes Company contribution amounts previously reported for prior years in the “All Other Compensation” column of the Summary Compensation Table. The amounts were reported for the applicable year in which the contributions were earned.
(6) In November 2021, Mr. Smith elected to freeze and transfer the value of his benefit in the SERP, in accordance with the terms of the SERP, to the Excess 401(k) Plan. The Company Contributions in 2022 for Mr. Smith include the related transfer of Company contributions that occurred in January 2022.
(7) Mr. Massey has less than one year of service and was not yet eligible to participate in the Excess 401(k) Plan during 2022.
Potential Payments by Regions Upon Termination or Change-in-Control
Regions maintains certain arrangements, plans, and programs under which our NEOs would be eligible to receive severance payments and other benefits upon termination of employment or a change-in-control of Regions.
Employment, Severance, and/or Change-in-Control Agreements. Regions does not generally enter into employment agreements with any of our executive officers. As a result, no NEO has post-employment benefits that differ from any other associate.
While we have not entered into any employment agreements, all of our NEOs, with the exception of Mr. Massey, hold a change-in-control agreement. Under the change-in-control agreements, certain severance benefits are due if, during the two-year period following a change-in-control, Regions terminates employment without “cause” or the NEO terminates employment with “good reason.”
For Mr. J. Turner, if Regions terminates his employment other than for “cause,” or if he resigns for “good reason” during the two-year period, he is entitled to enhanced severance in an amount equal to three times base salary and average annual bonus during the three years prior to the year in which the change-in-control occurred, as well as a pro-rated annual bonus for the year of termination based on the average annual bonus during the three years preceding. In addition to severance benefits, benefit continuation under our welfare benefits plans is also available for the three-year period following termination. Mr. D. Turner, Mr. Lusco, and Mr. Smith are covered by a similar change-in-control agreement, but their severance multiple is equal to two times pay and the benefit continuation period is two years following termination.
Mr. Massey is covered under the change-in-control provisions provided for in the Executive Severance Plan and does not hold an individual change-in-control agreement . The Executive Severance Plan provides that during the six-month period prior to, or the two-year period following, a change-in-control of Regions, if the eligible associate’s employment is terminated other than for “cause,” or if the eligible associate resigns for “good reason,” they would be paid accrued compensation and benefits, plus an amount equal to a multiple of the sum of the associate’s base salary and average annual bonus during the three years preceding the year in which the change-in-control occurs as well as a pro-rated annual bonus for the year of termination based on the average annual bonus during the three years preceding. Mr. Massey is an eligible associate under the Executive Severance Plan which would provide him with a severance multiple equal to two times pay and a cash payment equal to benefit continuation for two years following termination.
If a NEO’s employment is terminated by Regions for “cause,” or by reason of death, disability, or resignation other than for “good reason” during the change-in-control period, Regions’ liability is limited to accrued but unpaid compensation and benefits. All amounts are payable as a single lump-sum following the execution of a release of claims against the Company.
Under the Executive Severance Plan, if Regions terminates employment without “cause” for Mr. D. Turner, Mr. Lusco, Mr. Smith, and Mr. Massey, they would be entitled to an amount equal to 18 months of base salary and a pro-rated annual bonus for the year of termination based on the average annual
| | |
| COMPENSATION OF EXECUTIVE OFFICERS |
bonus during the three years preceding the year in which the termination occurred. All amounts are payable as a single lump-sum following the execution of a release of claims against the Company.
Two of our NEOs are subject to grandfathered agreements that provide for additional benefits in the event that change-in-control payments and benefits (referred to as “parachute payments”) become subject to the excise tax under IRC Section 4999. Mr. D. Turner and Mr. Smith have an agreement that requires Regions to make an additional payment covering the excise tax under IRC Section 4999, as well as any income tax on the excise tax payment and any penalty and interest that might be due (sometimes referred to as “Section 280G gross up payments”). However, if parachute payments do not exceed 110 percent of the greatest amount that could be paid without triggering the excise tax (the “Safe Harbor Amount”), then those payments and benefits will be reduced to that amount.
The agreements for Mr. J. Turner and Mr. Lusco, as well as the Executive Severance Plan, do not provide for Section 280G gross up payments. These agreements stipulate that in the event severance benefits are subject to the terms of IRC Section 4999, amounts payable to them (under their change-in-control agreements or otherwise) would be reduced to the Safe Harbor Amount if the reduction would result in them receiving a greater after-tax amount.
Equity-Based Award Plans. Under the terms of our LTIP, equity-based awards generally vest fully or in part at retirement, death, disability, termination of employment without “cause,” or if following a change-in-control, termination of employment without “cause” or for “good reason” within the 24-month period following the change-in-control (so-called “double trigger” vesting following a change-in-control).
Death – Under the terms of performance-based equity grant award agreements, the performance period lapses at death and release/payment is equal to the target performance value.
Disability – In the event of disability, performance-based awards continue to vest as scheduled and are released/paid subject to performance at the end of the performance period. Service-based vesting for RSUs accelerates.
Retirement – At retirement, performance-based awards continue to vest as scheduled and are released/paid subject to performance at the end of the performance period. Service-based vesting for RSUs accelerates. All of our NEOs, with the exception of Mr. Massey, meet the requirements for retirement under the Regions 2015 LTIP.
Termination without “cause” – For involuntary termination without “cause,” performance-based awards continue to vest
as scheduled. At the vesting date, grants are released/paid subject to performance achievement at the end of the performance period and are further prorated based on the service between the grant date and the date employment was terminated. RSUs are released on a prorated basis based on the service between the grant date and the date employment was terminated.
Change-in-control – Upon the occurrence of a change-in-control, performance-based awards will be deemed to have been earned based on the greater of target performance and actual performance being attained as of the effective date of the change-in-control and will remain subject to service-vesting requirements. In the event termination of employment without “cause” or for “good reason” occurs within a 24-month period following the change-in-control, service-vesting requirements on awards are accelerated to the termination of employment.
Pension Benefits. Benefits under the Retirement Plan are fully vested; therefore, upon termination of employment for any reason, each NEO would be entitled to receive the amounts designated as Retirement Plan benefits represented in the “Present Value of Accumulated Benefit” column of the Pension Benefits table. Mr. J. Turner, Mr. D. Turner, and Mr. Lusco are vested in the SERP benefit as well. Effective November 2021, Mr. Smith froze his benefit in the SERP and transferred the value to the Excess 401(k) Plan; as a result, he is no longer a participant in the SERP. Mr. Massey does not participate in the Retirement Plan or the SERP.
Upon qualifying termination in conjunction with a change-in-control, two additional years are added to the NEO’s age and credited years of service. Therefore, each participating NEO will fully vest in their SERP benefits and be entitled to the benefits included in the following table as additional change-in-control termination benefits.
Nonqualified Deferred Compensation Plan Benefits. Each participating NEO is currently fully vested in the amounts reported in the “Aggregate Balance at December 31, 2022” column of the Nonqualified Deferred Compensation table on page 92, and therefore, these amounts would be payable to the NEOs upon termination of employment for any reason.
Welfare and Other Insurance Benefits. Regions sponsors a number of broad-based benefit programs in which NEOs and other associates participate, such as health, short- and long-term disability coverage, and group term life insurance coverage. NEOs are eligible for continuation of these benefits post-qualifying termination.
