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SCHEDULE 14A

Information Required in Proxy Statement

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

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  Preliminary Proxy Statement
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  Definitive Proxy Statement
  Definitive Additional Materials
  Soliciting Material Under Rule 14a-12

Huntington Bancshares Incorporated
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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LOGO

Huntington Bancshares Incorporated

Huntington Center

41 South High Street

Columbus, Ohio 43287

March 8, 2018

Dear Fellow Shareholders:

We are pleased to invite you to the 2018 Annual Meeting of Shareholders to be held on Thursday, April 19, 2018, at 2:00 pm (local time) at our Easton Business Service Center in Columbus, Ohio. We will consider the matters described in the following Notice of Annual Meeting and Proxy Statement and review highlights of the past year. We hope you will attend the meeting.

2017 was a year of record performance and accomplishments for Huntington. We earned record net income of $1.2 billion, an increase of 67% over the prior year, and a record level for the third consecutive year. During the fourth quarter we achieved all five of our long-term financial goals for the first time. Our strong performance reflected the impact of the acquisition of FirstMerit Corporation and successful completion of the integration of branches, systems, products and services.

Your vote is important to us. Whether or not you plan to attend the annual meeting, we encourage you to read the Proxy Statement carefully. Please vote via internet, telephone or mail to ensure that your shares are represented.

Thank you for your support of Huntington.

Best wishes,

 

 

LOGO

Stephen D. Steinour

Chairman, President and CEO


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LOGO

Huntington Bancshares Incorporated

Huntington Center

41 South High Street

Columbus, Ohio 43287

NOTICE OF 2018 ANNUAL MEETING

OF SHAREHOLDERS

To the Shareholders of Huntington Bancshares Incorporated:

Our annual meeting of shareholders will be held on Thursday, April 19, 2018 at 2:00 p.m., local time at Huntington’s Easton Business Service Center, 7 Easton Oval, Columbus Ohio 43219. The purposes of the annual meeting are to:

 

    elect directors;

 

    approve the 2018 Long-Term Incentive Plan;

 

    approve the Supplemental Stock Purchase and Tax Savings Plan;

 

    ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2018;

 

    approve, on a non-binding basis, the compensation of executives as disclosed in the accompanying proxy statement; and

 

    conduct any other business that properly comes before the meeting.

Huntington shareholders as of the close of business on February 14, 2018 will be entitled to vote at our annual meeting and at any adjournments or postponements of the meeting.

Your vote is important. Please submit your proxy as soon as possible via the internet, mail or telephone.

 

How to Vote Your Shares

 

LOGO

  

Online

Registered holders – www.envisionreports.com/HBAN

Beneficial owners – www.proxyvote.com

  

 

LOGO

  

By Phone

Call the phone number at the top of your proxy card

 

LOGO

  

By Mail

Complete, sign, date and return your proxy card in the envelope provided

  

 

LOGO

  

In Person

Attend our annual meeting and vote by ballot

For your convenience, we will offer an audio webcast of the meeting. To listen to the webcast, go to the Investor Relations section of huntington.com shortly before the meeting time and follow the instructions provided. Please note that you will not be able to vote your shares via the webcast.

Sincerely,

 

 

LOGO

Jana J. Litsey

General Counsel & Secretary

March 8, 2018

Important Notice Regarding the Availability of Proxy Materials for the

Shareholder Meeting to be Held on April 19, 2018

The proxy statement and annual report to security holders are available at

www.edocumentview.com/HBAN


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Proxy Statement Summary

 

This summary highlights certain information contained elsewhere in this proxy statement. This summary does not contain all of the information you should consider. You should read the entire proxy statement carefully before voting.

2018 Annual Meeting of Shareholders

 

 Time and Date   Location    Record Date

April 19, 2018

2:00 p.m.

 

Huntington’s Easton Business Service Center

7 Easton Oval, Columbus, Ohio 43219

   February 14, 2018

Proposals & Voting

 

  Proposals   Votes Required  

Board   

Recommendation   

  Page Number   
     

1 —   Election of 12 Directors

  Majority of Votes Cast for each nominee   FOR each nominee   68
     

2 — Approval of 2018 Long-Term Incentive Plan

  Majority of Votes Cast   FOR   83
     

3 — Approval of Supplemental Stock Purchase and Tax Savings Plan

  Majority of Votes Cast   FOR   95
     

4  — Ratification of Appointment of PricewaterhouseCoopers LLP as independent auditors for 2018

  Majority of Votes Cast   FOR   97
     

5  — Advisory vote to approve the compensation of executives as disclosed in the proxy statement (“Say on Pay”)

  Majority of Votes Cast   FOR   99

 

Information for Shareholders Who Plan to Attend the 2018 Annual Meeting of Shareholders

Our Business Service Center, 7 Easton Oval, is located on the east side of Columbus near I-270 and Easton Way. There will be ample parking available as well as assistance (shuttle service and wheel chairs) in transportation from the parking lot to the building entrance.

 

Huntington Bancshares Incorporated Notice of the Annual Meeting and 2018 Proxy Statement   i


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Proxy Statement Summary

 

 

Huntington Overview

At Huntington, we are committed to doing the right thing for our shareholders, customers, colleagues and communities. Our purpose is to make people’s lives better, help businesses thrive, and strengthen the communities we serve. We deliver on this purpose by looking out for people — our customers, colleagues, shareholders and communities.

Our Business Strategy

 

 

Huntington has a well-defined business strategy that builds upon our sustainable, competitive
advantages:

 

 

 Drive continued growth in market share and share of wallet;

 

 Deliver exceptional customer experiences by leveraging the Welcome brand and delivering on our promise to do the right thing; and

 

 Maintain our aggregate moderate-to-low risk appetite through disciplined risk management and strong governance.

 

2017 Performance Highlights

 

 

2017 was a year of record performance and significant achievements:

 

 

 We reported record net income for the third consecutive year.

 

 We successfully completed the integration of FirstMerit Corporation into Huntington, fully implemented the anticipated cost savings and executed on the revenue opportunities.

 

 We delivered positive operating leverage for the fifth consecutive year.

 

 We achieved all five long-term financial goals for the first time on an adjusted, non-GAAP basis for the 2017 full year.

 

 We achieved all five long-term financial goals on a GAAP basis for the first time during the 2017 fourth quarter.

 

Corporate Responsibility and Governance

 

 

Corporate Responsibility Highlights

 

 

In 2017, Huntington reaffirmed its long-held practice of doing the right thing for our shareholders, customers, colleagues and communities.

 

 We formalized an enterprise Environmental, Social and Governance (ESG) strategy integrated with our core performance objectives that is led by executive management;

 

 We formed a corporate ESG committee with accountability to the Nominating and Corporate Governance Committee of the board of directors; and

 

 We issued Huntington’s first ESG Annual Report signaling our commitment to provide transparency and accountability for environmental, social and governance considerations.

 

 

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Proxy Statement Summary

 

 

 

 

Governance Highlights

 

 

Our board of directors has established strong governance to enhance its effectiveness.

 

 Our board of directors represents a well-rounded variety of skills, knowledge, experience and perspectives.

 

 Directors are elected annually with a majority voting standard.

 

 We have an independent and engaged Lead Director.

 

 A substantial majority of our directors are independent, and key committees are comprised of independent directors.

 

 An experienced third-party firm facilitated the board’s self-evaluation in 2017.

 

 

 

Executive Compensation Highlights

 

 

Our compensation philosophy and programs for executives are balanced and risk appropriate, demonstrate long-term alignment with long-term sustained performance and shareholder interests, and provide a competitive and effective program to attract, motivate and retain the best talent.

 

 We require that executives own a significant amount of company stock and hold a significant portion of the net shares earned until retirement.

 

 Any above target payments from our annual incentive program are paid in restricted stock units that vest over three years.

 

 50% of our annual long-term incentive awards for named executives only vest to the extent performance criteria have been achieved or exceeded.

 

 We use a broad, diverse group of incentive metrics in both our annual and long-term incentive programs.

 

 We have a Recoupment / Clawback Policy applicable to all incentive compensation for all employees.

 

 

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Proxy Statement — Table of Contents

 

 

General Information About the Meeting

     1  
   

Corporate Governance

    
   

   Corporate Governance Guidelines, Policies and Procedures

     3  
   

   Board Meetings and Committee Information

     3  
   

   Director Nomination and Board Evaluation

     14  
   

   The Board’s Leadership Structure

     17  
   

   The Board’s Role in Risk Oversight

     19  
   

   The Importance of Corporate Responsibility

     23  
   

   Compensation of Directors

     27  
   

Ownership of Voting Stock

     30  
   

Compensation of Executive Officers

    
   

   Compensation Discussion & Analysis

     33  
   

   Compensation Tables

     52  
   

   Payments upon Termination of Employment or Change in Control

     62  
   

Proposal 1 —  Election of Directors

     68  
   

Proposal 2 —  Approval of 2018 Long-Term Incentive Plan

     83  
   

Proposal 3 —  Approval of the Supplemental Stock Purchase and Tax Savings Plan

     95  
   

Proposal 4 —  Ratification of the Appointment of Independent Registered Public Accounting Firm

     97  
   

Proposal 5 —  Advisory Approval of Executive Compensation

     99  
   

Our Executive Officers

     99  
   

Proposals by Shareholders for 2019 Annual Meeting

     101  
   

Other Matters

     102  
   

Appendix A —  Huntington Bancshares Incorporated 2018 Long-Term Incentive Plan

     A-1  
   

Appendix B  — Huntington Supplemental Stock Purchase and Tax Savings Plan

 

    

 

B-1

 

 

 

 

iv   Huntington Bancshares Incorporated Notice of the Annual Meeting and 2018 Proxy Statement


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PROXY STATEMENT

We are providing this proxy statement in connection with the solicitation by the board of directors of Huntington Bancshares Incorporated, a Maryland corporation (“we”, “us”, “our”, the “company” or “Huntington”), of proxies to be voted at our 2018 annual meeting of shareholders to be held on April 19, 2018, and at any adjournment. We are sending or making this proxy statement available to our shareholders on or about March 8, 2018.

General Information About the Meeting

Voting Procedures

Holders of common stock at the close of business on February 14, 2018, are entitled to vote at the annual meeting. As of that date, there were 1,073,441,701 shares of common stock outstanding and entitled to vote. Holders of our Series B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock are not entitled to vote.

Each holder of common stock is entitled to cast one vote on each matter submitted at the annual meeting for each share of stock held of record at the close of business on February 14, 2018. The shares represented by a properly submitted proxy will be voted as directed provided we receive the proxy prior to or at the meeting. A properly executed proxy without specific voting instructions will be voted FOR Proposal 1 — Election of Directors, FOR Proposal 2 — Approval of the 2018 Long-Term Incentive Plan, FOR Proposal 3 — Approval of the Supplemental Stock Purchase and Tax Savings Plan, FOR Proposal 4 — Ratification of the Appointment of Independent Registered Public Accounting Firm and FOR Proposal 5 —Advisory Approval of Executive Compensation. A properly submitted proxy will also confer discretionary authority to vote on any other matter which may properly come before the meeting or any adjournment or postponement of the meeting.

You may vote by executing and returning your proxy card in the envelope provided, or by voting electronically over the Internet or by telephone. Please refer to the proxy card for information on voting electronically. If you attend the meeting, you may vote in person and the proxy will not be used.

We are not currently aware of any matters that may properly be presented other than those described in this proxy statement. If any matters not described in the proxy statement are properly presented at the meeting, the proxies will use their own judgment to determine how to vote your shares. If the meeting is adjourned, the proxies can vote your common stock at the adjournment as well, unless you have revoked your proxy instructions.

Revoking Your Proxy

If your common stock is held in street name, you must follow the instructions of your broker, bank or other nominee to revoke your voting instructions. If you are a holder of record and wish to revoke your proxy instructions, you must advise our secretary in writing before the proxies vote your common stock at the meeting, deliver later dated proxy instructions, or attend the meeting and vote your shares in person.

Expenses of Solicitation

We will pay the expenses of this proxy solicitation, including the reasonable charges and expenses of brokerage firms and others for forwarding solicitation material to their customers who are beneficial owners. In addition to soliciting proxies by mail and via the Internet, our employees may also solicit proxies by telephone and in person. We have retained Morrow Sodali LLC, 470 West Ave., Stamford, CT 06902, to assist in the solicitation of proxies for a fee of $10,000 plus reimbursement of expenses.

Vote Required

A quorum is required to conduct business at the annual meeting. Shareholders entitled to cast a majority of all the votes entitled to be cast at the annual meeting, present in person or by proxy, will constitute a quorum. Proposal 1: a nominee for

 

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General Information About the Meeting

 

 

election to the board of directors at a meeting of shareholders at which a quorum is present will be elected only if the number of votes cast “for” such nominee’s election exceeds the total number of votes cast “against” or affirmatively “withheld” as to such nominee’s election; provided, however, that if, on either the date of the company’s proxy statement for the meeting or on the date of the meeting, the number of nominees exceeds the number of directors to be elected, the directors shall be elected by a plurality of all the votes cast at the meeting. Each of Proposals 2 — 5 require the affirmative vote of a majority of all votes cast on the matter by the holders of common stock at a meeting at which a quorum is present.

Broker Voting

Under the laws of Maryland, our state of incorporation, abstentions and broker non-votes are counted for purposes of determining the presence or absence of a quorum, but are not counted as votes cast at the meeting. Broker non-votes occur when brokers who hold their customers’ shares in street name submit proxies for such shares on some matters, but not others. Generally, this would occur when brokers have not received any instructions from their customers. In these cases, the brokers, as the holders of record, are permitted to vote on “routine” matters, which typically include the ratification of the independent registered public accounting firm, but not on non-routine matters. Brokers are no longer permitted to vote on the election of directors or on matters related to executive compensation without instructions from their customers. Broker non-votes and abstentions will have no effect on the election of any director or the approval of the other matters described above since they are not counted as votes cast at the meeting, but votes affirmatively “withheld” from the election of any nominee will have the effect of a vote against that nominee’s election as a director.

 

The board of directors recommends that you vote FOR all of the director nominees and FOR Proposals 2 – 5.

 

2   Huntington Bancshares Incorporated Notice of the Annual Meeting and 2018 Proxy Statement


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Our board of directors believes that strong corporate governance is critical to Huntington’s long-term success. The board regularly evaluates the size and composition of the board to ensure there is a well-rounded variety of skills, knowledge, background and experience represented, in alignment with our corporate strategy.

Corporate Governance

Corporate Governance Guidelines, Policies and Procedures

Our board of directors believes that strong corporate governance is critical to Huntington’s long-term success. The board has adopted Corporate Governance Guidelines and a Code of Business Conduct and Ethics to support effective governance. Huntington’s Corporate Governance Guidelines detail board responsibilities, structures and practices intended to enhance the board’s effectiveness. The Code of Business Conduct and Ethics applies to all of our employees and, where applicable, to our directors and to employees and directors of our affiliates. Our employees serving as chief executive officer, chief financial officer, corporate controller and principal accounting officer are also bound by a Financial Code of Ethics for Chief Executive Officer and Senior Financial Officers. The Corporate Governance Guidelines, the Code of Business Conduct and Ethics and the Financial Code of Ethics for Chief Executive Officer and Senior Financial Officers are posted on the Investor Relations pages of Huntington’s website at www.huntington.com.

Board Meetings and Committee Information

The board of directors held a total of 16 regular and special meetings in 2017. We believe that regular attendance at meetings is of utmost importance, and we encourage our directors to attend the annual shareholders meetings and at least 75% of all regularly scheduled board and committee meetings. During 2017 each director attended greater than 85% of the meetings of the full board of directors and the committees on which he or she served. The board’s average attendance for 2017 was 97.33%. All directors then serving attended the 2017 annual meeting of shareholders.

Our board of directors has nine standing committees of the board: Audit, Community Development, Compensation, Executive, Huntington Investment Company Oversight, Nominating and Corporate Governance, Risk Oversight, Significant Event and Technology. The Significant Event Committee was established in January 2018 and has the authority to act on behalf of the board of directors during a significant cybersecurity event. From time to time the board of directors may establish an ad hoc committee, such as the Integration Oversight Committee that was established by the board of directors in February 2016 to assist the board in the oversight of the integration of people, systems and processes of FirstMerit Corporation with Huntington. Following successful completion of the integration, the role of the Integration Oversight Committee was concluded and the committee terminated activities in July 2017.

All board members have access to all committee reports and materials. In addition, all board members are welcome to attend any meetings of the standing committees. Each standing committee has a separate written charter. Current copies of the committee charters are posted on the Investor Relations pages of our website at www.huntington.com . Information about the board’s standing committees, including the committee members and a brief review of each committee’s responsibilities, is set forth below.

 

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Corporate Governance

 

 

 

     

 

Audit Committee

 

   

 

Members:

Richard W. Neu (Chair)

Ann B. Crane

Gina D. France

Eddie R. Munson

 

Meetings Held in 2017 : 11

 

(includes 6 held jointly with the
Risk Oversight Committee)

 

 

The Audit Committee oversees the integrity of the consolidated financial statements, including policies, procedures, and practices regarding the preparation of financial statements, the financial reporting process, disclosures and internal control over financial reporting. The Audit Committee also oversees the internal audit division; the independent registered public accounting firm’s qualifications, performance and independence; compliance with our Financial Code of Ethics for the chief executive officer and senior financial officers; and compliance with corporate securities trading policies.

 

While the Audit Committee has the duties and responsibilities set forth above and as set forth in its charter, our management is responsible for the internal controls and the financial reporting process, and the independent registered public accounting firm is responsible for performing an independent audit of our financial statements and our internal controls over financial reporting in accordance with generally accepted auditing standards and issuing a report thereon.

 

The Audit Committee periodically meets in joint session with the Risk Oversight Committee to cover matters relevant to both, such as the capital plan and the construct and appropriateness of the allowance for credit losses, which is reviewed quarterly.

 

All of the committee members are financially literate, and the board of directors has determined that each of Richard W. Neu, chairman of the Audit Committee, Gina D. France and Eddie R. Munson qualifies as an “audit committee financial expert” as the term is defined in the rules of the Securities and Exchange Commission (SEC). This designation does not impose any duties, obligations or liabilities on them that are greater than the duties, obligations and liabilities imposed on the other members of the Audit Committee. Each member of the Audit Committee qualifies as an “independent director” as the term is defined in the Nasdaq Stock Market Marketplace Rules.

 

 

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Corporate Governance

 

 

Report of the Audit Committee

The primary responsibility of the Audit Committee is to oversee the integrity of Huntington’s consolidated financial statements. In carrying out its duties, the Audit Committee has reviewed and discussed the audited consolidated financial statements for the year ended December 31, 2017 with Huntington management and with Huntington’s independent registered public accounting firm, PricewaterhouseCoopers LLP. This discussion included the selection, application and disclosure of critical accounting policies, as well as the firm’s views on fraud risks and how it demonstrates its independence and skepticism. The Audit Committee has also reviewed with PricewaterhouseCoopers LLP its judgment as to the quality, not just the acceptability, of Huntington’s accounting principles and such other matters required to be discussed under auditing standards generally accepted in the United States, including the Public Company Accounting Oversight Board’s Auditing Standard No. 130, Communication with Audit Committees.

The Audit Committee has reviewed the written disclosures and the letter from PricewaterhouseCoopers LLP required by the Public Company Accounting Oversight Board in Rule 3526 regarding PricewaterhouseCoopers LLP’s communications with the Audit Committee concerning independence, and has discussed with PricewaterhouseCoopers LLP its independence from Huntington. Based on this review and discussion, and a review of the services provided by PricewaterhouseCoopers LLP during 2017, the Audit Committee believes that the services provided by PricewaterhouseCoopers LLP in 2017 are compatible with, and do not impair, PricewaterhouseCoopers LLP’s independence.

Based on these reviews and discussions, the Audit Committee recommended to the board of directors that the audited consolidated financial statements be included in Huntington’s Annual Report on Form 10-K for the year ended December 31, 2017 which was filed with the SEC on February 16, 2018.

Submitted by the Audit Committee

Richard W. Neu, Chair

Ann B. Crane

Gina D. France

Eddie R. Munson

 

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Corporate Governance

 

 

 

     

 

Compensation Committee

 

   

 

Members:

Robert S. Cubbin (Chair)

Peter J. Kight

Kathleen H. Ransier

 

Meetings Held in 2017 : 6

 

 

The Compensation Committee fulfills the duties and responsibilities of the board as it relates to executive and director compensation matters. In carrying out its duties, the committee reviews and approves Huntington’s goals and objectives with respect to the compensation of the chief executive officer and other executive management. The Compensation Committee also evaluates the performance of the chief executive officer and other executive management in light of such goals and objectives, and sets their compensation levels based on such evaluation. The Compensation Committee advises the board of directors with respect to compensation for service by non-employee directors on the board of directors and its committees. The Compensation Committee also makes recommendations to the board of directors with respect to Huntington’s incentive compensation plans and equity-based plans, oversees the activities of the individuals and committees responsible for administering these plans, and discharges any responsibility imposed on the Compensation Committee by any of these plans. In addition, the Compensation Committee assists the board of directors in fulfillment of the duties and responsibilities delegated to the board under our retirement plans.

 

Procedures for Determining Executive and Director Compensation; Compensation Consultant

The Compensation Committee has the resources and authority appropriate to discharge its duties and responsibilities. This includes authority to select, retain, terminate and approve fees and other retention terms of advisors, including legal counsel and other advisors. The Compensation Committee engaged Pearl Meyer & Partners, LLC, an independent consulting firm, to provide advisory services related to executive and director compensation. The individual consultant managing the relationship with Huntington (the compensation consultant) reports directly to the Compensation Committee, and is evaluated by the Compensation Committee on an annual basis.

The compensation consultant is available as needed for expert guidance and support, provides updates on emerging trends and best practices, and frequently attends meetings of the Compensation Committee. Services provided by the compensation consultant during 2017 included review of our selected peer group, benchmarking compensation and performance, and establishing total compensation guidelines, including targets for short and long-term incentive plans, and modeling payouts under various performance scenarios. During 2017 the compensation consultant did not provide any services other than advice and recommendations related to executive and director compensation.

The Compensation Committee has received representations from the compensation consultant with respect to independence, including with respect to: the fees received by the consulting firm from Huntington as a percentage of total revenue of the consulting firm; the policies or procedures maintained by the consulting firm designed to prevent a conflict of interest; any business or personal relationship between the compensation consultant and any Compensation Committee member; any business or personal relationship between the compensation consultant and executive officers of Huntington; and any Huntington stock owned by the compensation consultant. Based on review of these representations and the services provided by the compensation consultant, the Compensation Committee has determined that the compensation consultant is independent and that the consultant’s work has not created any conflicts of interest.

 

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Corporate Governance

 

 

Although the Compensation Committee makes independent determinations on all matters related to compensation of executive officers, certain members of management are requested to attend committee meetings and provide input to the Compensation Committee. Input may be sought from the chief executive officer, Human Resources, Finance and Risk Management colleagues and others as needed to ensure the Compensation Committee has the information and perspective it needs to carry out its duties. In particular, the Compensation Committee will seek input from the chief executive officer on matters relating to strategic objectives, company performance goals and input on his assessment of the other executive officers. The Committee also receives regular updates from the chief risk officer and chief financial officer throughout the year as appropriate. Representatives of Human Resources work with the Chair of the Compensation Committee to ensure he has the background, information and data needed to facilitate meetings.

The Compensation Committee meets with representatives of the Audit Committee as appropriate in making determinations. The Audit Committee chair is consulted when the Compensation Committee certifies company performance against the established incentive plan performance goals.

The Compensation Committee takes risk into account when determining compensation and has developed an executive compensation philosophy that balances risk and reward with a mix of base pay, short-term incentives and long-term incentives, with greater emphasis on long-term incentives. The Compensation Committee’s role in the oversight of incentive compensation risk is discussed under “The Board’s Role in Risk Oversight,” below.

The Compensation Committee may delegate all or a portion of its duties and responsibilities to a subcommittee of the Compensation Committee, or in accordance with the terms of a particular compensation plan, to a management committee. The Compensation Committee delegates some responsibilities to management to assist in development of design considerations, with permission to work with the Committee’s compensation consultant to develop proposals for the Committee’s consideration. The Compensation Committee may not, however, delegate the determination of compensation for executive officers to management. From time to time, the Compensation Committee may obtain the approval of the board of directors with respect to certain executive and director compensation matters.

Compensation Committee Interlocks and Insider Participation. We have no compensation committee interlocks. In addition, no member of the Compensation Committee has served as one of our officers or employees.

Report of the Compensation Committee

The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis contained in this proxy statement. Based on this review and discussion, the Compensation Committee recommended to the board of directors that the Compensation Discussion and Analysis be included in Huntington’s proxy statement for its 2018 annual meeting of shareholders.

Submitted by the Compensation Committee

Robert S. Cubbin, Chair

Peter J. Kight

Kathleen H. Ransier

 

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Corporate Governance

 

 

 

     

 

Nominating and Corporate Governance Committee

 

 

Members:

David L. Porteous (Chair)

Ann B. Crane

Chris Inglis

 

Meetings Held in 2017 : 6

 

 

The Nominating and Corporate Governance Committee’s primary responsibilities are to annually: review the composition of the board of directors to assure that the appropriate knowledge, skills and experience are represented, in the Committee’s judgment, and to assure that the composition of the board of directors complies with applicable laws and regulations; review the qualifications of persons recommended for board of directors membership, including persons recommended by shareholders; discuss with the board of directors standards to be applied in making determinations as to the independence of directors; and review the effectiveness of the board of directors, including but not limited to, considering the size and desired skills of the board of directors and the performance of individual directors as well as collective performance of the board of directors.

 

The Nominating and Corporate Governance Committee oversees the company’s commitment to environmental, social and governance (ESG) issues, including the development of a formalized ESG business strategy that launched in 2017. The company’s ESG strategy will provide annual reporting on ESG-related key performance indicators and capitalizes on the company’s long-held commitment to corporate social responsibility and community impact.

 

The Committee reviews and approves related party transactions. Additionally the Committee oversees the company’s efforts to effectively communicate with shareholders, including shareholder outreach, matters relating to the company’s proxy filing, and other governance issues and efforts throughout the year. Other responsibilities of the Nominating and Corporate Governance Committee include reviewing and making appropriate changes to the Corporate Governance Guidelines and the Code of Business Conduct and Ethics for Huntington’s directors, officers and employees.

 

 

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Corporate Governance

 

 

 

     

 

Community Development Committee

 

 

Members:

Kathleen H. Ransier (Chair)

Ann B. Crane

J. Michael Hochschwender

Eddie R. Munson

 

Meetings Held in 2017 : 4

 

 

The purpose of the Community Development Committee is to promote Huntington’s mission of local involvement and leadership in the communities where Huntington is located and where its employees work. The Committee will consider matters relating to community development and involvement, philanthropy, government affairs, fair and responsible lending and inclusion.

 

The Committee’s duties and responsibilities are to:

 

 provide primary oversight of the company’s commitments to the Community Reinvestment Act (“CRA”), including review of CRA program, internal and external examination reports and related internal reports provided by management;

 

 provide primary oversight of the company’s performance against the Community Plan, provide board member representation on the National Community Advisory Council, and review of other relationships with external constituencies concerning community activities, including investors, regulators, elected officials, non-profits and community leaders;

 

 provide primary oversight of the company’s commitment to diversity and inclusion, including review of the company’s employee-related programs such as the affinity networks and other broad-based employee development programs that could affect the company’s reputation for social responsibility, as well as review of programs to drive economic inclusion in our supply chains;

 

 review the company’s compliance with fair lending and Unfair, Deceptive, or Abusive Acts and Practices (UDAAP) standards, including monitoring procedures and programs; and

 

 review shareholder proposals involving issues within the purview of the Committee’s duties and responsibilities.

 

 

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Executive Committee

 

   

 

Members:

David L. Porteous (Chair)

Ann B. Crane

Steven G. Elliott

Michael J. Endres

Jonathan A. Levy

Richard W. Neu

Stephen D. Steniour

 

Meetings Held in 2017 : 2

 

 

The Executive Committee’s purpose is to provide an efficient means of considering matters that arise between regularly scheduled meetings of the full board of directors. Matters that might be considered by the Executive Committee are such that either require prompt attention or are deemed appropriate by the Executive Committee to consider on behalf of the full board of directors. Meetings of this Committee may be called by the chief executive officer (who is a member of the Committee) or the Committee chairperson. The Executive Committee shall have and may exercise all of the powers and authority of the board of directors as may be permitted by law, and the charter and bylaws of the company. All actions of and powers conferred by the Executive Committee are deemed to be done and conferred under the authority of the board of directors.

 

 

     

 

Risk Oversight Committee

 

   

 

Members:

Steven G. Elliott (Chair)

Lizabeth Ardisana

Jonathan A. Levy

David L. Porteous

 

Meetings Held in 2017 : 18

 

(includes 6 held jointly with the
Audit Committee)

 

 

The Risk Oversight Committee assists the board of directors in overseeing management of material risks, and the approval and monitoring of the company’s capital position and plan supporting our overall aggregate moderate-to-low risk profile; the risk governance structure; compliance with applicable laws and regulations; and determining adherence to the board’s stated risk appetite. The Committee has oversight responsibility with respect to the full range of inherent risks: market, credit, liquidity, legal, compliance/regulatory, operational, strategic and reputational. This Committee also oversees our capital management and planning process, and ensures that the amount and quality of capital are adequate in relation to expected and unexpected risks and that our capital levels exceed “well-capitalized” requirements.

 

The Risk Oversight Committee periodically meets in joint session with the Audit Committee to cover matters relevant to both, such as the capital plan and the construct and appropriateness of the allowance for credit losses, which is reviewed quarterly.

 

Additional detail about the role and responsibilities of this Committee is set forth under “The Board’s Role in Risk Oversight” below.

 

 

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Technology Committee

 

   

 

Members:

Peter J. Kight (Chair)

Lizabeth Ardisana

Michael J. Endres

Chris Inglis

 

Meetings Held in 2017: 4

 

 

The purpose of the Technology Committee is to assist the board of directors in fulfilling its oversight responsibilities with respect to all technology, cyber security and third party risk management strategies and plans. The Committee is charged with evaluating Huntington’s capability to properly perform all technology functions necessary for its business plan, including projected growth, technology capacity, planning, operational execution, product development, new technologies and management capacity. The Committee provides oversight of the technology segment investments and plans to drive efficiency as well as to meet defined standards for risk, security and redundancy. The Committee oversees the allocation of technology costs and ensures that they are understood by the board of directors. The Technology Committee monitors and evaluates innovation and technology trends that may affect the company’s strategic plans, including monitoring of overall industry trends. The Technology Committee reviews and provides oversight of the company’s continuity and disaster recovery planning and preparedness.

 

 

     

 

Significant Event Committee

 

   

 

Members:

Stephen D. Steinour (Chair)

Steven G. Elliott

Chris Inglis

Peter J. Kight

Richard W. Neu

David L. Porteous

 

This Committee was established
in January 2018

 

 

The Significant Event Committee was established to act on behalf of the board of directors in the event of a significant cybersecurity incident or threat. The members of the Significant Event Committee are the Lead Director, the chairs of the Audit, Risk Oversight and Technology committees, and the lead cyber director. While primary oversight for the company’s information security risk management and incident response program resides with the Technology Committee, the Significant Event Committee will engage in at least one cybersecurity crisis tabletop exercise annually to assess the ability of management and the board of directors to respond effectively and timely during an actual significant cybersecurity incident or threat. The Significant Event Committee would provide oversight of management’s action plan and response in the event of an actual significant cybersecurity incident or threat.

 

 

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Huntington Investment Company Oversight Committee

 

 

Members:

Michael J. Endres (Chair)

Robert S. Cubbin

Gina D. France

 

Meetings Held in 2017 : 4

 

 

The board of directors established the Huntington Investment Company (HIC) Oversight Committee in 2016 to assist the board of directors in fulfilling its oversight responsibilities with respect to retail and institutional broker-dealer and investment advisory strategies and plans developed by the HIC Board and management. Additionally, the Committee will provide oversight related to the overall risk management process for HIC.

 

The Committee’s duties and responsibilities are to:

 

 provide oversight regarding HIC’s business strategy, including projected revenue growth, business planning, market strategies, product and service offerings, technology and computer systems and operational execution;

 

 ensure that an effective process is in place to manage risks through policies, procedures, and practices in a manner consistent with HIC’s strategic goals, organizational objectives, risk appetite and regulatory requirements;

 

 provide oversight regarding the development of strategies to address emerging industry trends, new rules and regulations;

 

 evaluate and assess actions taken by HIC in response to auditors, consultants and regulatory authorities; and

 

 evaluate and assess service quality regarding customer complaints or comments.

 

 

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Integration Oversight Committee (ad hoc)*

 

 

Members:

Steven G. Elliott (Chair)

Peter J. Kight

Richard W. Neu

 

Meetings Held in 2017: 3

 

*Dissolved in July 2017

 

 

The Integration Oversight Committee was an ad hoc committee established to assist the board in the oversight of the integration of people, systems and processes of FirstMerit Corporation with Huntington through enhanced review and effective challenge of integration plans and processes. The Committee was dissolved following successful completion of the integration.

 

The Committee’s duties and responsibilities with respect to the FirstMerit acquisition included review of the:

 

 overall integration and conversion project plan, the timeline and adjustments thereto;

 

 progress of Huntington in obtaining any necessary regulatory approvals relative to the acquisition through periodic updates; and

 

 progress of Huntington in integrating systems and personnel in a timely and professional manner.

 

In conjunction with the Risk Oversight Committee, the Committee reviewed risks, including operational, market, liquidity and credit, posed by the integration and the effective mitigation of those risks to ensure that the residual risk was within Huntington’s risk appetite. The Committee received and reviewed reports that assessed Huntington’s financial performance against its goals, including capturing synergies and opportunities from its acquisition. In addition, the Committee oversaw Huntington’s conformance to regulatory and contractual commitments made in connection with the acquisition.

 

Communication with the Board of Directors

Shareholders who wish to send communications to the board of directors may do so by following the procedure set forth on the Investor Relations pages of Huntington’s website at www.huntington.com.

 

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Director Nomination and Board Evaluation

 

Our board of directors is committed to maintaining a well-rounded and effective board aligned with the company’s business strategy.

At least annually the Nominating and Corporate Governance Committee assesses the size of the board and reviews the composition of the board to assure that the appropriate knowledge, skills and experience are represented, in the Committee’s judgment, and in order to comply with applicable laws and regulations.

Selection of Director Nominees

The board believes that one of its most important responsibilities is identifying, evaluating and selecting candidates for the board. The Nominating and Corporate Governance Committee reviews the qualifications of potential director candidates and makes recommendations to the full board. Factors considered by the Committee and the board in their review of potential candidates include whether the candidate:

 

   

has exhibited behavior that indicates he or she is committed to the highest ethical standards;

 

   

has special skills, expertise and background that would complement the attributes of the existing directors, taking into consideration the diverse communities and geographies in which the company operates;

 

   

has achieved prominence in his or her business, governmental or professional activities, and has built a reputation that demonstrates the ability to make the kind of important and sensitive judgments that the board is called upon to make;

 

   

possesses a willingness to challenge management while working constructively as part of a team in an environment of trust; and

 

   

will be able to devote sufficient time and energy to the performance of his or her duties as a director.

Each of the director nominees meets the standards listed above. When considering candidates, the board and the Nominating and Corporate Governance Committee also take into account gender, race, ethnicity, age, background and other attributes. The board believes that board membership should reflect the diversity of the markets in which we do business. From time to time the Nominating and Corporate Governance Committee will identify additional selection criteria for board membership, taking into consideration the company’s business strategy, the business environment and current board composition.