The following table quantifies certain amounts that would be payable to NEOs upon various separation situations. The amounts reflected in the table assume a December 31, 2022, termination of employment:
| | | | | | | | | | | | | | | | | | | | | | | |
Name | Voluntary
($) | Involuntary
Without
Cause ($)(1) | Early
Retirement
($) | For
Cause
($) | Involuntary for Good Reason Following a CIC ($)(2) | Death
($) | Disability
($) |
John M. Turner, Jr.(3) | | | | | | | |
Compensation: | | | | | | | |
Cash Severance | — | | — | | — | | — | | 12,174,079 | | — | | — | |
| | |
| COMPENSATION OF EXECUTIVE OFFICERS |
| | | | | | | | | | | | | | | | | | | | | | | |
Name | Voluntary
($) | Involuntary
Without
Cause ($)(1) | Early
Retirement
($) | For
Cause
($) | Involuntary for Good Reason Following a CIC ($)(2) | Death
($) | Disability
($) |
Long-Term Incentive | | | | | | | |
Restricted Stock Units(4) | 5,569,116 | | 5,569,116 | | 5,569,116 | | — | | 6,953,811 | | 6,953,811 | | 5,569,116 | |
Performance Stock Units(4) | 5,238,110 | | 5,238,110 | | 5,238,110 | | — | | 9,600,754 | | 8,699,848 | | 5,238,110 | |
Performance Cash Units | 2,500,001 | | 2,500,001 | | 2,500,001 | | — | | 6,875,001 | | 6,000,001 | | 2,500,001 | |
Perquisites: | | | | | | | |
Financial Planning(5) | 35,330 | | 35,330 | | 35,330 | | — | | 35,330 | | 35,330 | | 35,330 | |
Outplacement(6) | — | | — | | — | | — | | 60,000 | | — | | — | |
Benefits: | | | | | | | |
Value of continued welfare benefits(8) | — | | — | | — | | — | | 21,469 | | — | | — | |
Value of additional retirement benefits(9) | — | | — | | — | | — | | — | | — | | — | |
Total: | 13,342,557 | | 13,342,557 | | 13,342,557 | | — | | 35,720,444 | | 21,688,990 | | 13,342,557 | |
David J. Turner, Jr.(3) | | | | | | | |
Compensation: | | | | | | | |
Cash Severance | — | | 2,043,256 | | — | | — | | 4,404,768 | | — | | — | |
Long-Term Incentive | | | | | | | |
Restricted Stock Units(4) | 1,571,207 | | 1,571,207 | | 1,571,207 | | — | | 1,966,833 | | 1,966,833 | | 1,571,207 | |
Performance Stock Units(4) | 1,466,651 | | 1,466,651 | | 1,466,651 | | | 2,713,121 | | 2,455,716 | | 1,466,651 | |
Performance Cash Units | 700,001 | | 700,001 | | 700,001 | | — | | 1,950,001 | | 1,700,001 | | 700,001 | |
Perquisites: | | | | | | | |
Financial Planning(5) | 35,330 | | 35,330 | | 35,330 | | — | | 35,330 | | 35,330 | | 35,330 | |
Outplacement(6) | — | | — | | — | | — | | 60,000 | | — | | — | |
280G Tax Gross-up(7) | — | | — | | — | | — | | 4,498,082 | | — | | — | |
Benefits: | | | | | | | |
Value of continued welfare benefits(8) | — | | — | | — | | — | | 33,862 | | — | | — | |
Value of additional retirement benefits(9) | — | | — | | — | | — | | 1,782,716 | | — | | — | |
Total: | 3,773,189 | | 5,816,445 | | 3,773,189 | | — | | 17,444,713 | | 6,157,880 | | 3,773,189 | |
| | | | | | | |
| | | | | | | |
C. Matthew Lusco(3) | | | | | | | |
Compensation: | | | | | | | |
Cash Severance | — | | 1,770,876 | | — | | — | | 3,800,127 | | — | | — | |
Long-Term Incentive | | | | | | | |
Restricted Stock Units(4) | 1,312,583 | | 1,312,853 | | 1,312,853 | | — | | 1,629,354 | | 1,629,354 | | 1,312,853 | |
Performance Stock Units(4) | 1,257,153 | | 1,257,153 | | 1,257,153 | | — | | 2,254,324 | | 2,048,405 | | 1,257,153 | |
Performance Cash Units | 600,000 | | 600,000 | | 600,000 | | — | | 1,600,000 | | 1,400,000 | | 600,000 | |
Perquisites: | | | | | | | |
Financial Planning(5) | 35,330 | | 35,330 | | 35,330 | | — | | 35,330 | | 35,330 | | 35,330 | |
Outplacement(6) | — | | — | | — | | — | | 60,000 | | — | | — | |
Benefits: | | | | | | | |
Value of continued welfare benefits(8) | — | | — | | — | | — | | 14,113 | | — | | — | |
Value of additional retirement benefits(9) | — | | — | | — | | — | | 520,346 | | — | | — | |
Total: | 3,205,066 | | 4,976,212 | | 3,205,336 | | — | | 9,913,594 | | 5,113,089 | | 3,205,336 | |
Ronald G. Smith(3) | | | | | | | |
Compensation: | | | | | | | |
Cash Severance | — | | 1,673,540 | | — | | — | | 3,583,121 | | — | | — | |
Long-Term Incentive | | | | | | | |
Restricted Stock Units(4) | 1,062,145 | | 1,062,145 | | 1,062,145 | | — | | 1,351,187 | | 1,351,187 | | 1,062,145 | |
Performance Stock Units(4) | 942,873 | | 942,873 | | 942,873 | | | 1,837,074 | | 1,665,478 | | 942,873 | |
Performance Cash Units | 450,000 | | 450,000 | | 450,000 | | — | | 1,350,000 | | 1,183,333 | | 450,000 | |
Perquisites: | | | | | | | |
Financial Planning(5) | 35,330 | | 35,330 | | 35,330 | | — | | 35,330 | | 35,330 | | 35,330 | |
Outplacement(6) | — | | — | | — | | — | | 60,000 | | — | | — | |
280G Tax Gross-up(7) | — | | — | | — | | — | | — | | — | | — | |
Benefits: | | | | | | | |
Value of continued welfare benefits(8) | — | | — | | — | | — | | 19,131 | | — | | — | |
| | |
| COMPENSATION OF EXECUTIVE OFFICERS |
| | | | | | | | | | | | | | | | | | | | | | | |
Name | Voluntary
($) | Involuntary
Without
Cause ($)(1) | Early
Retirement
($) | For
Cause
($) | Involuntary for Good Reason Following a CIC ($)(2) | Death
($) | Disability
($) |
Value of additional retirement benefits(9) | — | | — | | — | | — | | — | | — | | — | |
Total: | 2,490,348 | | 4,163,888 | | 2,490,348 | | — | | 8,235,843 | | 4,235,328 | | 2,490,348 | |
| C. Dandridge Massey | | | | | | | |
Compensation: | | | | | | | |
Cash Severance | — | | 1,590,000 | | — | | — | | 3,270,000 | | — | | — | |
Long-Term Incentive | | | | | | | |
Restricted Stock Units(4) | — | | 346,167 | | — | | — | | 1,132,956 | | 1,132,956 | | 1,132,956 | |
Performance Stock Units(4) | — | | — | | — | | — | | — | | — | | — | |
Performance Cash Units | — | | — | | — | | — | | — | | — | | — | |
Perquisites: | | | | | | | |
Financial Planning(5) | — | | — | | — | | — | | — | | — | | — | |
Outplacement(6) | N/A | N/A | N/A | N/A | N/A | N/A | N/A |
Benefits: | | | | | | | |
Value of continued welfare benefits(8) | — | | — | | — | | — | | 19,131 | | — | | — | |
Value of additional retirement benefits(9) | N/A | N/A | N/A | N/A | N/A | N/A | N/A |
Total: | — | | 1,936,167 | | — | | — | | 4,422,087 | | 1,132,956 | | 1,132,956 | |
(1) The following chart summarizes the meaning of “cause” under the Executive Severance Plan for the NEOs, excluding Mr. J. Turner:
| | | | | |
| “cause” | (i) willful and continued failure to substantially perform reasonably assigned duties; (ii) breach of fiduciary duty or commission of a felony or a crime involving fraud or moral turpitude, material breach of any agreement; (iii) engaging in illegal conduct or misconduct; (iv) failure to cooperate with an investigation authorized by the Board, a regulatory body, or a governmental department or agency; (v) disqualification or bar by any governmental or regulatory authority from carrying out duties and responsibilities, or loss of any required licenses; or (vi) engaging in any act or omission which is a violation of Company policy. |
(2) The following chart summarizes the meaning of “cause,” “good reason/without cause,” and “change-in-control” under the change-in-control agreements of the NEOs:
| | | | | |
| “cause” | (i) willful and continued failure to substantially perform reasonably assigned duties; (ii) breach of fiduciary duty involving personal profit or commission of a felony or a crime involving fraud or moral turpitude, material breach of the agreement; (iii) engaging in illegal conduct or gross misconduct that materially injures Regions; (iv) failure to materially cooperate with an investigation authorized by the Board, a regulatory body, or a governmental department or agency; or (v) disqualification or bar by any governmental or regulatory authority from carrying out duties and responsibilities, or loss of any required licenses. |
“good reason” and
“without cause” | (i) an adverse change in responsibilities as in effect immediately before the change-in-control; (ii) a material diminution in the budget over which the executive has control; (iii) a material breach of the compensation provisions of the agreement; or (iv) requiring the executive to move his principal place of work by more than 50 miles. |
| “change-in-control” | (i) an acquisition of 20% or more of the combined voting power of Regions voting securities; (ii) a change in a majority of the members of the Board; (iii) the consummation of a merger (unless voting securities of Regions outstanding immediately prior to the merger continued to represent at least 55% of the combined voting power of the voting securities of the surviving company outstanding immediately after such merger); or (iv) shareholder approval of a complete liquidation or dissolution of Regions. |
(3) Mr. J. Turner, Mr. D. Turner, Mr. Lusco, and Mr. Smith are eligible for early retirement. For purposes of the various termination columns in the table, with the exception of the “For Cause” column, they are assumed to have taken early/normal retirement and, therefore, are entitled to receive the benefits shown.