Regular Self-Assessment

The full board of directors performs a self-evaluation each year, overseen by the Nominating and Corporate Governance Committee. Each committee of the board also performs an annual self-evaluation and reports the findings to the full board of directors. Typically, for the full board assessment, the lead director, as chair of the Nominating and Corporate Governance Committee, solicits comments and recommendations from the directors through a series of questions which provide a framework for discussion. Although the specific questions may vary from year-to-year, the topics generally include the substance and efficiency of board and committee meetings and materials, proper utilization of skills in making committee appointments, skills and experience needed for the board, and board engagement and interaction, and have an emphasis on the board’s responsibility for oversight of risk management.

In 2017, the board engaged an experienced third-party firm to facilitate the board’s self-evaluation. In-person interviews were conducted with each board member as part of the evaluation process. The interviews focused on the board’s culture, identification of opportunities and high impact topics, expectations of the chairman, lead director and committee chairs, building board strength and individual board member’s strengths, the selection, on-boarding, education and development of

 

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board members, and board effectiveness. In addition, feedback was facilitated from executive leadership team members focusing on the board as a whole and board leadership, processes, strengths and opportunities. The purpose of the assessment was to optimize board effectiveness and productivity, ensure director subject matter expertise was fully leveraged in relation to committee assignments and committee chair roles, and to provide feedback to the lead director and chair. In addition, the assessment provided an opportunity for the board, as a group, and for individual board members, to receive feedback on their performance. Overall, the assessment served as a catalyst for identifying future needs of the company and priorities.

Skills, Knowledge, Experience and Perspectives

Our directors embody a well-rounded variety of skills, knowledge, background and experience. The board also benefits from directors having a range of tenures as this provides continuity and experience as well as fresh perspective. The average tenure of our directors is 7 years. The directors range in age from 57 to 71 years.

A graphic summary of the qualifications of our directors is presented below.

 

 

LOGO

 

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A graphic presentation of the characteristics of our directors, including tenure, age and independence is presented below.

 

 

LOGO

 

LOGO    LOGO

Recommendations for Director Candidates

Shareholders may recommend director candidates for consideration by the Nominating and Corporate Governance Committee by sending a written notice to the Secretary at Huntington Bancshares Incorporated, Huntington Center, 41 South High Street, Columbus, Ohio 43287. The notice should indicate the name, age, and address of the person recommended, the person’s principal occupation or employment for the last five years, other public company boards on which the person serves, whether the person would qualify as independent as the term is defined under the Marketplace Rules of the Nasdaq Stock Market, and the class and number of shares of Huntington securities owned by the person. The Nominating and Corporate Governance Committee may require additional information to determine the qualifications of the person recommended. The notice should also state the name and address of, and the class and number of shares of our securities owned by, the person or persons making the recommendation. There have been no material changes to the shareholder recommendation process since we last disclosed this item.

Independence of Directors

Our board of directors and the Nominating and Corporate Governance Committee have reviewed and evaluated transactions and relationships with board members to determine the independence of each of the members. The board of directors does not believe that any of its non-employee members has relationships with us that would interfere with the exercise of independent judgment in carrying out his or her responsibilities as director. Further, the board and the Nominating and Corporate Governance Committee have determined that a majority of the board’s members are “independent directors” as the term is defined in the Nasdaq Stock Market Marketplace Rules. The directors determined to be independent under this

 

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definition are: Lizabeth Ardisana, Ann B. Crane, Robert S. Cubbin, Steven G. Elliott, Gina D. France, J. Michael Hochschwender, Chris Inglis, Peter J. Kight, Jonathan A. Levy, Eddie R. Munson, Richard W. Neu, David L. Porteous and Kathleen H. Ransier. The board of directors has determined that each member of the Audit, Compensation and Nominating and Corporate Governance Committees is independent under such definition and that the members of the Audit Committee are independent under the additional, more stringent requirements of the Nasdaq Stock Market applicable to audit committee members.

In making the independence determinations for each of the directors, the board took into consideration the transactions disclosed in this proxy statement under “Review, Approval or Ratification of Transactions with Related Persons” below. In addition, the board of directors considered that the directors and their family members are customers of our affiliated financial and lending institutions. Many of the directors have one or more transactions, relationships or arrangements where Huntington’s affiliated financial and lending institutions, in the ordinary course of business, act as depository of funds, lender or trustee, or provide similar services. Directors may also be affiliated with entities which are customers of our affiliated financial and lending institutions and which enter into transactions with such affiliates in the ordinary course of business. The board also considered charitable donations to organizations in which directors have an interest, and routine transactions entered into in the ordinary course of business between the Bank and a business organization with which Ms. Ransier has an interest, and determined them to be immaterial.

The Board’s Leadership Structure

Our chief executive officer, Stephen D. Steinour, serves as chairman of the board. Director David L. Porteous has served as independent lead director since the board created the position in November 2007. The board evaluates its leadership structure every year, and believes that having a combined chief executive officer and chairman along with a strong independent lead director provides an efficient and effective arrangement for Huntington. The board has also considered our leadership structure in light of the company’s size, the nature of its business, the regulatory framework in which it operates, and its peers and determined that the board’s leadership structure is appropriate for our company at this time.

The specific responsibilities of the lead director are clearly defined in our Corporate Governance Guidelines, and include:

 

   

serving as liaison between the chairman of the board and the outside directors;

 

   

consulting with the chairman of the board on information sent to the board;

 

   

reviewing and providing input to the chairman of the board on board meeting agendas;

 

   

consulting with the chairman of the board on meeting schedules to assure that there is sufficient time for discussion of all agenda items;

 

   

presiding at all meetings of the board at which the chairman is not present, including executive sessions of the outside directors;

 

   

having the authority to call meetings of the outside directors; and

 

   

ensuring that he or she is available for consultation and direct communication with key stakeholders, where appropriate.

 

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Mr. Porteous performs these duties and provides leadership in numerous additional ways. He is available to the chief executive officer as a sounding board for a variety of matters. He meets regularly with Huntington’s regulators. He promotes good governance and fosters dialogue among the directors and between the board and management. Mr. Porteous also takes an active role in outreach efforts with various constituents, including Huntington employees. He regularly engages with the employees and acts as a liaison between employees and the board. The board believes that having an independent lead director performing these duties effectively complements and counterbalances the role of the combined chairman / chief executive officer. The interaction of the roles of the chairman / chief executive officer and the lead director is reflected in the table below.

 

 

  Areas of Responsibility

 

 

 

Chair/CEO Role

 

      

 

Lead Director Role

 

    
   

Full Board Meetings

 

Has the authority to call meetings of the board of directors

 

Chairs meetings of the board of directors and the annual meeting of shareholders

     

Participates in board meetings like every other director

 

Acts as intermediary — at times, the chair may refer to the lead director for guidance or to have something taken up in executive session

 

Provides leadership to the board of directors if circumstances arise in which the role of the chair may be, or may be perceived to be, in conflict with the board of directors

 

Suggests calling full board meetings to the chair when appropriate

 

   
         

Executive Sessions

 

Receives feedback from the executive sessions

     

Has the authority to call meetings of the outside directors

 

Sets the agenda for and leads executive sessions of the outside directors

 

Briefs the CEO on issues arising out of the executive sessions

 

 

   
         

Board Agendas and Information

 

Takes primary responsibility for shaping board agendas, consulting with the lead director to ensure that board agendas and information provide the board with what is needed to fulfill its primary responsibilities

 

     

Collaborates with the chair to shape the board agenda and board information so that adequate time is provided for discussion of issues and so that appropriate information is made available to directors

 

Solicits agenda items from members of the board

   
         

Board Communications

 

Communicates with the directors on key issues and concerns outside of board meetings

 

Takes responsibility for new director orientation and continuing education for the board of directors

     

Facilitates discussion among the outside directors on issues and concerns outside of board meetings

 

Serves as a non-exclusive conduit to the chair of views, concerns, and issues of the outside directors

 

Coordinates with the chair on director orientation and continuing education

 

   

 

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  Areas of Responsibility

 

 

 

Chair/CEO Role

 

      

 

Lead Director Role

 

    
   

Committee Meetings

 

Member of the Executive Committee and attends such other committee meetings (excluding executive sessions) as the chair shall so choose

     

Participates on such committees (including executive sessions) to which he is elected and is ex-officio member of all other committees

 

Chairs the Nominating and Corporate Governance Committee which recommends the membership of various board committees as well as selection of committee chairs

 

   
         

External and Other Stakeholders

 

Represents the organization to, and interacts with, external stakeholders, including investors, customers, employees and others

     

Available to participate in meetings with key institutional investors as appropriate

 

Makes periodic independent visits to business regions, meeting with employees and customers

 

Regularly meets independently with regulators

 

Has authority to engage advisors and consultants who report directly to the board of directors on board issues

 

   

In addition to having an independent, engaged lead director, additional factors contribute to the board’s comfort with Mr. Steinour serving in the combined roles of chairman and chief executive officer. These factors include our strong corporate governance practices, our board’s independence, and the accountability of the chief executive officer to the board. Executive sessions, excluding the chairman and chief executive officer, are held in conjunction with each regularly scheduled board meeting to ensure open dialogue with the lead director. Moreover, there is regular reporting by senior management to the board of directors as further described under “The Board’s Role in Risk Oversight” below.

The Board’s Role in Risk Oversight

 

The board of directors has defined our risk appetite as aggregate moderate-to-low and has established a comprehensive and coordinated risk oversight structure.

While the board has three board committees that primarily oversee implementation of this desired risk appetite and the monitoring of our risk profile — the Risk Oversight Committee, Audit Committee and the Technology Committee — the full board is engaged in discussing all risks. The board of directors receives regular reports from every board committee. Noteworthy issues from each committee agenda are called to the attention of the full board in advance. In addition, all directors have access to information provided to each committee, and all scheduled committee meetings are open to all directors. The directors regularly communicate directly with members of senior management as well as among the board and board committees.

Board Committees

The Risk Oversight Committee assists the board of directors in overseeing management of material risks, and the approval and monitoring of the company’s capital position and plan supporting our overall aggregate moderate-to-low risk profile; the risk governance structure; compliance with applicable laws and regulations; and determining adherence to the board’s stated risk appetite. The Committee has oversight responsibility with respect to the full range of inherent risks: market, credit, liquidity, legal, compliance/regulatory, operational, strategic and reputational. This Committee also oversees our capital

 

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management and planning process, and ensures that the amount and quality of capital are adequate in relation to expected and unexpected risks and that our capital levels exceed “well-capitalized” requirements. The Risk Oversight Committee regularly receives reports directly from the chief risk officer.

The Audit Committee oversees the integrity of the consolidated financial statements, including policies, procedures, and practices regarding the preparation of financial statements, the financial reporting process, disclosures, and internal control over financial reporting. The Audit Committee also provides assistance to the board in overseeing the internal audit division and the independent registered public accounting firm’s qualifications and independence; compliance with our Financial Code of Ethics for the chief executive officer and senior financial officers; and compliance with corporate securities trading policies. The chief internal auditor reports directly to the Audit Committee.

The Risk Oversight and Audit Committees routinely hold executive sessions with our key officers engaged in accounting and risk management. On a regular basis, the two committees meet in joint session to cover matters relevant to both. The Audit Committee regularly meets in executive session with the independent registered public accounting firm.

The Technology Committee assists the board of directors in fulfilling its oversight responsibilities with respect to all technology, cyber security and third party risk management strategies and plans. The committee is charged with evaluating Huntington’s capability to properly perform all technology functions necessary for its business plan, including projected growth, technology capacity, planning, operational execution, product development and management capacity. The committee provides oversight of the technology segment investments and plans to drive efficiency as well as to meet defined standards for risk, security and redundancy. The Committee oversees the allocation of technology costs and ensures that they are understood by the board of directors. The Technology Committee monitors and evaluates innovation and technology trends that may affect the company’s strategic plans, including monitoring of overall industry trends. The Technology Committee reviews and provides oversight of the company’s continuity and disaster recovery planning and preparedness. The chief technology officer and the chief information officer regularly attend meetings of the Technology Committee.

The Significant Event Committee, comprised of the Lead Director, the chairs of the Audit, Risk Oversight and Technology committees, and the lead cyber director, was established in January 2018. While primary oversight for the company’s information security risk management and incident response program resides with the Technology Committee, the Significant Event Committee is empowered to act on behalf of the board of directors in the event of a significant cybersecurity incident or threat. The Significant Event Committee would provide oversight of management’s action plan and response to an actual significant cybersecurity incident or threat. This committee will engage in at least one cybersecurity crisis tabletop exercise annually to assess the ability of management and the board of directors to respond effectively and timely during an actual event.

Further, through its Compensation Committee, the board of directors seeks to ensure its system of rewards is risk-sensitive and aligns the interests of management, creditors and shareholders. The Compensation Committee reviews and evaluates the company’s compensation policies and practices and the relationship among risk, risk management and compensation to ensure that incentive compensation practices appropriately balance risk and financial results, incentives do not expose the company to imprudent risks, the incentive programs are compatible with effective controls and risk management, are supported by strong corporate governance and the compensation policies are not likely to have a material adverse effect on the company. The Compensation Committee meets regularly with members of senior management, including the chief risk officer and the chief financial officer. The Compensation Committee also supports the board of directors with succession planning for key management positions.

Through the Community Development Committee, the board oversees the company’s compliance with fair lending obligations and Unfair, Deceptive or Abusive Acts and Practices (UDAAP) standards. The Community Development Committee has primary oversight of the company’s commitments to the Community Reinvestment Act and the company’s

 

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commitment to create and maintain a culture of inclusion that leverages diversity effectively. Senior compliance officers and the chief diversity and inclusion officer regularly participate in meetings of the Community Development Committee.

The Nominating and Corporate Governance Committee oversees the company’s long-held commitment to corporate social responsibility and community impact. In 2017, the Nominating and Corporate Governance Committee approved the company’s formalized ESG strategy for taking sustainability factors into account which will provide annual reporting on ESG-related key performance indicators. The Nominating and Corporate Governance Committee receives updates from management with respect to the ESG strategy at least quarterly.

The role of each of the board committees is further described under “Corporate Governance” above.

Company Strategy and Leadership

The full board of directors focuses direct oversight on risks related to company strategy and leadership. The board holds a two-day off-site session with senior management each year devoted to review of strategic priorities. In addition, the CEO reserves time at the beginning of every board meeting to discuss priorities. Periodically, special board sessions are held to discuss and analyze specific possible risk scenarios, such as cybersecurity incidents.

The full board of directors oversees succession planning for the positions of the CEO and other members of the executive leadership team. As selecting and appointing qualified executive leadership for the company is a priority for the board of directors, succession planning is discussed frequently. At least annually, the CEO and the chief human resources officer review with the board the succession plans in place for executive leadership. Management also maintains succession plans for the positions reporting to the executive leadership team, and their direct reports.

Continual Director Education

Huntington has established a formal training program for the board of directors to assist the board in its risk oversight function. The training program, which is overseen by the chief risk officer, covers:

 

    Bank Secrecy Act (BSA)/Anti-Money Laundering (AML) issues;

 

    Fair lending responsibilities;

 

    Avoidance of UDAAP (Unfair, Deceptive, or Abusive Acts or Practices);

 

    Cyber risks and breaches; and

 

    Legal, regulatory and supervisory requirements and trends applicable to Huntington.

Additional topics may be included as appropriate, related to complex products, services or lines of business that have the potential to significantly impact the company and other topics as identified by the board of directors or executive management from time to time.

In addition, all board members are encouraged to participate in relevant external director education opportunities. Insights gained from these programs are shared with the full board of directors. In 2017, all of the non-employee directors attended conferences or seminars, totaling approximately 433 hours of instruction.

Risk Assessment of Incentive Compensation

The Compensation Committee oversees the company’s compensation policies and practices and the relationship among risk, risk management and compensation. The Compensation Committee’s oversight is supported by the Incentive

 

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Compensation Oversight Committee (the “Oversight Committee”), an executive level management committee. The Oversight Committee consists of senior management from Human Resources, Finance, Legal, Credit Administration, and Risk Management, and is co-chaired by the chief risk officer and the chief human resources officer. The Oversight Committee reports directly to the Compensation Committee.

Under the direction of the Oversight Committee, Huntington performs an annual risk assessment of each incentive plan. The review includes economic analysis as well as evaluation of plan design features, risk balancing mechanisms and governance policies and practices. A key tool for managing incentive compensation risk is an annual enterprise-level significant risk events review process overseen by the chief risk officer and the chief credit officer. This year-end significant risk events review typically results in incentive payment adjustments where warranted.

Huntington uses a variety of plan design features to balance risk and rewards. Governance policies and practices also play an important role in managing incentive plan risk. We regularly monitor our incentive compensation arrangements for employees at all levels and strive to enhance our risk review in light of developing best practices and regulatory guidance.

 

 

Key broad-based incentive plan design features
& controls include:

 

 

 

Other features and controls used in various plans
include:

 

 

 Recoupment / clawback provisions

 

 

 Multiple performance criteria

 

 

 Management discretion to reduce or eliminate awards

 

 

 Risk-related performance criteria

 

 

 Annual risk-based review of plans and awards

 

 

 Payment caps

 

 
   

 Hold-until-retirement or other termination provisions for equity grants

 

For executive officers, our compensation philosophy balances risk and reward with a mix of base pay, short-term incentives and long-term incentives, with greater emphasis on long-term incentives. We maintain stock ownership guidelines for executives and impose a “hold until retirement” requirement of up to 50% of the net shares. See “Compensation of Executive Officers” below for detail about our executive compensation philosophy and programs.

 

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The Importance of Corporate Responsibility

Huntington is committed to delivering sustainable, long-term value to our investors, colleagues, customers and communities through our commitment to financial, environmental, social and governance stewardship and best practices. For Huntington, our social responsibility starts with our colleagues. We recruit, develop and retain talented colleagues through a positive and welcoming work environment. We encourage interaction, engagement, and high performance. Our Board reviews CEO and senior management succession and development plans to ensure we continue to have a pipeline of top talent. We have invested in our colleagues through training programs and enhanced recruiting efforts. We value and attract colleagues who demonstrate bold thinking, a can-do attitude, and have a service heart.

 

 

  Our Commitment to Our Colleagues

    

Our Colleagues are the Key to our Brand and Success At Huntington, our colleagues are our most important asset and the key to fulfilling our purpose to make people’s lives better, help businesses thrive and strengthen the communities we serve. We are focused on making the colleague experience better than ever. Our transformation is being shaped by colleague feedback and focuses on three key areas:

 

   

Investing in
Physical,
Financial and
Personal
Well-Being

  

This year, we made several important investments in our colleagues, including:

 

  Raising our minimum salary commitment for the second year in a row;

 

  Increasing 401(k) plan matching contributions;

 

  Enhancing our leave of absence programs, including expanded family time off and short-term disability benefits, as well as implementing our new caregiver leave that provides colleagues time off to care for family members with serious health conditions;

 

  Improving military benefits and support throughout the deployment cycle;

 

  Expanding our Scholarship Program; and

 

  Augmenting our colleague recognition program.

 

 We have taken deliberate steps to ensure our benefits program is competitive, cost efficient and meets the needs of our diverse colleague base. We provide strong core programs, plus innovative, value-added offerings to our colleagues and their families.

 

 Our Huntington Total Health program supports colleagues’ well-being by taking a holistic approach that provides personalized support and guidance.

 

 Our wellness program is an important part of who we are. Colleagues and family members participate in a variety of healthy activities, including health assessments, biometric screenings and coaching. We opened a 2,000 square foot fitness and wellness center at our Gateway facility in Columbus and will open two more fitness centers in 2018.

 

   

 

Huntington Bancshares Incorporated Notice of the Annual Meeting and 2018 Proxy Statement   23


Table of Contents

Corporate Governance

 

 

 

  Our Commitment to Our Colleagues

   

Empowering
Professional
Growth and
Development

  

We are focused on engaging, developing, retaining and attracting talented colleagues.

 

 We are elevating our Performance Management process to “Performance Engagement,” with equal emphasis on “what” and “how” we deliver, as well as more frequent development conversations with colleagues. We believe these are key moments for our leaders to engage our colleagues and for colleagues to grow professionally.

 

 We are leveraging technology to enhance our career pathing and development for colleagues. We have invested in professional skills and development through three new programs:

 

  The Huntington Professional — Supports all colleagues’ development in our competencies and values.

 

  Managing Matters — Provides foundational skills and knowledge to help managers effectively support, lead, manage and develop their teams.

 

  Leadership Journey — Enriches leadership capabilities for higher level leaders and individual contributors to support maximizing personal, professional and business results.

 

 Colleague mentoring is core to our development culture. We identify one-on-one mentoring opportunities that are aligned with Talent Planning and utilize mentoring circles in many of our programs.

 

   

Driving
Inclusion
Through a
Diverse
Workforce
and Supplier
Base

  

We continue to create a workplace that is welcoming, inclusive and respectful to all. Our concept of diversity extends beyond gender, race, ethnicity, age and sexual orientation to include different thoughts, skills, experiences and backgrounds.

 

 We launched voluntary Colleague Conversations across our footprint where colleagues can feel safe engaging in discussion topics related to race, gender parity and generational difference in the workplace. These reflective discussions help us to understand and embrace our differences, while leveraging them to perform at a high level as an organization, and promote greater awareness and understanding among our colleagues.

 

 Our voluntary colleague-driven Business Resources Groups, organized around a shared interest or common diversity dimension, and Inclusion Councils have led enterprise-wide initiatives that have improved our disability equality score, enhanced our military deployment benefits, and improved our family time off policies.

 

 Our supplier spend with diverse businesses continues to exceed the national corporate average.

 

 Our achievements have been recognized by Forbes, which named us as one of the Best Employers for Diversity, and the Human Rights Campaign Foundation, which named us as one of the Best Places to Work for LGBTQ Equality.

 

   

 

 

  Our Commitment to Our Community

 

   

 In 2017 we invested more than $12.5 million in philanthropic and community donations empowering neighborhoods and families in the markets we serve to achieve sustainable economic opportunity.

 

   

 Our colleague engagement was marked by over thirty thousand dedicated hours of volunteer commitments in financial wellness training, service to neighborhood development and non-profit organizations, and in direct service to basic needs providers supporting our local markets.

 

   

 Our transformative $16.1 billion five-year community development plan made material progress in its second year focused on low-to-moderate income neighborhoods with bold goals for the following:

 

   

 $6.6 billion in small business lending;

 

   

 $5.7 billion in single family mortgage lending;

 

   

 $3.7 billion in community growth and affordable housing based lending;

 

   

 

24   Huntington Bancshares Incorporated Notice of the Annual Meeting and 2018 Proxy Statement


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  Our Commitment to Our Community

 

   

 $25 million in philanthropic investments to enhance service access; and

 

   

 $30 million in economic impact targets.

 

   

 We conducted an enterprise outreach and listening session with community development and non-profit local partners to understand unmet financial needs, which resulted in enhancements to our consumer, mortgage and small business products and services.

 

   

 We continued to grow our small business lending program to boost economic development and support job growth. We were the nation’s second largest originator of Small Business Administration (SBA) 7(a) loans during SBA fiscal year 2017 for total 7(a) loans and the top ranked 7(a) lender for total loans and dollars lent within our eight-state core footprint.

 

   

 

 

  Our Commitment to Our Environment

 

   

 We invested over $15 million in energy efficiency related programs in 2017 and increased our sustainability focused projects from 509 in 2016 to 682 in 2017.

 

   

 We are a committed participant in the Carbon Disclosure Project (CDP), a global initiative that allows us to track and submit data toward managing our environment impact. Our CDP score rose in 2016 to a “C” and we are diligent in our efforts to further raise that score inclusive of our new business expansion.

 

   

 Last year, we managed 541 active sites in the U.S. Environmental Protection Agency ENERGY-STAR program and have increased our enterprise ENERGY STAR scores by 5% since 2016.

 

   

 In 2017 we completed the conversion of all interior and exterior Huntington signage across our markets to LED lighting.

 

   

 We implemented equipment efficiency standards and policies in 2017 for HVAC and lighting across the enterprise.

 

   

 Our best practice sustainability initiatives were launched at our new Gateway facility in Columbus, Ohio, including lighting control systems, solar tracking skylights, solar collection “trees”, a single stream recycling program, follow-me printing and tracking to reduce paper use, and electric vehicle charging stations.

 

   

 A newly dedicated renewable energy finance team provides comprehensive and customized solutions to the renewable and efficiency energy market for green technologies including energy conservation measures, renewable energy generation and storage.

 

   

 We support our customers and our collective impacts on the environment through energy products and services, including energy efficiency contracting, renewable energy project financing, tax equity investments, and Federal Agency Energy Financing.

 

   

 

 

  Our Commitment to Our Shareholders

 

   

 Our board of directors believes that strong corporate governance is critical to Huntington’s long-term success. Huntington’s governance practices are discussed above under Corporate Governance.

 

   

 We are committed to providing compensation programs for executives that are balanced and risk appropriate, demonstrate long-term sustained performance and shareholder interests, and provide a competitive and effective program to attract, motivate and retain the best talent. Our compensation philosophy and program are discussed in the Compensation Discussion and Analysis later in this document.

 

   

 Governance policies and practices also play an important role in managing incentive plan risk. We regularly monitor our incentive compensation arrangements for employees at all levels and strive to enhance our risk review in light of developing best practices and regulatory guidance.

 

   

 

Huntington Bancshares Incorporated Notice of the Annual Meeting and 2018 Proxy Statement   25


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Corporate Governance

 

 

Review, Approval or Ratification of Transactions with Related Persons

The Nominating and Corporate Governance Committee of the board of directors oversees our Related Party Transactions Review and Approval Policy, referred to as the Policy. This written Policy covers “related party transactions”, including any financial transaction, arrangement or relationship or any series of similar transactions, arrangements or relationships, either currently proposed or since the beginning of the last fiscal year in which we were or will be a participant, involving an amount exceeding $120,000 and in which a director, nominee for director, executive officer or his or her immediate family member has or will have a direct or indirect material interest. The Policy requires our senior management and directors to notify the general counsel of any existing or potential “related party transactions.” Our general counsel reviews each reported transaction, arrangement or relationship that constitutes a “related party transaction” with the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee determines whether or not “related party transactions” are fair and reasonable for us. The Nominating and Corporate Governance Committee also determines whether any “related party transaction” in which a director has an interest impairs the director’s independence. Approved “related party transactions” are subject to on-going review by our management on at least an annual basis. Loans to directors and executive officers and their related interests made and approved pursuant to the terms of Federal Reserve Board Regulation O are deemed to be approved under this Policy. Any of these loans that become subject to specific disclosure in our annual proxy statement are reviewed by the Nominating and Corporate Governance Committee at that time. The Nominating and Corporate Governance Committee would also consider and review any transactions with a shareholder having beneficial ownership of more than 5% of Huntington’s voting securities in accordance with the Policy.

Indebtedness of Management. Many of our directors and executive officers and their immediate family members are customers of our affiliated financial and lending institutions in the ordinary course of business. In addition, our directors and executive officers also may be affiliated with entities which are customers of our affiliated financial and lending institutions in the ordinary course of business. Loan transactions with directors, executive officers and their immediate family members and affiliates have been made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other customers otherwise not affiliated with us. Such loans also have not involved more than the normal risk of collectability or presented other unfavorable features.

Certain Other Transactions. The Huntington National Bank has commitments outstanding for equity investments in three investment funds each operating as a “Small Business Investment Company” licensed by the Small Business Administration: the Stonehenge Opportunity Fund II, LP, the Stonehenge Opportunity Fund III, LP and the Stonehenge Opportunity Fund IV, LP. Each of the funds is managed by Stonehenge Partners Corp., an investment firm of which Michael J. Endres is a principal and holds a 9.8% equity interest. These funds seek to generate long-term capital appreciation by investing in equity and, in certain cases, mezzanine securities of a diverse portfolio of companies across a variety of industries. Our management determined that the investment would provide a cost effective means to participate in financing small businesses, provide a means of obtaining lending or investment credits under the Community Reinvestment Act and generally be favorable to us. The Huntington National Bank has a $7.85 million commitment for an equity investment in the Stonehenge Opportunity Fund II, LP, a $150 million investment fund, which was organized in 2004. This fund’s origination period ended in 2010. As of December 31, 2017, $6.36 million of the $7.85 million commitment has been funded. The remaining $1.49 million commitment is limited to fund follow-on investments in existing portfolio companies and fund expenses. The Huntington National Bank also has a $10 million commitment for an equity investment in the Stonehenge Opportunity Fund III, LP, a $250 million investment fund, which was organized in 2010 with an origination period that ended in 2016, and a $15 million commitment for an equity investment in the Stonehenge Opportunity Fund IV, LP, a $280 million investment fund, which was organized in 2016. As of December 31, 2017, $7.2 million of the $10 million commitment to Stonehenge Opportunity Fund III, LP and $5.6 million of the $15 million commitment to Stonehenge Opportunity Fund IV, LP have been funded. The remaining $2.8 million commitment to Stonehenge Opportunity Fund III, LP is limited to fund follow-on investments in existing portfolio companies and fund expenses. These funds pay to Stonehenge Partners Corp. management fees not to exceed on an annual basis 2.00% of the aggregate of private capital commitments and Small

 

26   Huntington Bancshares Incorporated Notice of the Annual Meeting and 2018 Proxy Statement


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Corporate Governance

 

 

Business Administration debentures of the respective fund during their origination period and management fees not to exceed on an a annual basis 1.50% of the aggregate cost basis of investments outstanding after the origination period. In addition, Stonehenge Partners Corp. is the controlling entity of Stonehenge Equity Partners, LLC, Stonehenge Equity Partners III, LLC, and Stonehenge Equity Partners IV, LLC, which serves as the managing member of Stonehenge Opportunity Fund II, LP, Stonehenge Opportunity Fund III, LP and Stonehenge Opportunity Fund IV, LP, respectively.

Paul McMahon, who is the son-in-law of director David L. Porteous, has been employed by The Huntington National Bank since 2006 and currently serves as a Portfolio Manager — Team Lead in the Commercial Banking Department. Mr. McMahon serves in a non-executive capacity four reporting levels below the Commercial Banking Director, is one of more than 15,600 employees, and is compensated in accordance with the employment compensation practices and policies applicable to all employees with equivalent qualifications and responsibilities in similar positions. For 2017, Mr. McMahon received compensation of approximately $175,859 including base salary and incentive compensation, as well as benefits generally available to all employees.

Compensation of Directors

Our compensation philosophy for the board of directors is to provide a compensation arrangement to outside directors that reflects the significant time commitment and substantial contributions the directors are expected to make to the value creation and governance of Huntington. Our compensation level and structure are designed, with the input of the independent compensation consultant, to enable us to attract and retain high caliber talent at a national level, and also to align the directors’ interests with those of the shareholders. Our compensation program for non-employee directors is a combination of cash and equity. Our CEO does do not receive compensation for his service as director.

Fees Payable in Cash. Each non-employee director earns an annual retainer of $45,000. We pay an additional annual retainer of $65,000 to the lead director, and $20,000 to the chairs of all standing board committees. We pay meeting fees at the standard rate of $2,000 for each board of directors or committee meeting the director attends and $1,000 for each teleconference board of directors or committee meeting in which the director participates. In addition, we pay directors fees of $2,000 per day in the event Huntington requests a director to attend or participate in an event or meeting, in person, in his capacity as a director. All fees are payable quarterly. Retainer fees are payable in four equal quarterly installments. A director may defer all or a portion of the cash compensation payable to the director if he or she elects to participate in the Director Deferred Compensation Plan.

Equity Compensation. To align the interests of directors with shareholders, a meaningful portion of director compensation is paid in equity that is subject to holding requirements. The Compensation Committee considers equity grants for non-employee directors on an annual basis, and the form and amounts of any equity grants for directors are determined at the discretion of the Compensation Committee. Since 2006, the equity grants for directors have been in the form of deferred stock units which are vested upon grant but not released to the director until six months following separation of service. Based on the market data and peer review facilitated by the independent compensation consultant, the Compensation Committee granted each non-employee director a deferred stock award having a value of $105,000, effective May 1, 2017. Divided by the stock price of $13.09 on the date of grant, each director was awarded 8,021 deferred stock units, rounded down to the nearest whole share. The Compensation Committee awarded an additional $20,000 grant value to the chairpersons of the Audit, Compensation and Risk Oversight Committees which converted to an additional 1,528 deferred stock units.

In addition to the mandated holding of shares imposed by the deferred stock units, the Compensation Committee has established a minimum ownership level guideline for directors based on five times the annual retainer fee (excluding committee chairmanship retainers). Based on the retainer fee and the fair market value of our common stock on the date the guidelines were established, the guideline for directors was set at 40,603 shares. Directors have five years to meet the minimum guidelines. Each director who has served at least five years has met the guidelines.

 

Huntington Bancshares Incorporated Notice of the Annual Meeting and 2018 Proxy Statement   27


Table of Contents

Corporate Governance

 

 

Director Compensation 2017

 

Name

 

 

Fees

Earned or

Paid in

Cash (2)

 

   

Stock

Awards (3)(4)

 

   

Option

Awards

 

   

Non-Equity

Incentive Plan

Compensation

 

   

 

Change in

Pension Value

and
Non-qualified

Deferred

Compensation

Earnings

 

   

All Other

Compen-

sation (5)

 

   

Total

 

 

 

Lizabeth Ardisana

 

 

 

 

 

 

$111,500

 

 

 

 

 

 

 

 

 

$104,995   

 

 

 

 

 

 

 

 

 

—    

 

 

 

 

 

 

 

 

—           

 

 

 

 

 

 

 

 

—         

 

 

 

 

 

$

 

 

 —

 

 

 

 

 

$

 

 

216,495

 

 

 

 

 

Ann B. Crane

 

 

 

 

 

 

112,500

 

 

 

 

 

 

 

 

 

104,995   

 

 

 

 

 

 

 

 

 

—    

 

 

 

 

 

 

 

 

—           

 

 

 

 

 

 

 

 

—         

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

217,495

 

 

 

 

 

Robert S. Cubbin

 

 

 

 

 

 

106,834

 

 

 

 

 

 

 

 

 

124,996   

 

 

 

 

 

 

 

 

 

—    

 

 

 

 

 

 

 

 

—           

 

 

 

 

 

 

 

 

—         

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

231,830

 

 

 

 

 

Steven G. Elliott

 

 

 

 

 

 

166,500

 

 

 

 

 

 

 

 

 

124,996   

 

 

 

 

 

 

 

 

 

—    

 

 

 

 

 

 

 

 

—           

 

 

 

 

 

 

 

 

—         

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

291,496

 

 

 

 

 

Michael J. Endres

 

 

 

 

 

 

108,500

 

 

 

 

 

 

 

 

 

104,995   

 

 

 

 

 

 

 

 

 

—    

 

 

 

 

 

 

 

 

—           

 

 

 

 

 

 

 

 

—         

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

213,495

 

 

 

 

 

Gina D. France

 

 

 

 

 

 

103,500

 

 

 

 

 

 

 

 

 

104,995   

 

 

 

 

 

 

 

 

 

—    

 

 

 

 

 

 

 

 

—           

 

 

 

 

 

 

 

 

—         

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

208,455

 

 

 

 

 

John B. Gerlach, Jr. (1)

 

 

 

 

 

 

46,167

 

 

 

 

 

 

 

 

 

—   

 

 

 

 

 

 

 

 

—    

 

 

 

 

 

 

 

 

—           

 

 

 

 

 

 

 

 

—         

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

46,167

 

 

 

 

 

J. Michael Hochschwender

 

 

 

 

 

 

83,500

 

 

 

 

 

 

 

 

 

104,995   

 

 

 

 

 

 

 

 

 

—    

 

 

 

 

 

 

 

 

—           

 

 

 

 

 

 

 

 

—         

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

188,495

 

 

 

 

 

Chris Inglis

 

 

 

 

 

 

95,500

 

 

 

 

 

 

 

 

 

104,995   

 

 

 

 

 

 

 

 

 

—    

 

 

 

 

 

 

 

 

—           

 

 

 

 

 

 

 

 

—         

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

200,495

 

 

 

 

 

Peter J. Kight

 

 

 

 

 

 

115,500

 

 

 

 

 

 

 

 

 

104,995   

 

 

 

 

 

 

 

 

 

—    

 

 

 

 

 

 

 

 

—           

 

 

 

 

 

 

 

 

—         

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

220,495

 

 

 

 

 

Jonathan A. Levy

 

 

 

 

 

 

102,500

 

 

 

 

 

 

 

 

 

104,995   

 

 

 

 

 

 

 

 

 

—    

 

 

 

 

 

 

 

 

—           

 

 

 

 

 

 

 

 

—         

 

 

 

 

 

 

 

 

19,710

 

 

 

 

 

 

 

 

 

227,205

 

 

 

 

 

Eddie R. Munson

 

 

 

 

 

 

108,500

 

 

 

 

 

 

 

 

 

104,995   

 

 

 

 

 

 

 

 

 

—    

 

 

 

 

 

 

 

 

—           

 

 

 

 

 

 

 

 

—         

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

213,495

 

 

 

 

 

Richard W. Neu

 

 

 

 

 

 

124,500

 

 

 

 

 

 

 

 

 

124,996   

 

 

 

 

 

 

 

 

 

—    

 

 

 

 

 

 

 

 

—           

 

 

 

 

 

 

 

 

—         

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

249,496

 

 

 

 

 

David L. Porteous

 

 

 

 

 

 

249,500

 

 

 

 

 

 

 

 

 

104,995   

 

 

 

 

 

 

 

 

 

—    

 

 

 

 

 

 

 

 

—           

 

 

 

 

 

 

 

 

—         

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

354,495

 

 

 

 

 

Kathleen H. Ransier

 

 

 

 

 

 

115,500

 

 

 

 

 

 

 

 

 

104,995   

 

 

 

 

 

 

 

 

 

—    

 

 

 

 

 

 

 

 

—           

 

 

 

 

 

 

 

 

—         

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

220,495

 

 

 

 

 

(1)  

Mr. Gerlach served as a director until April 20, 2017.