(4) Based on the closing price of Regions common stock of $21.56 per share on December 30, 2022.
(5) The service agreement with Regions’ financial planning provider allows for continuation of financial planning services for two years following termination due to retirement, death, disability, change-in-control, and involuntary termination without cause.
(6) The change-in-control agreement provides for reasonable outplacement services for up to two years. The Executive Severance Plan does not provide for outplacement services.
(7) 280G Tax Gross-up represents the amount of the excise tax and related gross-up for excise taxes levied under Section 4999 of the IRC on payment and benefits following a change-in-control (otherwise referred to as “excess parachute payments” under Section 280G of the IRC). The change-in-control agreements covering Mr. D. Turner and Mr. Smith, which were entered into prior to 2011, provide for a gross up payment in the event the change-in-control benefits exceed their 280G limit by more than 110% (otherwise benefits are automatically cut back to their 280G limit). The change-in-control agreements covering Mr. J. Turner and Mr. Lusco as well as the Executive Severance Plan that covers Mr. Massey provide only for a cut back of change-in-control payments to their 280G limit if the executive’s change-in-control benefits exceed their 280G limit and a cut back in benefits would result in a greater net after-tax payment to the executive.
(8) For Mr. J. Turner, the change-in-control agreement provides for continuation of medical and dental coverage equal under Regions’ medical and dental plans for a period of three years. For Mr. D. Turner, Mr. Lusco, and Mr. Smith, the agreements provides for a period of two years. For Mr. Massey, the Executive Severance Plan provides for a cash payment equivalent to two years of coverage.
(9) Mr. J. Turner, Mr. D. Turner, Mr. Lusco, and Mr. Smith participate in the Retirement Plan and/or the SERP. Mr. Massey does not participate in the Retirement Plan or the SERP. The change-in-control agreement provides for additional years’ credit for age and service under the Retirement Plan and the SERP that the NEO would have accrued had he remained employed through the second anniversary of the change-in-control. In addition, Mr. J. Turner is eligible for the
| | |
| COMPENSATION OF EXECUTIVE OFFICERS |
alternative target benefit under the SERP, which requires the NEO to reach age 60 and have a minimum of 10 years of service. Under the SERP, in the event of an involuntary termination of employment without cause (or termination for good reason) within 24 months following a change-in-control, unvested benefits become fully vested. Because these benefits are already accrued, they are reflected in the Pension Benefits table and do not represent additional expense to the Company. The following chart details the value of the SERP benefit attributable to the additional years of age and service, as well as the amounts already accrued that will vest upon involuntary termination of employment without cause (or termination with good reason) within 24-months of a change-in-control:
| | | | | | | | | | | |
Name | Value for Alternative Target/Regular Years of Age and Service Credit ($) | Value for Vesting in Alternative Target/Regular Benefit ($) | Total Additional Value ($) |
| John M. Turner, Jr. | — | | N/A | — | |
| David J. Turner, Jr. | 1,782,716 | | N/A | 1,782,716 | |
| C. Matthew Lusco | 520,346 | | N/A | 520,346 | |
| Ronald G. Smith | — | | N/A | — | |
| C. Dandridge Massey | N/A | N/A | N/A |
CEO Pay Ratio
CEO Pay Ratio and Compensation Philosophy. The guiding principles of compensation set forth by the CHR Committee and described in the CD&A form the foundation for Regions’ compensation and benefits philosophy for all associates. Accordingly, our compensation and benefit programs are designed to encourage and reward all associates who contribute to our success. We strive to ensure that the compensation of every associate reflects the level of their job impact and responsibilities and is benchmarked to be competitive in the market where the associate is geographically located.
Under the Dodd-Frank Act, we are required to identify and disclose the annual total compensation of our median employee, the annual total compensation of our President and CEO, Mr. J. Turner, and the ratio of these two amounts.
SEC rules for identifying the median employee and calculating the pay ratio allow companies to apply various methodologies and assumptions. As a result, the pay ratio reported by us may not be comparable to the pay ratio reported by other companies, including those within our peer groups and industry.
Consistently Applied Compensation Measure (“CACM”), Methodology, Associate Population, and Measurement Date. Entering the sixth year of pay ratio disclosure, we intended to use the same median employee as last year. To determine whether or not there had been a material change in pay distribution for the Company, we repeated the median employee identification process set forth in our proxy statements since 2018. Using base salary (annualized for new employees) as the CACM, we identified 20,335 full- and part-time associates, excluding our CEO, who were actively employed as of the first pay period at the beginning of the fourth quarter (October 14, 2022).
As of the measurement date, though the number of full- and part-time associates increased slightly when compared to 2021, we determined the change in our associate population did not materially affect the pay distribution across the associate population. Additionally, in keeping with our belief that the median employee should be reflective of the compensation structure and benefits profile of the average Regions associate, we verified that approximately 39 percent of our associate population is in the retail organization,
approximately 74 percent are incentive eligible, more than 93 percent participate in the 401(k) Plan, and 88 percent participate in our medical and/or dental insurance programs.
Median Employee. Based upon the determination that neither pay distribution nor the profile of the average Regions associate had materially changed, we confirmed use of the same median employee as the last two years. Our median employee is a full-time associate serving as a Relationship Banker within our branch network; is incentive eligible; and participates in our 401(k) Plan and in the medical, dental, life, disability insurance programs provided by the Company. Our median employee’s base compensation is $51,584. All elements of the median employee’s 2022 compensation, including incentives and the Company-paid cost of benefits mentioned above, totaled $93,080.
Pay Ratio. Using Mr. J. Turner’s income disclosed in the Summary Compensation Table, and including an additional $36,887 in Company-paid benefit costs associated with medical, dental, life, disability insurance, and the value of new parental leave benefits, we calculate our CEO’s total compensation for purposes of the pay ratio to be $14,589,252. As a result, the ratio of our CEO’s annual total compensation to that of our median employee is 157 to 1. We believe that this ratio is a reasonable estimate calculated in a manner consistent with the pay ratio disclosure requirements.
Alternative Pay Ratio. In addition to the required pay ratio calculation, we have calculated an alternative pay ratio that compares compensation for our median employee to our CEO compensation excluding the $3,885,359 change in pension value reported in the Summary Compensation Table. When calculated without this value, our CEO’s adjusted pay is $10,703,893, resulting in an alternative pay ratio of 115 to 1.
Regions’ Retirement Plan was closed to new participants in 2007, and, at this time, only approximately 13 percent of our associates remain participants in the plan. Changes in pension value, as required to be disclosed in the Summary Compensation Table, are impacted by changes in mortality tables, discount rates, and interest rates and, as a result, can represent a significant additional compensation component for those associates still eligible under the closed Retirement Plan. In keeping with the spirit of the disclosure, we believe it is important to identify an associate most reflective of our
| | |
| COMPENSATION OF EXECUTIVE OFFICERS |
average associate. Therefore, our median employee is representative of our larger associate population as an individual who is not a Retirement Plan participant. Our CEO participates in the Retirement Plan and the SERP as previously
described. The change in pension value for the CEO represents actuarial increases in the lump sum value of his pension that are primarily impacted by promotional salary increases, age, and additional years of service.