(2)  

Amounts earned include fees deferred by participating directors under the Director Deferred Compensation Plan.

(3)  

On May 1, 2017, grants of 9,549 deferred stock units were made to the chairpersons of the Audit, Compensation and Risk Oversight Committees and grants of 8,021 deferred stock units were made to each other director under the 2015 Long-Term Incentive Plan. These awards were vested upon grant and are payable six months following separation from service. This column reflects the grant date fair value in accordance with FASB Topic 718 and is equal to the number of units times the fair market value (the closing price) on the date of grant ($13.09). These deferred stock unit awards will be credited with an additional number of deferred stock units to reflect reinvested dividend equivalents with respect to the period of time between the date of grant and the delivery of shares.

 

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(4)  

The Compensation Committee has granted deferred stock awards to non-employee directors each year since 2006. The directors’ deferred stock unit awards outstanding as of December 31, 2017 are set forth in the table below.

 

Name

 

  

 

Deferred Stock

Awards

Outstanding

 

 

 

Lizabeth Ardisana

 

  

 

 

 

 

8,114      

 

 

 

 

 

Ann B. Crane

 

  

 

 

 

 

69,890      

 

 

 

 

 

Robert S. Cubbin

 

  

 

 

 

 

9,659      

 

 

 

 

 

Steven G. Elliott

 

  

 

 

 

 

77,661      

 

 

 

 

 

Michael J. Endres

 

  

 

 

 

 

86,521      

 

 

 

 

 

Gina D. France

 

  

 

 

 

 

8,114      

 

 

 

 

 

J. Michael Hochschwender

 

  

 

 

 

 

8,114      

 

 

 

 

 

Chris Inglis

 

  

 

 

 

 

8,114      

 

 

 

 

 

Peter J. Kight

 

  

 

 

 

 

51,062      

 

 

 

 

 

Jonathan A. Levy

 

  

 

 

 

 

84,521      

 

 

 

 

 

Eddie R. Munson

 

  

 

 

 

 

29,230      

 

 

 

 

 

Richard W. Neu

 

  

 

 

 

 

84,792      

 

 

 

 

 

David L. Porteous

 

  

 

 

 

 

86,521      

 

 

 

 

 

Kathleen H. Ransier

 

  

 

 

 

 

86,521      

 

 

 

 

 

(5)  

In September 2017, Huntington provided emergency transportation for Mr. Levy and his family due to rapidly deteriorating weather conditions caused by Hurricane Irma. A corporate aircraft was made available to the Levy family when they were unable to procure a commercial flight. The corporate aircraft was otherwise not needed for business purposes and the incremental cost to Huntington was $19,710.

Director Deferred Compensation Plan. We have historically offered a deferred compensation program which allows the members of the board to elect to defer receipt of all or a portion of the compensation payable to them in the future for services as directors. Under an updated plan adopted for 2017, cash amounts deferred will accrue interest, earnings and losses at the market rate of the investment option selected by the participant. The investment options consist of Huntington common stock and a variety of mutual funds that are generally available under and/or consistent with the types of investment options available under our tax-qualified 401(k) plan for employees.

A director’s account will be distributed either in a lump sum or in annual installments, as elected by each director. Distribution will commence following the age or date specified by the director at the time the deferral election was made, or within 30 days of the director’s termination as a director. All of the assets of the current and predecessor plans are subject to the claims of our creditors. The rights of a director or his or her beneficiaries to any of the assets of the plans are no greater than the rights of our unsecured general creditors. Only non-employee directors are eligible to participate in this plan.

As of December 31, 2017, the participating directors’ accounts under the current and predecessor plans were substantially comprised of Huntington common stock and had the values set forth in the table below.

 

Name

 

  

 

Account Balance at
December 31, 2017

 

 

 

Ann B. Crane

 

  

 

 

 

 

$1,094,914      

 

 

 

 

 

Steven G. Elliott

 

  

 

 

 

 

133,305      

 

 

 

 

 

Michael J. Endres

 

  

 

 

 

 

1,155,022      

 

 

 

 

 

Peter J. Kight

 

  

 

 

 

 

169,124      

 

 

 

 

 

Richard W. Neu

 

  

 

 

 

 

1,580,983      

 

 

 

 

 

David L. Porteous

 

  

 

 

 

 

1,285,993      

 

 

 

 

 

Kathleen H. Ransier

 

  

 

 

 

 

453,049      

 

 

 

 

 

Huntington Bancshares Incorporated Notice of the Annual Meeting and 2018 Proxy Statement   29


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Ownership of Voting Stock

The table below sets forth the beneficial ownership of Huntington common stock by each of our directors, nominees for director, executive officers named in the Summary Compensation Table, and the directors and all executive officers as a group, as of January 31, 2018. Beneficial ownership is determined in accordance with the rules of the SEC. Generally, the rules attribute beneficial ownership of securities to persons who possess sole or shared voting power and/or investment power with respect to those securities, including shares which could be acquired within 60 days. The table also sets forth additional share interests not reportable as beneficially owned.

 

 

Beneficial Ownership

 

   

  Name of Beneficial Owner

Shares of

Common Stock

Beneficially

Owned

(1)(2)(3)(4)

Percent of

Class

Additional

Share Interests

(5)(6)

Total
Share

Interests

  Lizabeth Ardisana   31,802   *   8,114   39,916
  Ann B. Crane   92,931   *   69,890   162,821
  Robert S. Cubbin   55,261   *   9,659   64,920
  Steven G. Elliott   9,921   *   77,661   87,582
  Michael J. Endres   296,365   *   86,521   382,886
  Gina D. France   69,466   *   8,114   77,580
  Paul G. Heller   389,587   *   2,605   392,192
  J. Michael Hochschwender   125,471   *   8,114   133,585
  Helga S. Houston   288,101   *   55,816   343,917
  Chris Inglis   7,142   *   8,114   15,256
  Peter J. Kight   225,988   *   51,062   277,050
  Jonathan A. Levy   130,137   *   84,521   214,658
  Howell D. McCullough III   533,878   *   29,232   563,110
  Eddie R. Munson   10,000   *   29,230   39,230
  Richard W. Neu   213,685   *   84,792   298,477
  Sandra E. Pierce   191,207   *   65,278   256,485
  David L. Porteous   721,902   *   86,521   808,423
  Kathleen H. Ransier   67,204   *   86,521   153,725
  Stephen D. Steinour   6,396,446   *   1,031,712   7,428,158

Directors and All Executive Officers as a Group (26 in the group)

  11,308,683   1.05 %   2,153,164   13,461,847

 

*

Indicates less than 1% of outstanding shares.

(1)  

This column consists of shares for which the directors and executives, directly or indirectly, have the power to vote or to dispose, or to direct the voting or disposition thereof, and also includes shares for which the person has the right to acquire beneficial ownership within 60 days. Except as otherwise noted, none of the named individuals shares with another person either voting or investment power as to the shares reported. None of the shares reported are pledged as security.

(2)  

Figures include the number of shares of common stock which could have been acquired within 60 days of January 31, 2018, under stock options awarded under our employee and director equity plans as set forth below.

 

Mr. Heller

     111,891  

Ms. Houston

     47,327  

Mr. McCullough

     323,470  

Ms. Pierce

     0  

Mr. Steinour

     3,375,004  

Directors and Executive Officers as a Group (26 in the group)

     4,513,337  

 

(3)  

Figures include 13,180 shares, 10,136 shares, 1,772 shares and 174,117 shares of common stock owned by members of the immediate families or family trusts of Mr. Levy, Mr. Porteous, Ms. Ransier and Mr. Steinour, respectively; 1,762 shares owned by various corporations and partnerships attributable to Mr. Levy; and 11,341 shares owned jointly by Ms. Crane and her spouse, 331,290 shares owned jointly by Mr. Porteous and his spouse, 1,500 shares owned jointly by Ms. Ransier and her spouse, and 341,149 shares owned jointly by Mr. Steinour and his spouse.

(4)

Figures also include the following shares of common stock held as of January 31, 2018, in Huntington’s deferred compensation plans for directors, including a legacy FirstMerit Corporation plan: 77,390 shares for Ms. Crane, 9,921 shares for Mr. Elliott,

 

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Ownership of Voting Stock

 

 

 

81,550 shares for Mr. Endres, 26,567 shares for Ms. France, 56,429 shares for Mr. Hochschwender, 11,703 shares for Mr. Kight, 111,335 shares for Mr. Neu, 90,566 shares for Mr. Porteous, and 31,350 shares for Ms. Ransier. Prior to the distribution from the deferred compensation plans to the participants, voting for the shares allocated to the accounts is directed by the company.

(5)  

This column includes shares in benefit plans in which the executive officers have vested ownership interests but do not have the power to vote or dispose of the shares, or the right to acquire such shares within 60 days. Figures include the following shares of common stock held as of January 31, 2018 in Huntington’s Supplemental Stock Purchase and Tax Savings Plan: 2,605 shares for Mr. Heller, 10,798 shares for Ms. Houston, 14,205 shares for Mr. McCullough, 2,413 shares for Ms. Pierce, 60,592 shares for Mr. Steinour, and 181,022 shares for executive officers as a group (12 in the group). Prior to the distribution from this plan to the participants, voting and power for the shares allocated to the accounts of participants is held by Huntington. Figures include the following shares of common stock held as of January 31, 2018 in Huntington’s Executive Deferred Compensation Plan: 45,018 shares for Ms. Houston, 15,027 shares for Mr. McCullough, 62,865 shares for Ms. Pierce, 971,120 shares for Mr. Steinour and 1,273,308 shares for executive officers as a group (12 in the group). Prior to the distribution from this plan to the participants, voting for the shares allocated to the accounts of participants is directed by the company.

(6)  

Figures in this column for the directors consist of vested deferred stock unit awards that will be issued in shares of common stock six months following separation from service. These amounts are also set forth in footnote 4 to the Director Compensation 2017 Table above.

As of December 31, 2017, we knew of no person who was the beneficial owner of more than 5% of our outstanding shares of common stock, except as follows:

 

Name and Address

of Beneficial Owner

 

Shares of

Common Stock

Beneficially Owned

 

Percent of

Class

 

The Vanguard Group, Inc. (1)

100 Vanguard Boulevard

Malvern, PA 19355

 

 

 

111,847,702

 

 

 

 

10.34

 

%

 

FMR LLC (2)

245 Summer Street

Boston, MA 02210

 

 

 

97,057,266

 

 

 

 

8.978

 

%

 

BlackRock, Inc. (3)

55 East 52nd Street

New York, NY 10055

  68,403,363   6.30 %

State Street Corporation (4)

State Street Financial Center

One Lincoln Street

Boston, MA 02211

 

 

 

59,170,805

 

 

 

 

5.47

 

%

 

Capital International Investors (5)

333 S. Hope Street

Los Angeles, CA 90071

 

 

 

57,946,121

 

 

 

 

5.30

 

%

 

 

(1)  

This information is based on an amendment to Schedule 13-G filed by The Vanguard Group, Inc. on February 9, 2018. The Vanguard Group, Inc. has sole voting power for 1,502,194 of the shares, shared voting power for 208,170 of the shares, sole dispositive power for 110,173,765 of the shares, and shared dispositive power for 1,673,937 of the shares. The Vanguard Group, Inc. acquired the shares in the ordinary course of business.

(2)

This information is based on an amendment to Schedule 13-G filed by FMR LLC on February 13, 2018. FMR LLC has sole voting power for 5,633,927 of the shares and sole dispositive power over all of the shares. FMR LLC acquired the shares in the ordinary course of business.

(3)

This information is based on an amendment to Schedule 13-G filed by BlackRock Inc. on January 25, 2018. BlackRock Inc. has sole voting power for 59,253,278 of the shares and sole dispositive power for all of the shares. These shares were acquired and are held by BlackRock, Inc. in the ordinary course of business.

(4)

This information is based on a Schedule 13-G filed by State Street Corporation on February 14, 2018. State Street Corporation has shared voting power and shared dispositive power for all of the shares. These shares were acquired and are held by State Street Corporation in the ordinary course of business.

(5)

This information is based on a Schedule 13-G filed by Capital International Investors on February 14, 2018. Capital International Investors has sole voting power for 55,498,951 of the shares and sole dispositive power for all of the shares. These shares were acquired and are held by Capital International Investors in the ordinary course of business. Beneficial ownership is disclaimed.

 

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Ownership of Voting Stock

 

 

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our officers, directors, and persons who are beneficial owners of more than ten percent of Huntington common stock to file reports of ownership and changes in ownership with the SEC. Reporting persons are required by SEC regulations to furnish us with copies of all Section 16(a) forms filed by them. To the best of our knowledge, and following a review of the copies of Section 16(a) forms received, we believe that during 2017 all filing requirements applicable for reporting persons were met.

 

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Compensation of Executive Officers

 

Compensation Discussion & Analysis

 

Our compensation philosophy is to “pay for performance” that creates long-term shareholder value.

This Compensation Discussion & Analysis describes Huntington’s executive compensation program for 2017 for our CEO and the other executive officers named in the Summary Compensation Table (the named executive officers or “NEOs”). Our compensation philosophy is to “pay for performance” that creates long-term shareholder value. The Compensation Committee has developed a balanced compensation program for executives that incorporates many key compensation and governance practices.

 

 

Key Compensation & Governance Practices
What We Do

ü

 

Significant stock ownership and hold until retirement policies that reinforce alignment between shareholders and senior management

 

ü

 

Significant emphasis on performance-based compensation, with majority of compensation dependent upon long-term performance

 

ü

 

Balanced portfolio of metrics that drive annual and long-term goals in a risk appropriate manner

 

ü

 

Annual cash incentive awards for executives — cash is capped at 100% of target; any award above target is paid in RSUs with a 3 year ratable vesting period

 

ü

 

All incentive compensation subject to Recoupment and Clawback Policy

 

ü

 

Performance Share Units comprise 50% of total annual LTI grant value

 

ü

 

Independent compensation consultant advising the Compensation Committee

 

ü

 

Biannual shareholder outreach to understand the viewpoints of our investors

 

 

 

What We Don’t Do

û

 

No repricing of stock options without shareholder approval

 

û

 

No excise tax gross-ups upon change in control

 

û

 

No single-trigger vesting of equity awards upon change in control

 

û

 

No hedging by executives

 

û

 

No dividend or dividend equivalents paid on equity grants prior to vesting

 

This Compensation Discussion & Analysis is divided into five sections:

 

 

  Overview

 

  

33

 

 

   Key Highlights

 

  

34

 

 

   Determination of Compensation

 

  

36

 

 

   2017 Compensation Decisions

 

  

40

 

 

  Other Policies and Practices

 

  

48

 

 

Overview

The Compensation Committee of our board of directors provides independent oversight of our executive compensation and has engaged an independent compensation consultant, Pearl Meyer & Partners LLC, to provide advice with respect to the amount and form of executive compensation.

Doing the Right Thing ”. The Compensation Committee also oversees the company’s broader compensation policies and practices and the relationship among risk takers, risk management and compensation. We regularly monitor our incentive arrangements for colleagues at all levels and strive to enhance incentive risk management in light of developing best practices and regulatory guidance. Risk assessment of incentive compensation is discussed in greater detail above under “The Board’s Role in Risk Oversight”.

We continue to build a culture of doing the right thing for our customers. Our “fair play” banking philosophy starts with doing the right thing with products and services that are simple, clear and fair. We also look to deepen existing customer relationships by working to understand and serve our customers’ needs. We have a proud legacy of strong customer service and we require that all of our colleagues follow both the letter and intent of our Code of Business Conduct and Ethics. We take action when we find violations of our Code of Conduct, and violations are reported to the Audit Committee of the board of directors.