Pay Versus Performance
As required by the Dodd-Frank Act and Item 402(v) of Regulation S-K, the Pay Versus Performance disclosure that follows provides information about the relationship between Compensation Actually Paid (“CAP”) to our Principal Executive Officer (“PEO”) and Non-PEO NEOs and certain financial
performance measures of the Company. For further information concerning Regions’ pay-for-performance philosophy and how the Company aligns executive compensation with performance, see our CD&A.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Year | Summary Compensation Table Total for PEO ($) (1) | Compensation Actually Paid to PEO ($) (2) | Average Summary Compensation Table Total for Non-PEO NEOs ($) (3) | Average Compensation Actually Paid to Non-PEO NEOs ($) (4) | Value of Initial Fixed $100 Investment Based On: | Net Income ($ in millions) (7) | Adjusted ROATCE (non-GAAP) (%) (8) |
Total Shareholder Return ($) (5) | Peer Group Total Shareholder Return ($) (6) |
| 2022 | 14,552,365 | | 11,382,593 | | 3,416,909 | | 3,674,803 | | 140 | | 94 | | 2,245 | | 24.12 | % |
| 2021 | 14,267,077 | | 14,651,530 | | 3,549,359 | | 4,515,449 | | 137 | | 117 | | 2,521 | | 16.55 | % |
| 2020 | 13,832,516 | | 9,770,613 | | 4,100,496 | | 2,969,679 | | 98 | | 86 | | 1,094 | | 14.95 | % |
(1) The amounts reported in this column reflect the total compensation reported for Mr. J. Turner (our President and CEO) for each corresponding year in the “Total” column of the Summary Compensation Table. Refer to Compensation of Executive Officers – Summary Compensation Table.
(2) The amounts reported in this column represent the amount of Compensation Actually Paid to Mr. J. Turner, as computed in accordance with Item 402(v) of Regulation S-K. The amounts do not reflect the actual amount of compensation earned by or paid to Mr. J. Turner during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to Mr. J. Turner’s Total compensation for each year to determine the Compensation Actually Paid:
| | | | | | | | | | | | | | | | | | | | |
| Year | Reported Summary
Compensation
Table Total for PEO
($) | Reported Value of Equity Awards ($) (a) | Aggregate Equity Award Adjustments ($) (b) | Reported Change in the Actuarial Present Value of Pension Benefits ($) (c) | Aggregate Pension Benefit Adjustments ($) (d) | Compensation
Actually Paid
to PEO
($) |
| 2022 | 14,552,365 | | (3,305,994) | | 4,021,581 | | (3,885,359) | | — | | 11,382,593 | |
| 2021 | 14,267,077 | | (3,767,112) | | 8,517,923 | | (4,883,636) | | 517,278 | | 14,651,530 | |
| 2020 | 13,832,516 | | (3,328,484) | | 4,425,591 | | (6,914,629) | | 1,755,619 | | 9,770,613 | |
(a) The reported value of equity awards represents the grant date fair value of equity awards as reported in the “Stock Awards” column in the Summary Compensation Table for the applicable year. The Company has not granted any option awards since 2011.
(b) The equity award adjustments for each applicable year include the addition (or subtraction, as applicable) of the following: (i) the year-end fair value of any equity awards granted in the applicable year that are outstanding and unvested as of the end of the year; (ii) the amount of change in fair value as of the end of the applicable year (from the end of the prior fiscal year) of any awards granted in prior years that are outstanding and unvested as of the end of the applicable year; (iii) for awards that are granted and vest in same applicable year, the fair value as of the vesting date; (iv) for awards granted in prior years that vest in the applicable year, the amount equal to the change in fair value as of the vesting date (from the end of the prior fiscal year); (v) for awards granted in prior years that are determined to fail to meet the applicable vesting conditions during the applicable year, a deduction for the amount equal to the fair value at the end of the prior fiscal year; and (vi) the dollar value of any dividends or other earnings paid on stock or option awards in the applicable year prior to the vesting date that are not otherwise reflected in the fair value of such award or included in any other component of total compensation for the applicable year. The valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time of grant. The amounts deducted or added in calculating the equity award adjustments are as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| Year | Year End Fair Value of Equity Awards
($) | Year Over Year Change in Fair Value of Outstanding and Unvested Equity Awards
($) | Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year
($) | Year Over Year Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year
($) | Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year
($) | Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation
($) | Aggregate Equity Award Adjustments
($) |
| 2022 | 3,319,852 | | 763,610 | | — | | (61,881) | | — | | — | | 4,021,581 | |
| 2021 | 3,643,739 | | 4,576,898 | | 292,966 | | 4,320 | | — | | — | | 8,517,923 | |
| 2020 | 5,221,913 | | (268,789) | | — | | (527,532) | | — | | — | | 4,425,591 | |
(c) The amounts in this column represent the amounts reported in “Change in Pension and Nonqualified Deferred Compensation” column of the Summary Compensation Table for each applicable year.
(d) The total pension benefit adjustments for each applicable year include the aggregate of two components: (i) the actuarially determined service cost for services rendered by Mr. J. Turner during the applicable year (the “service cost”); and (ii) the entire cost of benefits granted in a plan amendment (or
| | |
| COMPENSATION OF EXECUTIVE OFFICERS |
initiation) during the applicable year that are attributed by the benefit formula to services rendered in periods prior to the plan amendment or initiation (the “prior service cost”), in each case, calculated in accordance with U.S. GAAP. The amounts deducted or added in calculating the pension benefit adjustments are as follows:
| | | | | | | | | | | |
| Year | Service Cost
($) | Prior Service Cost
($) | Aggregate Pension Benefit Adjustments
($) |
| 2022 | — | | — | | — | |
| 2021 | 517,278 | | — | | 517,278 | |
| 2020 | 1,755,619 | | — | | 1,755,619 | |
(3) The amounts in this column represent the average of the amounts reported for the Company’s NEOs as a group (excluding Mr. J. Turner, who has served as our President and CEO since 2018) in the “Total” column of the Summary Compensation Table in each applicable year. The names of each of the NEOs (excluding Mr. J. Turner) included for purposes of calculating the average amounts in each applicable year are as follows: (i) for 2022, David J. Turner, Jr., C. Matthew Lusco, Ronald G. Smith, and C. Dandridge Massey; (ii) for 2021, David J. Turner, Jr., C. Matthew Lusco, Ronald G. Smith, and David R. Keenan; and (iii) for 2020, David J. Turner, Jr., John B. Owen, C. Matthew Lusco, and Ronald G. Smith.
(4) The amounts in this column represent the average amount of Compensation Actually Paid to the NEOs as a group (excluding Mr. J. Turner), as computed in accordance with Item 402(v) of Regulation S-K. The amounts do not reflect the actual average amount of compensation earned by or paid to the NEOs as a group (excluding Mr. J. Turner) during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to average total compensation for the NEOs as a group (excluding Mr. J. Turner) for each year to determine the average Compensation Actually Paid, using the same methodology described above in Note 2:
| | | | | | | | | | | | | | | | | | | | |
| Year | Average Reported Summary Compensation Table Total for Non-PEO NEOs
($) | Average Reported Value of Equity Awards
($) | Average Equity Award Adjustments ($) (a) | Average Reported Change in the Actuarial Present Value of Pension Benefits
($) | Average Pension Benefit Adjustments ($) (b) | Average Compensation Actually Paid to Non-PEO NEOs
($) |
| 2022 | 3,416,909 | | (863,969) | | 1,022,060 | | (79,488) | | 179,291 | | 3,674,803 | |
| 2021 | 3,549,359 | | (936,037) | | 2,020,212 | | (461,627) | | 343,542 | | 4,515,449 | |
| 2020 | 4,100,496 | | (832,121) | | 740,162 | | (1,356,140) | | 317,282 | | 2,969,679 | |
(a) The amounts deducted or added in calculating the average equity award adjustments are as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| Year | Average Year End Fair Value of Equity Awards
($) | Year Over Year Average Change in Fair Value of Outstanding and Unvested Equity Awards
($) | Average Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year
($) | Year Over Year Average Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year
($) | Average Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year
($) | Average Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation
($) | Total Average Equity Award Adjustments
($) |
| 2022 | 899,780 | | 134,656 | | — | | (12,375) | | — | | — | | 1,022,060 | |
| 2021 | 815,494 | | 1,026,353 | | 175,767 | | 2,598 | | — | | — | | 2,020,212 | |
| 2020 | 1,305,478 | | (103,727) | | — | | (461,589) | | — | | — | | 740,162 | |
(b) The amounts deducted or added in calculating the average pension benefit adjustments are as follows:
| | | | | | | | | | | |
| Year | Average Service Cost
($) | Average Prior Service Cost
($) | Total Average Pension Benefit Adjustments
($) |
| 2022 | 179,291 | | — | | 179,291 | |
| 2021 | 343,542 | | — | | 343,542 | |
| 2020 | 317,282 | | — | | 317,282 | |
(5) Cumulative Total Shareholder Return (“TSR”) is calculated by dividing the sum of the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and the difference between the Company’s share price at the end and the beginning of the measurement period by the Company’s share price at the beginning of the measurement period. “Measurement period” is defined as: for 2020, the one-year period from market close December 31, 2019 through December 31, 2020; for 2021, the two-year period from market close on December 31, 2019 through December 31, 2021; and for 2022, the three-year period from market close December 31, 2019 through December 31, 2022.