Moreover, Huntington maintains a robust Recoupment and Clawback Policy which is a tool for recoupment or clawback of incentive compensation in appropriate situations. Colleagues at all levels in the organization are subject to this policy. Incentive compensation subject to possible clawback or recoupment includes any cash incentive or equity compensation, vested or unvested. In general, situations that trigger a review under this policy

 

 

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Compensation of Executive Officers

 

 

involve behaviors or actions outside the bounds of the company’s overall risk appetite and governance structure. The Compensation Committee would make any compensation recoupment or clawback determination with respect to executive officers. Additional detail about the Recoupment and Clawback Policy can be found later in this discussion.

The Importance of Stock Ownership . A critical foundation of our executive compensation philosophy is the requirement to own Huntington common stock, which aligns management’s interests with those of shareholders. Mr. Steinour’s commitment to this principle and to the company is evidenced by his significant personal investment in Huntington. Since joining Huntington in January 2009, Mr. Steinour has purchased over 1.6 million shares of Huntington common stock in open market transactions. As of January 31, 2018, Mr. Steinour directly and indirectly owned shares of Huntington common stock equal to approximately 60X his salary, significantly exceeding our best practice 6X salary ownership guideline for the CEO. Each executive officer has an ownership guideline ranging from 2X to 6X salary. In addition, executive officers are subject to a holding requirement equal to 50% of net shares received upon the exercise of a stock option or upon the release of full value awards. This amount of shares must be held until retirement or other departure from the company. See additional detail under “Stock Ownership & Holding Requirements” later in this discussion.

Consideration of “Say-on-Pay” / Shareholder Outreach . We strive to continually strengthen our compensation practices based on our philosophy, market best practices and feedback received from shareholders. During 2017, we continued our biannual shareholder outreach and held conversations with investors collectively holding greater than 25% of our outstanding common stock. The board and management have gained valuable insight from these interactions and will continue to seek shareholder input. We are gratified that more than 96% of the votes cast for our “say-on-pay” advisory vote at the 2017 annual meeting were in favor of our executive compensation programs. Based on the “say-on-pay” vote and other feedback, the Compensation Committee determined to maintain the essential design of our compensation program for 2017.

We will continue to monitor emerging trends and best practices and seek ways to improve our compensation programs and ensure continued alignment between our pay and performance.

Key Highlights

Our Business Strategy, Goals and Accomplishments

 

 

  2017 Highlights

ü

 

Record net income for third consecutive year, up 67% over the prior year

ü

 

Completed the integration of the FirstMerit acquisition

ü

 

Revenue growth was 22% over 2016, materially aided by the FirstMerit acquisition

ü

 

Net interest margin of 3.30%, an increase of 14 basis points

ü

 

Return on average tangible common equity was 15.7%

ü

 

Return on average assets was 1.17%

ü

 

We achieved positive operating leverage on an adjusted basis for the fifth consecutive year

ü

 

Efficiency ratio of 60.9%

ü

 

Increased cash dividends for seventh consecutive year; end-of-year dividend yield of 3.0%

ü

 

Net charge offs of 0.23% of average loans and leases.

 

 

LOGO

 

 

Total Shareholder Return Since Strategic Plan Implementation (1/1/10-12/31/17)

 

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Compensation of Executive Officers

 

 

Compensation Highlights

 

 

  Named Executive Officers

     

 

A significant portion of compensation is
stock-based and long-term in focus.

A critical foundation of our executive
compensation philosophy is the requirement
to own Huntington common stock, which
aligns management’s interests with those of
shareholders.

  Stephen D. Steinour

  Chairman, President and Chief Executive Officer

   

  Howell D. McCullough III

  Chief Financial Officer

   

  Paul G. Heller

  Chief Technology and Operations Officer

   

  Helga S. Houston

  Chief Risk Officer

   

  Sandra E. Pierce

  Private Client Group Director

   

 

Consistent with Huntington’s “pay for performance” philosophy, the Compensation Committee’s 2017 compensation program for executive officers emphasized performance-based compensation. Huntington’s 2017 performance against the Management Incentive Plan (MIP) metrics was 120.5% of target. The named executive

officers earned annual incentive awards ranging from 117.1% to 126.1% of target. Executive officers also received long-term incentive awards in 2017 comprised of performance stock units (“PSUs”), restricted stock units (“RSUs”) and stock options, and merit-based salary increases.

 

 

 

  2017 Key Compensation Elements

  Base Salaries   

Merit-based increases (for each NEO other than the CEO)

  Management Incentive Plan   

Overall performance at 120.5% of target on:

 

 Earnings per share

 

 Return on Average Tangible Common Equity

 

 Operating Leverage

  Long-term Incentive Plan   

Awarded long-term incentive grants comprised of:

 

 PSUs (50%)

 

 RSUs (35%)

 

 Stock Options (15%)

 

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The targeted direct compensation mix, below, illustrates the emphasis on variable, incentive-based compensation. Fixed compensation consists of base salaries. Variable, performance-based compensation includes our annual incentive payouts in cash and RSUs, the target value of PSUs, and the grant date fair value of stock options and RSUs.

 

 

LOGO

Determination of Compensation

Philosophy and Decision-Making Process

The Compensation Committee develops and approves our executive compensation with input from our management and the independent compensation consultant. Services provided by the compensation consultant during 2017 included review of our selected peer group, benchmarking compensation and performance, and establishing total compensation guidelines, including targets for short and long-term incentive plans, and modeling payouts under various performance scenarios. Our management provides information and may make recommendations to the Compensation Committee with respect to the amount and form of executive compensation. In addition, our CEO and CFO make recommendations to the Compensation Committee when it sets specific financial measures and goals for determining incentive compensation. Our CEO provides input and makes recommendations to the Compensation Committee regarding the performance and compensation of his direct reports, which include the NEOs. The CEO consults in advance with the chairs of the respective board committees regarding recommendations for key control positions. The CEO does not make recommendations to the Compensation Committee regarding his own compensation, other than requests in prior years that the Compensation Committee defer consideration of a base salary increase for him. From time to time, the Compensation Committee consults with other committees of the board and may obtain the approval of the full board of directors with respect to certain executive and director compensation matters. For additional detail, see “Procedures for Determining Executive and Director Compensation; Compensation Consultant” in the Corporate Governance section above.

We provide a balanced total compensation package, which includes both fixed and variable, performance-based elements. The use of both short-term and long-term incentives ensures that the ultimate compensation delivered is dependent upon achievement of our annual business goals, as well as delivering long-term shareholder value. Our performance and evaluation process considers company, business segment and individual performance, as well as performance relative to industry peers. Our target pay levels are designed to be competitive with market practice. Since a majority of our pay is variable and based on performance, our actual pay positioning will vary appropriately to reflect our performance.

 

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Compensation of Executive Officers

 

 

While overall compensation policies generally apply to all executives, we recognize the need to differentiate compensation by individual, reflecting on his or her role, experience, performance, and expected contributions. Base salaries and incentive targets are the primary means for differentiating compensation opportunities to reflect executive role and scope of responsibility. For example, Mr. Steinour has a higher base salary and higher potential award opportunities due to his responsibilities as CEO. He is also held to a higher stock ownership guideline, reflecting his increased stake in our performance.

 

 

Guiding Principles

 

Focus on long-term shareholder alignment

  

A significant portion of compensation is stock-based and long-term in focus

 

Approach compensation in a balanced and holistic fashion

  

Our program includes fixed and performance-based elements, short-term and long-term performance incentives, and considers corporate, business segment, individual and relative performance

 

Vary pay based on performance

  

Total compensation is expected to vary each year and may evolve over the long-term to reflect our performance and key objectives

 

Maintain an aggregate moderate-to-low risk profile

  

We monitor our programs, controls and governance practices for consistency with our aggregate moderate-to-low risk profile

 

See “Risk Assessment of Incentive Plans” above

 

Assure appropriate positioning in the market

  

Our target pay levels are designed to be competitive with market practice

 

Reflect internal equity

  

We differentiate compensation by individual, reflecting his or her role, experience, performance and expected contributions

 

Market Referencing

The Compensation Committee regularly reviews peer and industry information in regard to levels of compensation and performance as a competitive frame of reference. The Compensation Committee uses this information and analysis as a benchmarking reference for setting pay opportunities and making pay decisions, such as changes to base salaries, annual incentive awards and long-term incentive grants. A key source of information is a peer group of regional banks similar to Huntington in terms of size and business model. The peer banks are chosen using an objective process recommended by the independent compensation consultant and approved by the Compensation Committee.

 

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We re-evaluated and updated the peer group in 2017 for ongoing relevance, as we do each year. The process began with the selection of U.S. based publicly traded commercial banks considering asset size as of December 31, 2016. A number of banks with relevant asset size were eliminated due to a business model which included one or more of: international process or focus, a focus on different services, a high level of inside ownership and off-shore headquarters. The resulting group consisted of ten bank holding companies; seven larger and three smaller, positioning Huntington between the 25th and the 50th percentile for asset size. The Compensation Committee used the ten peers to represent the most appropriate market comparators for Huntington in terms of industry and size. The table below lists the peer banks approved by the Compensation Committee for 2017.

 

 

  Peer Banks for 2017

 

BB&T Corporation

 

  

KeyCorp

 

CIT Group Inc.

 

  

M&T Bank Corporation

 

Citizens Financial Group, Inc.

 

  

Regions Financial Corporation

 

Comerica Incorporated

 

  

SunTrust Banks, Inc.

 

Fifth Third Bancorp

 

  

Zions Bancorporation

 

The independent compensation consultant also provided the Compensation Committee with industry surveys as appropriate to supplement the peer group data. When using survey data, the information was reflective of Huntington’s size and industry. This included utilizing size adjusted comparisons representing data from companies that fell closest to our asset size. The Compensation Committee also relied on the independent compensation consultant to provide a broader industry perspective of emerging trends and best practices.

Among the peer and industry data considered in 2017 were three-year total shareholder return relative to peers, three-year relative performance in incentive measures, and realizable pay over the prior three years relative to peers. With the assistance of the independent compensation consultant, the Compensation Committee performed a pay and performance analysis in 2017 for the 2014 — 2016 period and determined that there was appropriate alignment between performance and pay. The Compensation Committee performs a pay and performance analysis on an annual basis to review the appropriateness of the company’s executive compensation program.

 

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Compensation of Executive Officers

 

 

Compensation Components

The three primary components of executive compensation are base salary, annual incentive awards and equity-based long-term incentive awards. Benefits comprise a smaller component of overall pay. The purpose and features of each component are summarized below.

 

  Executive Compensation

Components

 

  

Purpose and Key Features

 

Base Salary

  

Set within a competitive range of market practice to attract and retain top talent

 

Varies depending upon the executive’s role, performance, experience and contribution

 

Foundation from which incentives and other benefits are determined

 

Annual Incentive

(Management Incentive Plan)

  

Motivate and reward for achieving or exceeding annual financial strategic and operational goals that ultimately support sustained long-term profitable growth and value creation

 

Reflect company performance on key measures, adjusted for business unit and individual performance, including risk management

 

Each NEO has a target opportunity expressed as a percentage of base salary reflective of the NEO’s role

 

Tied directly to performance in year for which reported

 

Awards up to target are paid in cash; any amount of annual incentive earned in excess of target is paid in the form of RSUs which vest incrementally over three years

 

Long-Term Incentive

(Equity Grants)

  

Motivate and reward for delivering long-term sustained performance aligned with shareholder interests

 

Grants are comprised of performance share units (PSUs), time-based restricted stock units (RSUs) and stock options

 

Awards based on multiple factors, including competitive market data, business segment performance, individual performance and historical equity grants

 

Benefits

  

Same broad-based benefit programs generally available to all employees

 

A limited number of additional benefits are offered targeted to be within typical market practice and as needed to attract and retain executive talent

 

 

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2017 Compensation Decisions

Timing of Compensation Decisions

Shortly after each year-end, the Compensation Committee approves annual incentive awards tied directly to the prior year’s performance. These awards are based on metrics chosen by the Compensation Committee during the first quarter of the preceding year. During the second quarter of the year, the Compensation Committee will make decisions with respect to base salary adjustments and annual equity-based long-term incentive based on performance and on other factors discussed below. With respect to the incentive compensation amounts reported for 2017 in the Summary Compensation Table:

 

    Annual incentives based on 2017 performance are reported under the “Non-Equity Incentive Plan” column.

 

   

Annual long-term incentives granted on May 1, 2017 are based on a multi-faceted approach that includes company and individual performance and contributions, retention value of current equity ownership, historical long-term incentive compensation awards and the market-based framework the independent consultant developed. These awards are reported under the columns “Stock Awards” and “Option Awards”.

The following discussion of compensation decisions with respect to base salary adjustments, annual incentive awards under MIP and annual equity grants below is applicable to each of the NEOs.

Base Salary

Each of the NEOs other than the CEO received a merit-based salary increase effective May 1, 2017. For several years after joining the company, the CEO expressed a desire to not be considered for a base salary increase; with the exception of 2016, the Committee has honored the CEO’s wishes. The salary increases in 2017 were market competitive, and ranged from 1.0% to 9.1%.

Annual Incentive Award

Huntington’s annual incentive awards under the Management Incentive Plan reflect company performance on key short-term measures, adjusted in the discretion of the CEO and the Compensation Committee, for business segment and individual performance. Each executive has an annual target incentive opportunity expressed as a percentage of his or her base salary. The specific threshold, target and maximum opportunity for each executive is reflective of the executive’s role and competitive market practice. For 2017, the CEO’s target incentive was equal to 150% of his base salary. For the other participating NEOs, the 2017 MIP target was equal to 100% of base salary. These targets were increased from 125% and 80% in 2016, respectively, and were determined to be market competitive based on Huntington’s asset size.

Metrics and Performance . The Compensation Committee considers the appropriate corporate performance metrics for each year. To measure 2017 performance, the Compensation Committee retained the metrics of earnings per share, return on tangible common equity, and operating leverage. These performance metrics were chosen from among the list of available criteria under MIP and represented key short-term strategic areas of focus intended to support long-term success. The choice of metrics also reflected a balanced approach to measuring success. The metric of operating leverage ensures that our incentives are aligned with our commitment to shareholders to grow revenue faster than expenses. Return on tangible common equity (ROTCE) was chosen due to the strong correlation of higher ROTCE to higher market price-to-tangible book value (P/TBV) valuations for the common stocks of publicly-traded bank holding companies.

For each metric the Compensation Committee determined a threshold, target and maximum level of achievement based on the company’s operating plan for 2017. The performance goal for each of the 2017 MIP metrics was significantly increased over the goal for 2016 to reflect the company’s increased size. MIP allows for awards to be earned under each plan criterion,

 

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independent of the other criteria. We interpolate between the threshold, target and maximum goals to ensure sound incentive compensation arrangements and appropriate pay for performance alignment. In determining whether a performance goal has been met, the Committee will include or exclude “extraordinary events” or any other objective events or occurrences, in either establishing the performance goal based on the qualifying performance criteria or in determining whether the performance goal has been achieved; provided, however, that the Committee retains the discretion to reduce or eliminate an award that would otherwise be paid to any participant based on the Committee’s evaluation of such events or other factors. Awards may be paid only after the Compensation Committee has certified in writing that the performance goals have been met.

In addition, the 2017 cycle of MIP included an individual funding mechanism for each of the participating NEOs, excluding the CFO, equal to a maximum of 0.5% of net income for the CEO and a maximum of 0.2% of net income for the other participating NEOs. No awards would have been paid to these select NEOs if positive net income had not been achieved for 2017.

The company’s 2017 performance was reviewed in accordance with the MIP and certified by the Compensation Committee in January 2018. Excluding significant items, actual performance against each of the EPS, ROTCE and Operating Leverage goals was above target.

The table below provides the schedule of metrics and goals that the Compensation Committee approved for 2017, along with the company’s performance. The goals for the ROTCE metric were scaled to the level of TCE at year-end 2017.

 

Metric

 

  

Weight

 

    

Threshold

 

    

Target

 

    

Maximum

 

    

2017
Performance

 

    

 

Calculated
Performance
Factor

 

 

 

EPS

 

    

 

30%

 

 

 

   $

 

0.846 

 

 

 

   $

 

0.940 

 

 

 

   $

 

1.025   

 

 

 

   $

 

0.981

 

 

 

    

 

128.8%

 

 

 

 

ROTCE

 

    

 

30%

 

 

 

    

 

13.50%

 

 

 

    

 

14.90%

 

 

 

    

 

16.20%  

 

 

 

    

 

15.4% 

 

 

 

    

 

120.6%

 

 

 

 

Operating Leverage

 

    

 

40%

 

 

 

    

 

1.00%

 

 

 

    

 

3.40%

 

 

 

    

 

7.50%  

 

 

 

    

 

4.4% 

 

 

 

    

 

114.3%

 

 

 

  

 

 

                

 

 

 

 

% of Target

     100%              120.5%  

Adjustments for Individual Performance . The final award for the CEO may be adjusted for his individual performance at the discretion of the Compensation Committee. Due to limits for deducting compensation expenses under Internal Revenue Code Section 162(m), the award for the CEO could have been adjusted downward or upward within the overall parameters of MIP, but not increased above the individual funding factor of 0.5% of net income (approximately $5,930,410). Final awards for the other NEOs may be adjusted, at the discretion of the CEO and the Compensation Committee, for business segment and individual performance. Due to limits for deducting compensation expenses under Internal Revenue Code Section 162(m), awards for Mr. Heller, Ms. Houston and Ms. Pierce could have been adjusted downward or upward within the overall parameters of MIP, but not increased above the individual funding factor of 0.2% of net income (approximately $2,372,164). As the position of CFO is not a “covered officer” under Internal Revenue Code Section 162(m), the award for Mr. McCullough was not subject to a cap other than the $7,500,000 limit for any award granted under the terms of the plan. The portion of each award that exceeded target was converted and paid in RSUs based on the closing price of a share of common stock on the grant date. Final awards for the NEOs are discussed below under “Compensation of the Named Executive Officers”.