(6) Represents the weighted peer group TSR, weighted according to the respective companies’ stock market capitalization at the beginning of each measurement period for which a return is indicated. The peer group used for this purpose is the following published industry index: S&P 500 Banks. “Measurement period” is defined as: for 2020, the one-year period from market close December 31, 2019 through December 31, 2020; for 2021, the two-year period from market close on December 31, 2019 through December 31, 2021; and for 2022, the three-year period from market close December 31, 2019 through December 31, 2022.
(7) The dollar amounts reported represent the amount of net income reflected in the Company’s audited financial statements for the applicable year.
(8) For each applicable year, Adjusted ROATCE (non-GAAP) is defined as that year’s adjusted net income available to common shareholders divided by average tangible common shareholders' equity (average shareholders' equity less average intangible assets, average deferred tax liability related to intangibles and average preferred stock). This metric is used by the CHR Committee as the primary performance metric within the Long-Term Incentive Plan and considered the most critical long-term performance metric to align management with shareholder value creation. While Regions uses numerous financial and non-
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| COMPENSATION OF EXECUTIVE OFFICERS |
financial performance measures for the purpose of evaluating performance for the Company’s compensation programs, Regions has determined that Adjusted ROATCE is the financial performance measure that, in the Company’s assessment, represents the most important performance measure (that is not otherwise required to be disclosed in the table) used to link Compensation Actually Paid to the Company’s NEOs, for the most recently completed fiscal year, to Company performance. For non-GAAP reconciliation information, see Appendix B.
Financial Performance Measures. As described in greater detail in the CD&A, Regions’ executive compensation program is rooted in a pay-for-performance philosophy to support the long-term growth of and the strategic direction for the Company. The metrics that Regions uses for both our annual cash incentive and long-term incentive plans are selected based on the objective of creating a strong tie between NEO and shareholder financial interests through sustaining positive performance over a multi-year period. The most important financial performance measures used by Regions to link Compensation Actually Paid to NEOs, for the most recently completed fiscal year, to the Company’s performance are as follows:
•Adjusted ROATCE
•Adjusted Net Income Available to Common Shareholders
•Adjusted Efficiency Ratio
•Earnings per Share Growth
•Customer Service
Description of the Relationship between Pay and Performance. The following graphs provide visual representations of the relationship between both the CAP of our PEO and the average CAP of our non-PEO NEOs and our (i) TSR, (ii) net income, and (iii) our Company-Selected Metric (“CSM”), Adjusted ROATCE. An additional graph depicts the relationship between our own TSR and a peer group TSR. CAP is influenced by numerous factors, including, but not limited to, the timing of new equity grants and outstanding award vesting,
share price volatility during the fiscal year, mix of performance metrics, and other factors.
A large portion of CAP to our NEOs is comprised of long-term awards under the LTIP and is primarily driven by Adjusted ROATCE performance. Over the last three years, changes in stock price as well as Adjusted ROATCE performance have led to changes in CAP. The graphs below demonstrate:
•From 2020 to 2021, CAP to our PEO increased by 50% and average CAP to our other NEOs, which excludes the PEO, similarly increased by 52%, TSR increased from $98 to $137 (39.4%), net income grew 130.4%, and Adjusted ROATCE grew 132.6%.
•In 2022, CAP to our PEO was $11,382,593, which represents a 22.3% decline as compared to CAP in 2021. TSR increased from $137 to $140 (2.3%), net income declined 10.9%, and Adjusted ROATCE grew 12.6%. The average CAP to our other NEOs, which excludes the PEO, declined from $4,515,449 to $3,574,827, reflecting a similar 20.8% decline.
•Regions has seen sustained growth in TSR from 2020 through 2022 with a cumulative growth rate of 42.6%, while the peer group (S&P 500 Banks Index) experienced a 9.4% increase over the three-year period.
For additional context along with a review of our performance metrics, our process for setting executive compensation, and how our executive compensation design reinforces our compensation philosophy, please see the preceding CD&A.
| | |
| COMPENSATION OF EXECUTIVE OFFICERS |
| | |
QUESTIONS AND ANSWERS ABOUT
THE ANNUAL MEETING AND VOTING |
Who is entitled to vote at the meeting, and what are my voting rights?
The Board set February 21, 2023, as the Record Date for the annual meeting. If you were a shareholder of record at the close of business on the Record Date, you are entitled to vote at the meeting.
As of the close of business on the Record Date, 934,561,674 shares of our common stock were issued and outstanding and, therefore, eligible to be voted at the meeting. Holders of our common stock are entitled to one vote per share; therefore, a total of 934,561,674 votes are entitled to be cast at the meeting. This includes shares that are: (i) held directly in someone’s name as the shareholder of record and (ii) held for a shareholder as the beneficial owner through a Broker. There is no cumulative voting.
Holders of our Class B Depositary Shares, Class C Depositary Shares, Class D Depositary Shares, or Class E Depositary Shares are not entitled to vote at the annual meeting.
How many shares must be present to hold the meeting?
A majority of the outstanding shares of Regions common stock entitled to vote on a matter at the annual meeting must be present, in attendance or by properly executed or otherwise documented proxy, to constitute a quorum at the annual meeting.
Abstentions and Broker non-votes will be counted for the purpose of determining whether a quorum is present. We urge you to vote promptly by proxy, even if you plan to attend the meeting, so we will know as soon as possible that enough shares will be present for us to hold the meeting.
What is a proxy statement, and what is a proxy?
In accordance with the federal securities laws and the regulations of the SEC, a proxy statement is a document we give to you, or provide you access to, when we are soliciting your vote.
A proxy is your designation of another person to vote your shares. Tara A. Plimpton, our Chief Legal Officer and Corporate Secretary, and Andrew S. Nix, our Chief Governance Officer, have been designated as proxies to cast the votes of our shareholders at our 2023 Annual Meeting.
What is Notice and Access?
“Notice and Access” is an SEC rule that allows us to furnish our proxy materials over the Internet instead of mailing paper copies of the materials to each shareholder. As a result, beginning on or about March 6, 2023, we will send most of our shareholders a Notice of Internet Availability of Proxy Materials containing instructions on how to access our proxy materials over the Internet and vote online.
The Notice of Internet Availability of Proxy Materials is not a proxy card and cannot be used to vote your shares. If you received a notice this year, you will not receive paper copies of the proxy materials unless you request the materials by following the instructions on the notice or on the website referred to in the notice.
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Since 2012, when we started distributing our annual meeting materials under the SEC’s “Notice and Access” rule, we have printed roughly 90 percent fewer proxy statements and annual reports each year, helping us reduce our impact on the environment and printing and mailing expenses. |
What is the purpose of the Annual Meeting?
The purpose of the annual meeting is to (i) elect the 13 nominees named in our proxy statement to serve as Directors until the next annual meeting of shareholders and in each case until their successors are duly elected and qualified or their earlier retirement, resignation, or removal; (ii) ratify the appointment of EY as Regions’ independent registered public accounting firm for the year 2023; (iii) approve, on an advisory basis, the compensation of our named executive officers; and (iv) conduct such other business as may properly come before the annual meeting or any adjournments or postponements thereof.
How can I access Regions’ proxy materials and annual report electronically?
This proxy statement, the Company’s 2022 Annual Report on Form 10-K, and the CEO’s Letter are available on ir.regions.com/governance/annual-proxy and at proxyvote.com, as set out in the Notice of Internet Availability of Proxy Materials.
How do I sign up for electronic delivery of proxy materials?
Most shareholders can elect to view our future proxy statements and annual reports over the Internet instead of receiving paper copies in the mail. You can choose to receive future proxy statements and annual reports electronically by following the prompt that will appear if you choose to vote through the Internet. Shareholders who choose to view future proxy statements and annual reports through the Internet will receive an email with instructions containing the Internet address of these materials, as well as voting instructions, approximately four weeks before future meetings.
If you have not already done so, we ask you to consider signing up to receive these materials electronically in the future by following the instructions after you vote your shares over the Internet. Enrolling in future electronic delivery of these materials helps reduce Regions’ impact on the environment as well as printing and mailing expenses.
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| Benefits of Accessing Annual Meeting Materials Online |
•Immediate receipt of the proxy statement, Annual Report on Form 10-K, and related materials •Online proxy voting •You will receive less mail and will not have to worry about misplacing your paper materials | •It saves Regions and its shareholders money by eliminating the costs of printing and postage •It is much better for the environment •Electronic documents are more convenient than paper |
If you elect to view our proxy statement and annual report electronically and vote your proxy through the Internet, your enrollment will remain in effect for all shareholder meetings until you cancel it. To cancel enrollment, registered shareholders should visit http://enroll.icsdelivery.com/rf and follow the instructions to cancel enrollment. If you hold your shares in street name, check the information provided by your Broker for instructions on how to cancel your enrollment.
If at any time you would like to receive a paper copy of the proxy statement or annual report, email investors@regions.com, or write to:
Regions Financial Corporation
1900 Fifth Avenue North
Birmingham, Alabama 35203
Attention: Investor Relations
What is the difference between a “shareholder of record” and a “street name” holder or “beneficial owner”?
If your shares are registered directly in your name with Broadridge, our transfer agent, you are considered the “shareholder of record” with respect to those shares. If your shares are held by a Broker, you are considered the “beneficial owner” of shares held in “street name.” If you hold your shares in “street name,” you will have the opportunity to instruct your Broker how to vote your shares. “Street name” shareholders may only vote at the meeting if they have a legal proxy––if you intend to do so, be sure to request the legal proxy from your Broker promptly following receipt of these materials so there is enough time for it to be received before the meeting.
What is the deadline for voting by mail, internet, mobile device, or telephone?
| | | | | | | | |
If You Are: | And You Are Voting by: | Your Vote Must Be Received: |
A shareholder of record | Mail | By April 18, 2023 |
Internet, mobile device, or telephone | By 11:59 P.M. ET on April 18, 2023 |
A street name holder | Mail | By April 18, 2023 |
Internet, mobile device, or telephone | By 11:59 P.M. ET on April 18, 2023 |
A participant in Regions 401(k) Plan | Internet, mobile device, or telephone | By 11:59 P.M. ET on April 16, 2023 |
How do I vote?
Shareholders of record, and most beneficial shareholders, have several ways to vote, as described on page 2. If you have the ability to vote online, we encourage you to record your vote through the Internet to reduce corporate expenses. See the Notice of Internet Availability of Proxy Materials or Voter Instruction Form from your Broker for available options. | | |
Your vote is important! Please submit your vote by proxy over the Internet, by telephone,
or complete, sign, date, and return your proxy card or voting instruction form. |
How do I vote shares held in the Regions 401(k) Plan?
If you are a participant in the Regions 401(k) Plan, you may direct the 401(k) Plan trustee how to vote your shares. Under the terms of the 401(k) Plan, the trustee votes all shares held by the 401(k) Plan, but each participant may direct the trustee how to vote the shares of Regions common stock allocated to their 401(k) Plan account. If you own shares through the 401(k) Plan and do not submit voting instructions, the 401(k) Plan trustee will vote the shares in accordance with the Board’s recommendations. To vote your shares held in the 401(k) Plan, follow the instructions above.
How do I vote shares held in the dividend reinvestment plan?
If you are a participant in the Broadridge Direct Stock Purchase and Dividend Reinvestment Plan (the “Dividend Reinvestment Plan”), the proxy card or electronic voting instructions cover all shares allocated to your account under the plan. If you do not return your proxy card, or vote by telephone or over the Internet, your shares in the Dividend Reinvestment Plan will not be voted. To vote your shares held in the Dividend Reinvestment Plan, follow the instructions above.
What if I do not specify how I want my shares voted?
If you requested printed copies of the proxy materials and sign and return your proxy card without giving specific voting instructions, your proxy will be voted in accordance with the Board’s recommendations. Our telephone and Internet voting procedures do not permit you to submit your proxy vote without specifying how you want your shares voted.
How will my shares be voted if I don’t provide my proxy or provide my broker with voting instructions, and I don’t attend the annual meeting?
If you...
...are a shareholder of record and do not provide a proxy or vote at the meeting, your shares will not be voted.
...hold your shares through the 401(k) Plan and do not vote your shares, your shares (along with all other shares in the 401(k) Plan for which votes are not cast) will be voted by the trustee in favor of Proposals 1, 2, and 3 (see the question How do I vote shares held in the Regions 401(k) Plan? above).
...are a participant in the Dividend Reinvestment Plan and do not vote, your shares in the plan will not be voted.
...hold your shares in street name and do not give your Broker instructions on how to vote your shares, your Broker may not vote on any proposal other than Proposal 2 (the ratification of appointment of EY as our independent registered public accounting firm for 2023).
Can I change my vote after casting a vote or submitting my proxy?
If you are a shareholder of record, you may change or revoke any previously cast vote, so long as the new vote or revocation is received prior to the completion of voting at the annual meeting. The following are the methods of re-voting/revocation, and their associated timing:
•Signing and mailing a new proxy card with a later date, allowing adequate time for it to be received and processed prior to the date of the annual meeting;
•Delivering a written revocation of your previously cast vote to our Corporate Secretary at Regions Financial Corporation, 1900 Fifth Avenue North, Birmingham, Alabama 35203, prior to the date of the annual meeting;
•Casting a new vote over the Internet or by telephone, prior to 11:59 P.M., Eastern Time on April 18, 2023; or
•Attending the annual meeting and voting again at the meeting.
If your shares are held in street name, you should follow your Broker’s instructions regarding how to change your vote or withdraw your voting instructions. Subsequent proxy cards or written revocations must still be received by the regular voting deadline in order to be effective.
What vote is required to approve each of the proposals?
The votes required to approve each matter to be considered by Regions’ shareholders at the annual meeting are as follows:
•Proposal 1—Election of Directors: Each nominee requires the affirmative “FOR” vote of a majority of the votes cast for or against the nominee. Abstentions and Broker non-votes have no effect on the vote results.
•Proposal 2—Ratification of Appointment of EY: Approval of this proposal requires the affirmative “FOR” vote of a majority of the votes cast for or against the proposal. Abstentions have no effect on the vote results, and we do not expect there to be any Broker non-votes on this proposal.
•Proposal 3—Advisory Vote on Executive Compensation: Approval of this proposal requires the affirmative “FOR” vote of a majority of the votes cast for or against the proposal. Abstentions and Broker non-votes have no effect on the vote results.
A “broker non-vote” occurs when a bank, broker or other holder of record holding shares for a beneficial owner does not vote on a particular proposal because that holder does not have discretionary voting power for that particular item and has not received instructions from the beneficial owner. If you are a beneficial owner, your bank, broker or other holder of record is permitted to vote your shares on the ratification of the independent registered public accounting firm even if the record holder does not receive voting instructions from you. Absent instructions from you, the record holder may not vote on any “nondiscretionary” matter including a director election, an equity compensation plan, a matter relating to executive compensation, certain corporate governance changes, or any stockholder proposal. In that case, without your voting instructions, a broker non-vote will occur. An “abstention” will occur at the annual meeting if your shares are deemed to be present at the annual meeting, either because you attend the annual meeting or because you have properly completed and returned a proxy, but you do not vote on any proposal or other matter which is required to be voted on by our stockholders at the annual meeting.
Who pays the expenses of this proxy solicitation?