Long-Term Incentive Compensation

Determining LTI Grant Value . The Compensation Committee engaged the independent compensation consultant to develop long-term incentive award ranges based on competitive market practice to serve as guidelines for annual grants. In addition to these guidelines, when determining award ranges for individual executive officers, the Compensation Committee considers the impact on potential total compensation. Award opportunities are within a range defined by a low to high percentage of

 

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base salary to allow for awards to vary in order to reflect individual performance. RSUs awarded in payment of an annual incentive (MIP) award over target are not counted against potential annual LTI grants.

Value Range for Potential Equity Grants

 

Position

   Threshold      Target      Maximum  

CEO

     162.5      325.0      650.0

CFO

     107.5      215.0      430.0

Chief Technology Officer

     107.5      215.0      430.0

Other NEOs

     100.0      200.0      400.0

LTI Grant Vehicles . For the 2017 annual LTI grants, management proposed, and the Compensation Committee approved the strategy set forth below. All equity vehicles are subject to our Share Ownership and Share Holding Policy provisions for the executive leadership team: 50% of net shares released upon vesting or exercise are required to be held to retirement or other departure from the company.

2017 Long-Term Incentive Program Highlights

 

  Vehicle   % of Total LTI Value   Key Design Features

  Performance

  Share Units

  (PSUs)

  50%  

Performance Measurement Period: 3 years

 

Performance Measures:

 

 Adjusted Return on Tangible Common Equity
(ROTCE, 50% weighting)

 

 Relative Total Shareholder Return (TSR, 50% weighting)

 

Share Payout Range: 0 — 150% of target

 

  Restricted

  Stock Units

  (RSUs)

  35%  

Vesting: 50% in year 3 and 50% in year 4

  Stock Options

 

15%

 

Vesting: 4 year annual pro-rata

 

Option Term : 10 years

 

 

PSUs — Performance Metrics. With assistance from the independent consultant, the Compensation Committee selected the same two metrics for the PSUs granted in 2017 as used in 2015 and 2016: return on tangible common equity (ROTCE) and TSR. For the 2017 grant, the goal for ROTCE is absolute and the goal for TSR is relative. The company believes ROTCE and TSR are key factors to long-term value creation. There is a strong correlation of higher ROTCEs to higher market price-to-tangible book value (P/TBV) valuations for the common stock of publicly-traded bank holding companies. TSR aligns long-term incentive compensation to value created for our shareholders.

As reflected in the table below, the Compensation Committee determined a threshold, target and maximum level of achievement for the three-year performance cycle. In calculating performance to determine whether a performance goal has been achieved, the Compensation Committee will adjust for Extraordinary Events as defined in the 2015 Long-Term Incentive Plan.

 

PSU Metric

   Threshold    Target    Maximum

Relative TSR

   35 th  Percentile    50 th  Percentile    65 th  Percentile

ROTCE

   13.00%    14.00%    15.00%

 

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TSR will be measured over the length of the cycle, from January 1, 2017 to December 31, 2019. ROTCE results are measured annually, adjusted for extraordinary items, and averaged using year-end reported amounts. The range of potential payouts, 0% to 150% of the target number of share units, was consistent with the design of PSUs awarded in the prior year, and determined to be within competitive market practice, and reasonable from an annual share run rate and dilution perspective.

Determination of individual LTI Grants. The Compensation Committee independently evaluated the CEO’s performance for the purpose of determining a 2017 long-term incentive award and assessed the competitive pay positioning that would result from the awards to be consistent with our pay-for-performance philosophy.

In determining award values for the other NEOs, the Compensation Committee considered the CEO’s performance assessments for each NEO, as well as additional input from the CEO, and the market guidelines provided by the consultant. Consistent with the company’s philosophy, the chief executive officer’s evaluation was based on a holistic approach that included individual performance and contributions, retention value of current equity ownership, historical long-term incentive compensation awards and the market-based framework the independent consultant developed. The key factors included in the evaluation of each NEO are discussed under “Compensation Decisions for each Named Executive Officer” below. The Compensation Committee approved awards in 2017 for the NEOs, excluding the chief executive officer, as recommended by the CEO.

Compensation Decisions for each Named Executive Officer

When considering base salary increases, adjusting MIP awards for business segment and individual performance, and determining the grant-date value of long-term incentive compensation awards, the CEO and Compensation Committee considered the performance of each executive under the following common factors:

 

    Common

    Performance

    Factors:

  

 

  Financial and operating results

 

  

 

  Organization culture and colleagues

 

  

 

  Risk management and key metrics

 

  

 

  Strategic planning and execution

 

  

 

  Continuous improvement and simplification

 

  

 

  Customers, community and stakeholder relations.

 

Further, the Compensation Committee differentiated compensation for the NEOs other than the CEO by taking into consideration the CEO’s evaluation of each executive’s performance, role and relative contribution to overall company performance. Although there were no predetermined quantifiable goals against which business unit and individual performance were evaluated independently for purposes of determining compensation, highlights of the specific 2017 individual and business unit performance considered by the Compensation Committee for each NEO are set forth below.

 

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Stephen D. Steinour, CEO. In determining appropriate compensation for the CEO, the Compensation Committee considered Mr. Steinour’s outstanding leadership in 2017, including the following significant accomplishments:

 

    Achievement of long-term financial goals

 

      Achieved all five long-term financial goals (on an adjusted, non-GAAP basis) for the first time for full-year 2017.

 

      Increased fully-taxable equivalent total revenue to $4.4 billion, or 22% year-over-year growth compared to our 4% —6% annual growth goal.

 

      Delivered positive operating leverage (on an adjusted, non-GAAP basis) for the fifth consecutive year.

 

      Reduced Efficiency Ratio (on an adjusted, non-GAAP basis) to 57%, consistent with our 56% — 59% goal.

 

      Reported net charge-offs (NCOs) of 0.23%, the fourth consecutive year better than our long-term target range of 0.35% — 0.55%.

 

      Achieved Return on Tangible Common Equity (ROTCE) of 16%, above our long-term goal of 13% to 15%.

 

      Achieved all five long-term financial goals on a GAAP basis for the first time during the 2017 fourth quarter.

 

    Strong financial performance

 

      Delivered record net income for the third consecutive year.

 

      Net income of $1.2 billion represented a 67% increase over the prior year.

 

      Delivered 43% year-over-year increase in diluted earnings per common share.

 

      Increased average core deposits 23% year-over-year.

 

      Increased average total loans and leases 18% year-over-year.

 

    Increased capital return to shareholders

 

      Increased cash dividend for seventh consecutive year.

 

      Cash dividend per share of $0.35, representing a 21% year-over-year increase.

 

      Declared $379 million of cash dividends on common shares.

 

      Repurchased $260 million of common stock (19 million shares) under the 2017 CCAR capital plan.

 

    Completed the FirstMerit integration

 

      Completed all FirstMerit branch and systems conversions.

 

      Fully implemented all FirstMerit-related cost savings ($255 million annualized), including branch and corporate office consolidations and elimination of back-office redundancies.

 

      Expanded home lending, SBA lending, and RV and marine lending businesses to new markets.

 

      Delivered $48 million of revenue enhancements.

 

    Huntington earned for the first time an “Outstanding” rating from the Office of the Comptroller of the Currency (OCC), for its most recent Community Reinvestment Act (CRA) Performance Evaluation period.

 

Stephen D. Steinour — 2017 Compensation Decisions  

Base Salary Increase

     N/A  

MIP Award

   $ 2,000,000  

LTI

   $ 5,000,000  

 

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Howell D. “Mac” McCullough, Chief Financial Officer. The Compensation Committee, in determining appropriate compensation for Mr. McCullough, considered the following significant 2017 accomplishments:

 

    Achievement of long-term financial goals

 

      Achieved all five long-term financial goals (on an adjusted, non-GAAP basis) for the first time for full-year 2017.

 

      Increased fully-taxable equivalent total revenue to $4.4 billion, or 22% year-over-year growth compared to our 4% —6% annual growth goal.

 

      Delivered positive operating leverage (on an adjusted, non-GAAP basis) for the fifth consecutive year.

 

      Reduced Efficiency Ratio (on an adjusted, non-GAAP basis) to 57%, consistent with our 56% — 59% goal.

 

      Reported net charge-offs (NCOs) of 0.23%, the fourth consecutive year better than our long-term target range of 0.35% — 0.55%.

 

      Achieved Return on Tangible Common Equity (ROTCE) of 16%, above our long-term goal of 13% to 15%.

 

      Achieved all five long-term financial goals on a GAAP basis for the first time during the 2017 fourth quarter.

 

    Strong Financial Performance

 

      Delivered record net income for the third consecutive year.

 

      Net income of $1.2 billion represented a 67% increase over the prior year.

 

      Delivered 43% year-over-year increase in diluted earnings per common share.

 

      Increased average core deposits 23% year-over-year.

 

      Increased average total loans and leases 18% year-over-year.

 

    Increased capital return to shareholders

 

      Increased cash dividend for seventh consecutive year.

 

      Cash dividend per share of $0.35, representing a 21% year-over-year increase.

 

      Declared $379 million of cash dividends on common shares.

 

      Repurchased $260 million of common stock (19 million shares) under the 2017 CCAR capital plan.

 

    Completed the FirstMerit integration

 

      Completed all FirstMerit branch and systems conversions.

 

      Fully implemented all FirstMerit-related cost savings ($255 million annualized), including branch and corporate office consolidations and elimination of back-office redundancies.

 

      Expanded home lending, SBA lending, and RV and marine lending businesses to new markets.

 

      Delivered $48 million of revenue enhancements.

 

    Reengineered and simplified the annual budget process.

 

    Strong adopter of Continuous Improvement initiatives and colleague certifications.

 

    Executive sponsor of the internal women’s Business Resource Group; played a key role in the expansion of Huntington’s time-off and caregiver leave policy.

 

Howell D. “Mac” McCullough — 2017 Compensation Decisions  

Base Salary Increase

     6.6

MIP Award

   $ 800,000  

LTI

   $ 1,400,000  

 

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Paul G. Heller, Chief Technology & Operations Officer. The Compensation Committee in determining appropriate compensation for Mr. Heller considered the following significant 2017 accomplishments:

 

    Completed the FirstMerit integration.

 

    Completed all FirstMerit branch and systems conversions.

 

    Fully implemented FirstMerit-related cost savings, including branch and corporate office consolidations and elimination of back-office redundancies.

 

    Implemented increased efforts around cyber-security.

 

    Built new state of art operations center in Central Ohio while consolidating two leased facilities.

 

    Converted our credit and debit card and ATM process or to a new provider.

 

    Built two new state of art Customer Care Centers in Akron, Ohio and Flint, Michigan.

 

    Launched significant enhancements to our mobile and online access.

 

    Significantly enhanced information security and disaster recovery capabilities.

 

    Strong adopter of Continuous Improvement initiatives.

 

    Active leadership in the Columbus Collaboratory, a rapid innovation and insights partnership that focuses on delivering business value through advanced analytics and cyber security solutions.

 

Paul G. Heller — 2017 Compensation Decisions  

Base Salary Increase

     4.2

MIP Award

   $ 775,000  

LTI

   $ 1,400,000  

Helga Houston, Chief Risk Officer.  The Compensation Committee, in determining appropriate compensation for Ms. Houston, considered the following significant 2017 accomplishments:

 

   

Provided strong leadership and direction to drive the collective efforts of the organization to ensure adherence to the company’s stated risk appetite, including through the integration of FirstMerit Corporation, and to further institutionalize the company’s risk culture.

 

   

Provided strong leadership over the company’s capital planning process, including successful filing of the company’s annual capital plan, and non-objection to the company’s proposed capital actions.

 

    Increased capital return to shareholders.

 

      Increased cash dividend for seventh consecutive year.

 

      Cash dividend per share of $0.35, representing a 21% year-over-year increase.

 

      Declared $379 million of cash dividends on common shares.

 

      Repurchased $260 million of common stock (19 million shares) under the 2017 CCAR capital plan.

 

    Reported net charge-offs (NCOs) of 0.23%, the fourth consecutive year better than our long-term target range of 0.35% —0.55%.

 

    Drove enhanced focus on operations risk management controls.

 

    Ensured critical compliance and Bank Secrecy Act (BSA) / Anti-Money Laundering (AML) program delivery.

 

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    Named one of the “Top 25 Most Powerful Women in Banking” by American Banker.

 

    Substantially bolstered progress and resource allocation within cyber and information technology risk management.

 

    Strong adopter of Continuous Improvement initiatives.

 

    Executive sponsor of the African American Business Resource Group.

 

Helga S. Houston — 2017 Compensation Decisions  

Base Salary Increase

     9.1

MIP Award

   $ 700,000  

LTI

   $ 1,200,000  

Sandra E. Pierce, Private Client Group Director.  The Compensation Committee in determining appropriate compensation for Ms. Pierce considered the following significant 2017 accomplishments:

 

    Delivered 25% year-over-year increase in net income for Regional Banking and The Huntington Private Client Group.

 

    Increased total revenues for Regional Banking and The Huntington Private Client Group 13% year-over-year.

 

    Increased average total deposits for Regional Banking and The Huntington Private Client Group 12% year-over-year.

 

    Increased average total loans and leases for Regional Banking and The Huntington Private Client Group 17% year-over-year.

 

    Increased total asset under management (AUM) 8% year-over-year.

 

    Increased total trust assets 16% year-over-year.

 

    Strong adopter of Continuous Improvement initiatives.

 

    Established Regional Presidents’ council and aligned Community Advisory Boards.

 

    Named one of the “Top 25 Most Powerful Women in Banking” by American Banker.

 

Sandra E. Pierce — 2017 Compensation Decisions  

Base Salary Increase

     1.0

MIP Award

   $ 700,000  

LTI

   $ 1,100,000  

Recently Completed PSU Performance Cycles

2015 — 2017 Cycle . December 31, 2017 marked the end of the three-year performance cycle for PSU awards granted in 2015. The Compensation Committee expects to certify the results and determine the final values for these PSU awards in April 2018. The metrics for this cycle were relative TSR targeted at the 50th percentile performance for the selected peer group and return on tangible common equity targeted at 12.25% averaged over the three years, all adjusted for significant items. During the period January 1, 2015 through December 31, 2017, absolute adjusted ROTCE was above maximum performance, and relative TSR was below threshold performance.

2014 — 2016 Cycle . In April 2017, the Compensation Committee determined the final award values for the PSU awards granted in 2014, which had a three-year performance cycle that ended on December 31, 2016. These awards were paid in shares of stock reported on a Form 4 report filed for each participating executive officer. The metrics for this cycle were relative return on assets targeted at the 50th percentile performance for the selected peer group, efficiency ratio targeted at

 

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61.0% for the three years, and absolute revenue growth targeted at 3.0% annualized over the three years, all unadjusted for significant items. During the period January 1, 2014 through December 31, 2016, relative return on assets and absolute revenue growth exceeded target performance, and the efficiency ratio was between threshold and target. Final awards were equal to 123% of target.

Other Policies & Practices

Stock Ownership & Holding Requirements

The Compensation Committee first established stock ownership requirements, expressed as a number of shares, for executive officers in 2006. The Compensation Committee adopted the current value-based approach in 2016 pursuant to which executives are required to meet and maintain a dollar value of ownership based on a multiple of current salary rather than a prescribed number of shares. This approach provides a consistent measure for all executives without regard to the date an executive becomes subject to the requirements and reduces the impact of stock price fluctuations. Ownership levels are evaluated annually based on then current stock prices. The executive’s current base salary is multiplied by his or her assigned multiple and compared to current holdings, valued based on a 30-day average closing stock price. After becoming subject to the guidelines, executives generally have five years to meet their ownership levels. Thereafter, executives must continue to meet their requirements on an on-going basis. Executive officers continue to be subject to a holding requirement equal to 50% of net shares received upon the exercises of a stock option or upon the release of full value awards. This amount of shares must be held until retirement or other departure from the company. The Compensation Committee may permit a discretionary hardship exemption from the ownership and / or holding requirements, on a case-by-case basis. All NEOs currently exceed their ownership guidelines.

 

Executive

 

  

Multiple

 

    

Ownership

Guideline

 

    

 

Market Value

of Shares

Owned (1)

 

 

Steinour

 

    

 

6X

 

 

 

   $

 

6,600,000

 

 

 

   $

 

65,580,032

 

 

 

McCullough

 

    

 

3X

 

 

 

    

 

1,950,000

 

 

 

    

 

3,877,375

 

 

 

Heller

 

    

 

3X

 

 

 

    

 

1,875,000

 

 

 

    

 

4,535,270

 

 

 

Houston

 

    

 

3X

 

 

 

    

 

1,800,000

 

 

 

    

 

4,798,826

 

 

 

Pierce

 

    

 

3X

 

 

 

    

 

1,800,000

 

 

 

    

 

4,149,927

 

 

 

 

(1)   Value is based on the closing price of a share of Huntington common stock on January 31, 2018 ($16.18).

In addition to the executive officers, stock ownership requirements extends to approximately 70 additional senior managers and the shareholding requirements extend to approximately 1,150 additional colleagues

Hedging & Pledging Policies

The Compensation Committee has a policy prohibiting Huntington’s executive officers from hedging their ownership of Huntington stock, as this would be inconsistent with the goals of the compensation program. Prohibited hedging activity includes trading in financial instruments designed to hedge or offset any decrease in the market value of Huntington stock. These financial instruments include prepaid variable forward contracts, equity swaps, collars and exchange funds.

In addition, executive officers and directors are discouraged from pledging their Huntington securities, however they may pledge shares owned in excess of stock ownership guidelines with the consent of the General Counsel. Any such request, along with the General Counsel’s response, must be communicated to the Compensation Committee. None of Huntington’s executive officers or directors currently has shares of Huntington stock pledged, or had shares pledged in 2017.