Our proxy materials are being distributed by our Board in connection with the solicitation of proxies for our annual meeting. We pay the entire cost of soliciting your proxy, including the cost of preparing, assembling, printing, mailing, and otherwise distributing the Notice of Internet Availability of Proxy Materials and these proxy materials, as well as soliciting your vote. In addition to solicitation of proxies by mail, we request that Brokers send proxy materials or the Notice of Internet Availability of Proxy Materials to the street name/ beneficial owners of Regions common stock and secure their voting instructions. We will reimburse Brokers for their reasonable expenses in taking those actions.
We have made arrangements with Innisfree M&A Incorporated to assist us in soliciting proxies and have agreed to pay $17,500, plus reasonable and customary expenses, for these services. If necessary, we also may use several of our associates, without additional compensation, to solicit proxies from shareholders, either personally or by telephone, email, or letter, on Regions’ behalf. If you have any questions or need assistance voting your shares, please contact Innisfree M&A Incorporated:
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| Innisfree M&A Incorporated, 501 Madison Avenue, 20th Floor, New York, NY 10022. |
| Shareholders may call Innisfree toll-free: 1-888-750-5834. |
| Brokers may call Innisfree collect: 1-212-750-5833. |
Who counts the votes?
We have engaged Broadridge Financial Solutions, Inc. to count the votes represented by proxies and cast at the meeting by online ballot and to act as Inspector of Election. A representative from Broadridge will be present at the annual meeting.
When will the Company announce the voting results?
We will announce the preliminary voting results at the annual meeting. We will also report the final voting results in a Current Report on Form 8-K filed with the SEC within four business days of the annual meeting.
Who can attend the annual meeting, and who can vote and ask questions at the meeting?
Registered and beneficial shareholders as of the Record Date are entitled to attend, vote, and ask questions at this year’s virtual annual meeting at www.virtualshareholdermeeting.com/RF2023 by logging in using the 16-digit control number appearing on the Notice of Internet Availability of Proxy Materials, email notification, voting instruction form, or paper proxy card. Guests without a control number may also attend the meeting, but they will not be permitted to vote or ask questions.
The annual meeting will begin at 9:00 A.M. Central Time. It is recommended that attendees log into the meeting with sufficient time before the meeting time to address any technical issues. The Virtual Shareholder Meeting website will provide technical assistance to attendees experiencing issues accessing the meeting. The technical support contact information will appear on the meeting website prior to the start of our meeting.
Additional information and rules of conduct will be provided on the Virtual Shareholder Meeting website in advance of the meeting.
How do I inspect the list of shareholders of record?
A list of the shareholders of record as of the Record Date will be made available for inspection at our headquarters during ordinary business hours from April 9, 2023, to April 18, 2023. If you would like to review the list prior to the annual meeting, please contact Tara A. Plimpton, Corporate Secretary at 1900 Fifth Avenue North, Birmingham, Alabama 35203 to arrange a time for inspection.
How do I submit a shareholder proposal for Regions’ 2024 Annual Meeting of Shareholders?
The table below summarizes the requirements for shareholders who wish to submit proposals, including Director nominations, for next year’s annual meeting. Each of the following descriptions are summaries and are qualified in their entirety by reference to SEC Rule 14a-8 and our By-Laws. Shareholders are encouraged to consult SEC Rule 14a-8 or our By-Laws, as applicable, to see all necessary requirements.
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| Proposals for inclusion in Regions’ 2024 Proxy Statement | Director nominees for inclusion in Regions’ 2024 Proxy Statement (proxy access) | Other proposals/nominees outside of SEC Rule 14a-8 or proxy access to be presented at the 2024 Annual Meeting (advance notice) |
Type of Proposal | SEC rules permit shareholders to submit proposals for inclusion in our proxy statement by satisfying the requirements specified in SEC Rule 14a-8. | A shareholder (or a group of up to 20 shareholders) owning at least 3% of Regions stock for at least 3 years may submit Director nominees† for inclusion in our proxy statement by satisfying the requirements specified in Article II, Section 8 of our By-Laws.* | Shareholders may present proposals or Director nominees at the annual meeting by satisfying the requirements specified in Article II, Section 7 of our By-Laws.* |
When proposal must be received by Regions | No later than the close of business on November 7, 2023 | Between October 8, 2023 and November 7, 2023 | Between November 7, 2023 and December 7, 2023 |
What to include | The information required by SEC Rule 14a-8. As the rules of the SEC make clear, however, simply submitting a proposal does not guarantee its inclusion. | The information required by our By-Laws.* | The information required by our By-Laws.* |
Where to send | Regions Financial Corporation
1900 Fifth Avenue North
Birmingham, Alabama 35203
Attention: Corporate Secretary |
† Note that proxy access may only be used to nominate up to the greater of (i) two nominees or (ii) 20% of the total number of Directors.
* Our By-Laws are available on Regions’ website at ir.regions.com/governance.
In addition to satisfying applicable requirements of our By-Laws for director nominations, shareholders who intend to solicit proxies in support of Director nominees other than our nominees must provide notice to the Company that complies with the information and timing requirements of SEC Rule 14a-19 under the Exchange Act. The deadline under SEC Rule 14a-19 for providing the Company with notice of a solicitation of proxies in support of Director nominees other than our nominees at the 2024 Annual Meeting of Shareholders is February 19, 2024. However, the deadline for the Company to receive notice of a shareholder’s nomination of a Director nominee is an earlier date, as reflected in the table above.
How do I recommend a candidate for directorship to be considered by the NCG Committee?
The NCG Committee considers recommendations for directorship submitted by shareholders and other parties outside of our By-Laws. Recommendations for directorships may be submitted to the NCG Committee at any time by sending the candidate’s information to our Corporate Secretary at the below address. You should provide as much relevant information about the candidate as possible. Refer to the section Proposal 1—Election of Directors to see the skills and diversity attributes considered by the NCG Committee and Board when selecting nominees.
Regions Financial Corporation
1900 Fifth Avenue North
Birmingham, Alabama 35203
Attention: Corporate Secretary
How do I have my dividend check automatically deposited into my bank account?
If you are a shareholder of record and do not participate in the dividend reinvestment plan, we encourage you to sign up for direct deposit of your dividend check rather than receiving a paper check. You can do so by logging into your Broadridge account through their website at www.shareholder.broadridge.com/RF/ and selecting "dividend options" from the menu on the right side of the page. Doing so will reduce the Company’s quarterly printing and mailing expenses and reduce our paper usage. For additional information, please contact Broadridge at 1-800-524-2879.
Forward-looking statements
This proxy statement, other reports filed by the Company with the SEC under the Exchange Act, and any other written or oral statements made by us or on our behalf to analysts, investors, the media, and others, may include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. The words “future,” “anticipates,” “assumes,” “intends,” “plans,” “seeks,” “believes,” “predicts,” “potential,” “objectives,” “estimates,” “expects,” “targets,” “projects,” “outlook,” “forecast,” “would,” “will,” “may,” “might,” “could,” “should,” “can,” and similar terms and expressions often signify forward-looking statements. Forward-looking statements are not based on historical information, but rather are related to future operations, strategies, financial results, or other developments. Forward-looking statements are subject to the risk that the actual effect may differ, possibly materially, from what is reflected in those forward-looking statements due to factors and future developments that are uncertain, unpredictable and in many cases beyond our control. Forward-looking statements are based on management’s current expectations as well as certain assumptions and estimates made by, and information available to, management at the time the statements are made. Those statements are based on general assumptions and are subject to various risks, and because they also relate to the future, they are likewise subject to inherent uncertainties and other factors that may cause actual results to differ materially from the views, beliefs, and projections expressed in such statements. Therefore, we caution you against relying on any of these forward-looking statements.
You should not place undue reliance on any forward-looking statements, which speak only as of the date made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible to predict all of them. We assume no obligation and do not intend to update or revise any forward-looking statements that are made from time to time, either as a result of future developments, new information, or otherwise, except as may be required by law.
See also the reports filed with the SEC, including the discussions under the “Forward-Looking Statements” and “Risk Factors” sections of Regions’ Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the SEC and available on its website at sec.gov, as well as at ir.regions.com/governance/annual-proxy and proxyvote.com.
Trademark information
Regions®, the Regions logo, Regions360®, the LifeGreen bike, and other appropriately designated words or symbols in this proxy statement are registered trademarks of Regions Bank. The LifeGreen color is a trademark of Regions Bank. Other words or symbols in this proxy statement that identify other parties’ goods or services may be trademarks or service marks of those other parties.
Information not incorporated into this Proxy Statement
Information contained on or accessible through our website at regions.com or doingmoretoday.com is not and shall not be deemed to be a part of this proxy statement by reference or otherwise incorporated into any other filings we make with the SEC, except to the extent we specifically incorporate such information by reference.
GAAP TO NON-GAAP RECONCILIATIONS
Annual Cash Incentive Plan
The tables below present computations of financial metrics, which exclude certain items that are included in the financial results presented in accordance with GAAP. The non-GAAP financial metrics utilized for the Annual Cash Incentive Plan include the following: adjusted net income available to common shareholders-annual cash incentive plan (non-GAAP) and adjusted efficiency ratio-annual cash incentive plan (non-GAAP). The adjustments made to arrive at these adjusted financial metrics are included in our financial results presented in accordance with GAAP and represent the amounts recognized in such financial results but excluded for purposes of measuring operating results in respect of the 2022 target for the Annual Cash Incentive Plan.
Regions believes that excluding certain items provides a meaningful base for analyzing the operating results of the Company and predicting future performance because management does not consider the activities related to the adjustments to be indications of ongoing operations. These non-GAAP financial measures are used by management and the CHR Committee to assess the performance of Regions’ business.
Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied, and are not audited. Although these non-GAAP financial measures are frequently used by stakeholders in the evaluation of a company, they have limitations as analytical tools and should not be considered in isolation or as a substitute for analyses of results as reported under GAAP. In particular, a measure of earnings that excludes these selected items does not represent the amount that effectively accrues directly to shareholders.
Adjusted Net Income Available to Common Shareholders - Annual Cash Incentive Plan (Non-GAAP)
| | | | | | | | |
(Unaudited) ($ amounts in millions) | | Year Ended December 31, 2022 |
| Net income available to common shareholders (GAAP) | | $ | 2,146 | |
Adjustments(1): | | |
Provision release associated with the sale of consumer unsecured loans, net of tax(2) | | (24) |
| Branch consolidation, property and equipment charges, net of tax | | 3 |
| Securities losses, net of tax | | 1 |
| Leveraged lease termination gains, net of tax | | (1) |
Add provision, net of release associated with the sale of consumer unsecured loans, net of tax(3) | | 227 | |
Net charge-offs less charge-offs associated with the sale of consumer unsecured loans, net of tax(4) | | (150) | |
| Adjusted net income available to common shareholders - annual cash incentive plan (non-GAAP) | | 2,202 | |
___________
(1) Calculated by applying the Company’s effective tax rate of 25% to adjusted income before tax for EIP incentive purposes (non-GAAP).
(2) In 2022 the Company sold a portfolio of consumer unsecured loans with an associated allowance of $94 million at the time of the sale. In conjunction with the sale, there was a $63 million fair value mark recorded through charge-offs, which resulted in a net provision benefit of $31 million. The net provision benefit was not included in net income for EIP incentive purposes.
(3) For the purposes of EIP performance evaluation, the Company utilizes net charge-offs in place of provision. In 2022 the provision adjustment excludes the provision benefit associated with the sale of consumer unsecured loans discussed in footnote 2 above.
(4) In replacing provision with net charge-offs, the charge-offs exclude $63 million in charge-offs associated with the sale of consumer unsecured loans discussed in footnote 2.
Adjusted Efficiency Ratio - Annual Cash Incentive Plan (Non-GAAP)
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(Unaudited)
($ amounts in millions) | | Year Ended December 31, 2022 |
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| Non-interest expense (GAAP) | A | $ | 4,068 | |
| Adjustments: | | |
| Branch consolidation, property and equipment charges | | (3) | |
| Adjusted non-interest expense (non-GAAP) | B | $ | 4,065 | |
| Net interest income (GAAP) | C | $ | 4,786 | |
| Taxable-equivalent adjustment (GAAP) | | 47 | |
| Net interest income, taxable-equivalent basis (GAAP) | D | $ | 4,833 | |
| Non-interest income (GAAP) | E | $ | 2,429 | |
| Adjustments: | | |
| Securities (gains) losses, net | | 1 | |
| Leveraged lease termination gains | | (1) | |
| Adjusted non-interest income (non-GAAP) | F | $ | 2,429 | |
| Total revenue (GAAP) | C+E=G | $ | 7,215 | |
| Adjusted total revenue (non-GAAP) | C+F=H | $ | 7,215 | |
| Total revenue, taxable-equivalent basis (GAAP) | D+E=I | $ | 7,262 | |
| Adjusted total revenue, taxable-equivalent basis (non-GAAP) | D+F=J | $ | 7,262 | |
| Efficiency ratio (GAAP) | A/I | 56.0 | % |
| Adjusted efficiency ratio - annual cash incentive plan (non-GAAP) | B/J | 56.0 | % |
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GAAP TO NON-GAAP RECONCILIATIONS
Long-Term Incentive Plan (LTIP)
The tables below present computations of financial metrics, which exclude certain items that are included in the financial results presented in accordance with GAAP. The non-GAAP financial metric utilized for the Long-Term Incentive Plan is the adjusted return on average tangible common equity-long term incentive plan (“Adjusted ROATCE - LTIP”) (non-GAAP). Other adjusted financial measures used in the computation of the non-GAAP financial metric include; adjusted net income available to common shareholders-LTIP (non-GAAP), adjusted non-interest expense (non-GAAP), adjusted non-interest income (non-GAAP), adjusted total revenue (non-GAAP). The adjustments made to arrive at these adjusted financial metrics and measures are included in our financial results presented in accordance with GAAP and represent the amounts recognized in such financial results but excluded for purposes of measuring operating results in respect of the 2022 target for the LTIP.
Regions believes that excluding certain items provides a meaningful base for analyzing the operating results of the Company and predicting future performance because management does not consider the activities related to the adjustments to be indications of ongoing operations. These non-GAAP financial measures are used by management and the CHR Committee to assess the performance of Regions’ business.
Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied, and are not audited. Although these non-GAAP financial measures are frequently used by stakeholders in the evaluation of a company, they have limitations as analytical tools and should not be considered in isolation or as a substitute for analyses of results as reported under GAAP. In particular, a measure of earnings that excludes these selected items does not represent the amount that effectively accrues directly to shareholders.
Adjusted ROATCE - LTIP (Non-GAAP)
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| (Unaudited) | | Year Ended December 31 |
| ($ amounts in millions) | | 2022 | | 2021 | | 2020 |
| Net income available to common shareholders (GAAP) | A | $ | 2,146 | | $ | 2,400 | | $ | 991 |
Replace provision for (benefit from) credit losses with net charge-offs, net of tax(1) | | (6) | | 546 | | (614) |
| Adjusted net income available to common shareholders-LTIP (non-GAAP) | B | 2,152 | | 1,854 | | 1,605 |
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| Average shareholders' equity (GAAP) | | 16,503 | | 18,201 | | 17,382 |
| Less: | | | | | | |
| Average intangible assets (GAAP) | | 6,023 | | 5,435 | | 5,239 |
| Average deferred tax liability related to intangibles (GAAP) | | (103) | | (99) | | (99) |
| Average preferred stock (GAAP) | | 1,659 | | 1,658 | | 1,509 |
| Average tangible common shareholders' equity (non-GAAP) | C | $ | 8,924 | | $ | 11,207 | | $ | 10,733 |
ROATCE (non-GAAP)(2) | A/C | 24.05 | % | | 21.42 | % | | 9.23 | % |
Adjusted ROATCE - LTIP (non-GAAP)(2) | B/C | 24.12 | % | | 16.55 | % | | 14.95 | % |
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(1) In the calculation of net income for LTIP incentive purposes, net charge-offs of $263 million, $204 million and $512 million for the years ended December 31, 2022, 2021 and 2020, respectively were utilized compared to provision expense of $271 million in 2022, provision benefit of $524 million in 2021, and provision expense of $1.3 billion in 2020. The impact of the replacement was calculated by applying the Company’s effective tax rate of 25%.
(2) Amounts calculated using whole dollar values.