 

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Annual Long-Term Incentive Award Grant Practices

The Compensation Committee may designate a grant date effective following the date of the committee action. This practice is followed in the event the trading window is closed pursuant to the company’s trading policies on the date the committee acts. Since 2012 we have granted our annual long-term incentive awards effective May 1. The exercise price for each stock option award is equal to the fair market value of a share of common stock on the grant date. Under the company’s stock plan, fair market value is generally defined as the closing price on the applicable date. We prohibit the repricing of stock options.

Recoupment / Clawback Policies

Our Recoupment / Clawback Policy is a tool for recoupment or clawback of incentive compensation in appropriate situations to the extent permitted (or required) by law and by the company’s plans, policies and agreements. Incentive Compensation subject to possible clawback or recoupment includes:

 

(a) any bonus or other cash incentive payment, including commissions, previously paid or payable, and

 

(b)

any equity compensation, vested or unvested (including without limitation, performance shares and performance share units, restricted stock and restricted stock units, and stock options), and net proceeds of any exercised or vested equity awards.

The policy is applicable to all colleagues, including the named executive officers. In general, situations that trigger a review under this policy involve behaviors or actions outside the bounds of the company’s overall risk appetite and governance structure. In determining whether to require reimbursement or forfeiture of an executive officer’s incentive compensation, the Compensation Committee shall take into account such considerations as it deems appropriate, such as the extent to which the employee’s actions or inactions were in violation of the code of conduct; whether the action or inaction could reasonably be expected to cause financial or reputational harm to the company; the egregiousness of the conduct; the tax consequences to the affected employee; and other factors as the Committee deems appropriate under the circumstances. For employees who are not executive officers, the decision to recoup or clawback incentive compensation is made by the CEO jointly with the Chief Human Resources Officer.

Specific provisions apply in the event of a financial restatement. If it is determined by the board of directors that gross negligence, intentional misconduct or fraud by an employee or former employee caused or partially caused the company to have to restate all or a portion of its financial statements, the board, in its sole discretion, may, to the extent permitted by law and the company’s benefit plans, policies and agreements, and to the extent it determined in its sole judgment that it is in the best interests of the company to do so, require repayment of a portion or all of any Incentive Compensation if (1) the amount or vesting of the Incentive Compensation was calculated based upon, or contingent on, the achievement of financial or operating results that were the subject of or affected by the restatement; and (2) the amount or vesting of the Incentive Compensation would have been less had the financial statements been correct.

Further, pursuant to Section 954 of the Dodd-Frank Act, if the company is required to restate any of its financial statements because of a material financial reporting violation, the company shall recover the amount in excess of the incentive compensation payable under the company’s restated financial statements, or such other amount required under the Dodd-Frank Act or any other applicable law or policy. The company shall recover this amount from any current or former employee who received incentive compensation during the three-year period preceding the date on which the restatement is required, or from any other individual specified in the Dodd-Frank Act.

In addition, we have included clawback provisions in incentive plans for executive officers and for all employees. For NEOs our recoupment and clawback policies include the following:

 

   

Stock Plans. We also have forfeiture and recoupment provisions in the 2015 Long-Term Incentive Plan and the proposed 2018 Long-Term Incentive Plan specific to awards under these plans. Except following a change in control event, should

 

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the Compensation Committee determine that a participant has committed a serious breach of conduct or has solicited or taken away customers or potential customers with whom the participant had contact during the participant’s employment with us, the Compensation Committee may terminate any outstanding award, in whole or in part, whether or not yet vested. If such conduct or activity occurs within three years following the exercise or payment of an award, the Compensation Committee may require the participant or former participant to repay to us any gain realized or payment received upon exercise or payment of such award. A serious breach of conduct includes, without limitation, any conduct prejudicial to or in conflict with Huntington or any securities law violations including any violations under the Sarbanes-Oxley Act of 2002. In addition, awards may be forfeited upon termination of employment for cause.

 

   

Annual Incentive Plan. The Management Incentive Plan provides that if Huntington is required to restate any of its financial statements because of a material financial reporting violation, Huntington will recover the amount in excess of the award payable under Huntington’s restated financial statements, or such other amount required under the Dodd-Frank Act. In addition, if the Compensation Committee determines that a participant took unnecessary or excessive risk, manipulated earnings, or engaged in any misconduct described in our Recoupment Policy, the Committee may terminate the participant’s participation in the plan and require repayment of any amount previously paid in accordance with the Recoupment Policy, any other applicable policies and any other applicable laws and regulations.

Benefits

Executive officers participate in the same broad-based benefit programs generally available to all employees. A limited number of additional benefits are offered to executive officers and certain other officers and are designed to represent a modest portion of total compensation. Following is a list of the additional benefits and compensation elements offered to executive officers during 2017.

Supplemental Savings: The NEOs are eligible to participate in a supplemental defined contribution plan. This plan is further discussed following the Non-Qualified Deferred Compensation 2017 table below.

Deferred Compensation: Our Executive Deferred Compensation Plan, a non-qualified plan, provides a vehicle for participants to defer receipt of cash or stock to a time when taxes may be at a more personally beneficial rate and / or to save for long-term financial needs. This plan is discussed in more detail following the Non-Qualified Deferred Compensation 2017 table below.

Perquisites: A very limited number of perquisites are utilized at Huntington; they represent a small component of compensation and are not intended to be performance-based. We offer an incurred expense reimbursement allowance for tax and financial planning to our NEOs, up to 2% of base salary per year. For the chief executive officer, we provide security monitoring of his personal residence, and for efficiency and security, use of our cars and drivers and occasional use of a corporate aircraft to which the company has access. All personal use of the corporate aircraft is in accordance with Huntington’s Aircraft Usage Policy. We also provide relocation benefits to senior level employees to facilitate transition to their new locations.

Employment Agreement: Only one executive officer, the CEO, has an employment agreement with us, which is described under “Mr. Steinour’s Employment Agreement” below.

Severance Arrangements: Huntington has change-in-control agreements, referred to as Executive Agreements, with our NEOs. The objectives of the Executive Agreements are to provide severance protections for the NEOs in the event of a qualifying termination of employment in connection with a change-in-control of Huntington and to encourage their continued employment in the event of any actual or threatened change-in-control of Huntington. The Executive Agreements are further described under “Potential Payments upon Termination or Change in Control” below.

Frozen Supplemental Pension: The CEO is a participant in the frozen pension plan (frozen on December 31, 2013) and is also a participant in a supplemental defined benefit plan that was also frozen on the same date. These plans are further discussed under the Pension Benefits 2017 table, below.

 

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Tax & Accounting Considerations

Internal Revenue Code Section 162(m) generally places a $1 million limit on the amount of compensation a publicly-traded company can deduct in any one year for certain executive officers. Historically, including when we made our 2017 compensation decisions, Code Section 162(m) contained an exception to the $1 million limit on deductibility for “performance-based” compensation. Regulations under Code Section 162(m) required several requirements to be satisfied in order for compensation to qualify as performance-based. Over the years we have worked to balance our compensation philosophy with the goal of achieving maximum deductibility under Code Section 162(m).

Our Management Incentive Plan for Covered Officers and 2015 Long-Term Incentive Plan were structured so that awards under these plans for “covered officers” may qualify as performance-based compensation deductible for federal income tax purposes under Code Section 162(m). The Compensation Committee has also reserved the right, however, with respect to any award or awards, to determine that compliance with Code Section 162(m) is not desired after consideration of the goals of Huntington’s executive compensation philosophy and whether it is in the best interests of Huntington to have such award so qualified.

The “Tax Cuts and Jobs Act” eliminates the performance-based exception under Code Section 162(m), effective for taxable years beginning after December 31, 2017, such that compensation paid to our covered executive officers (including stock options) in excess of $1 million will not be deductible unless it qualifies for transition relief that applies to compensation paid under binding contracts that were in effect as of November 2, 2017. Covered executive officers now include anyone who has ever been Huntington’s CEO, CFO or one of the three highest paid named executive officers in any fiscal year beginning after December 31, 2016. Because of the lack of regulatory and other guidance pertaining to the future interpretation of Code Section 162(m) and the new transition rule, no assurance can be given that compensation intended to qualify for Code Section 162(m)’s performance-based exception in fact will. Further, the Compensation Committee reserves the right to modify compensation that was initially intended to be exempt from Section 162(m) if it determines that such modifications are consistent with Huntington’s business needs. Huntington will continue to evaluate the impact of the elimination of the performance-based exception and the impact of the transition rule on its current and future compensation programs. In addition, the Compensation Committee may award compensation in the future that is not fully deductible under Code Section 162(m) if the Compensation Committee believes that such compensation packages will best attract, retain, and award successful executives and contribute to achievement of Huntington’s business objectives.

Huntington also takes into consideration Internal Revenue Code Section 409A with respect to non-qualified deferred compensation programs, and ASC 718, “Compensation — Stock Compensation” in administering its equity compensation program.

 

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Table of Contents

Compensation of Executive Officers

 

 

Compensation Tables

The following table sets forth the compensation paid by us and by our subsidiaries for each of the last three fiscal years ended December 31, 2017, to our principal executive officer, principal financial officer, and the three other most highly compensated executive officers serving at the end of 2017.

Summary Compensation 2017

 

Name and

Principal Position (1)

  Year     Salary     Bonus    

Stock

Awards (2)

   

Option

Awards (3)

   

Non-Equity

Incentive Plan

Compensation (4)

   

Change in

Pension Value
and

Non-Qualified

Deferred

Compensation

Earnings (5)

   

All Other

Compen-

sation (6)

    Total (7)  

Stephen D. Steinour

 

    Chairman, President

    and CEO

    2017       1,100,000           4,076,187       749,998       2,000,000       155,293       598,492       8,679,970  
    2016       1,061,538           4,122,487       726,124       2,400,000       54,953       566,510       8,931,612  
    2015       1,000,000           4,037,478       712,499       1,650,000           430,325       7,830,302  

Howell D. McCullough III

                     

    Chief Financial Officer

    and Senior Executive

    Vice President

    2017       634,615           1,141,324       210,000       800,000           138,454       2,924,393  
    2016       596,538           1,019,993       179,659       900,000           55,326       2,751,516  
    2015       565,385       200,000       934,994       164,999       675,000           71,032       2,611,410  

Paul G. Heller

                                                                       

    Chief Technology &

    Operations Officer,

    Senior Executive

    Vice President

    2017       615,385           1,141,324       210,000       775,000           136,004       2,877,713  
    2016       590,385           1,019,993       179,659       875,000           76,272       2,741,309  
    2015       565,385           934,994       164,999       630,000           85,252       2,380,630  
                                                                       

Helga S. Houston

                                                                       

    Chief Risk Officer and

    Senior Executive

    Vice President

    2017       580,769           978,275       179,997       700,000           106,647       2,545,688  
    2016       542,308           892,483       157,201       850,000           79,861       2,521,853  
    2015       518,462           849,986       149,998       575,000           60,005       2,153,451  

Sandra E. Pierce

                                                                       

    Private Client Group

    Director and Senior

    Executive Vice

    President

    2017       597,732             896,745       164,998       700,000           70,167       2,429,642  
    2016       222,789       850,000       1,750,065                   2,112,954       4,935,808  
                     
                                                                       

 

(1)  

Mr. Steinour also serves as Chairman, President and Chief Executive Officer of The Huntington National Bank. Ms. Pierce joined Huntington as Private Client Group Director and Senior Executive Vice President of The Huntington National Bank, effective upon the acquisition of FirstMerit Corporation in August 2016. She also serves as Regional Banking Director.

(2)

The amounts in this column are the grant date fair values of awards of restricted stock units and performance share units determined for accounting purposes in accordance with FASB ASC Topic 718. The performance share units are valued at target. The assumptions made in the valuation are discussed in Note 15 “Share-Based Compensation” of the Notes to Consolidated Financial Statements for our financial statements for the year ended December 31, 2017. These awards were granted on May 1, 2017.

 

    

Time-
Vesting

RSUs

    

Performance-

Based PSUs

(Target)

     Total Stock Awards  

Stephen D. Steinour

     1,749,989        2,326,198        4,076,187  

Howell D. McCullough III

     489,998        651,326        1,141,324  

Paul G. Heller

     489,998        651,326        1,141,324  

Helga S. Houston

     419,993        558,282        978,275  

Sandra E. Pierce

     384,990        511,755        896,745  

 

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Table of Contents

Compensation of Executive Officers

 

 

The grant date value of the performance share units assuming the highest level of performance is set forth below.

 

 

Dollar Value of Performance

Share Units at

Maximum Performance

Stephen D. Steinour

  $2,951,200  

Howell D. McCullough III

  826,327

Paul G. Heller

  826,327

Helga S. Houston

  708,281

Sandra E. Pierce

  649,252

 

(3)  

The amounts in this column are the grant date fair values of awards of stock options determined for accounting purposes in accordance with FASB ASC Topic 718. The assumptions made in the valuation are discussed in Note 15 “Share-Based Compensation” of the Notes to Consolidated Financial Statements for the year ended December 31, 2017.

 

Risk-Free Interest Rate

   2.04%

Expected Volatility

   29.5%

Expected Term

   6.5 years

Expected Dividend Yield

   3.31%

 

(4)  

The amounts in this column are the dollar value of annual incentive awards earned under the Management Incentive Plan for 2017. These awards will be paid in cash up to the target award amount; any amount earned in excess of target will be paid in RSUs which vest in three equal annual increments from the date of grant.

 

     2017 MIP
Award Value
     Amount Paid
in Cash
     Amount Paid
in RSUs
 

Stephen D. Steinour

     $2,000,000        $1,650,000        $350,000  

Howell D. McCullough III

     800,000        634,615        165,385  

Paul G. Heller

     775,000        615,385        159,615  

Helga S. Houston

     700,000        580,769        119,231  

Sandra E. Pierce

     700,000        597,732        102,268  

 

(5)  

The amount in this column represents the change in the actuarial present value of accumulated benefit from December 31, 2016 to December 31, 2017, under two defined benefit pension plans: the Retirement Plan and the Supplemental Retirement Income Plan, referred to as the SRIP. These plans were closed to new hires after December 31, 2009 and were frozen as of December 31, 2013. Benefits are based on levels of compensation and years of credited service as of December 31, 2013. The valuation method used to determine the present values, and all material assumptions applied, are discussed in Note 16 “Benefit Plans” of the Notes to Consolidated Financial Statements for the fiscal year ended December 31, 2017. The change in present value for Mr. Steinour under each plan is detailed below. None of the other named executive officers are eligible to participate in these plans as they were hired after participation was closed to new hires. Additional detail about these plans is set forth in the discussion following the table of Pension Benefits 2017 below. There were no above-market or preferential earnings on non-qualified deferred compensation.

 

    

Change in Present Value

Retirement Plan

    

Change in Present Value

SRIP

    

Total Change

in Present Value

 

Stephen D. Steinour

     $13,151        $142,142        $155,293  

 

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Table of Contents

Compensation of Executive Officers

 

 

 

(6)  

All other compensation as reported in this column includes: our contributions to the Huntington Investment and Tax Savings Plan, a defined contribution plan, referred to as the 401(k) Plan, and our Supplemental Stock Purchase and Tax Savings Plan and Trust; perquisites and personal benefits valued at incremental cost to us; premiums for group term life insurance; and dividends paid on vesting of previously awarded RSUs. These amounts are detailed below.

 

   

Amounts

Contributed

to 401(k)

Plan ($)

   

Amounts

Contributed

to

Supplemental

Plan ($)

   

Perquisites

and

Personal

Benefits ($)

   

Group Term

Life

Insurance ($)

   

Dividends Paid

Upon Vesting

Event ($)

   

Total All Other

Compensation ($)

 

Stephen D. Steinour

    10,800       30,462       169,625       396       387,209       598,492  

Howell D. McCullough III

    10,800       17,877           396       109,381       138,454  

Paul G. Heller

    10,800       17,231       12,500       396       95,077       136,004  

Helga S. Houston

    10,800       12,000           396       83,451       106,647  

Sandra E. Pierce

    10,800       15,994       18,815       396       24,162       70,167  

In the ordinary course of business, Huntington maintains a number of automobiles and has access to a corporate aircraft as needed to provide efficient and secure business transportation for senior management. When it is not otherwise needed for business travel, a corporate aircraft may be available to Mr. Steinour for personal usage given the constraints of commercial flight arrangements, en route work requirements, travel or work schedules or other circumstances burdensome on time and the potential security risks for the company. The incremental cost to Huntington for personal use of a plane by Mr. Steinour during 2017 was based on an hourly rate and totaled $138,213, consisting of variable charges for crew, landing and parking, fuel and oil, radio maintenance and repairs, supplies, and outside services. For efficiency and security Mr. Steinour is also permitted personal use of the automobiles, driven by Huntington security personnel, including for commuting, which permits him to work while traveling. The incremental cost of this usage to Huntington for 2017 was based on a rate per mile for fuel and maintenance and overtime costs for the drivers. Other perquisites and personal benefits for Mr. Steinour consisted of financial planning and security monitoring of his personal residence. Perquisites and personal benefits for Mr. Heller consisted of financial planning. For Ms. Pierce, perquisites and personal benefits consisted of financial planning and reimbursement for three days of unused paid time off pursuant to a transition program for legacy FirstMerit colleagues, consistent with FirstMerit Corporation policy. The perquisites and personal benefits for Mr. McCullough and Ms. Houston were zero or did not exceed $10,000 and are not included.

(7)  

This column shows the total of all compensation for the fiscal year as reported in the other columns of this table.

The table below sets forth potential opportunities for annual cash incentive awards under the Management Incentive Plan for Covered Officers and awards of RSUs, PSUs and stock options for 2017.

 

54   Huntington Bancshares Incorporated Notice of the Annual Meeting and 2018 Proxy Statement


Table of Contents

Compensation of Executive Officers

 

 

Grants of Plan-Based Awards 2017

 

 

Name

 

 

Grant

Date

 

   

Date of

Board or

Committee

Action

 

   

Estimated Possible

Payouts Under

Non-Equity Incentive

Plan Awards (1)

 

   

Estimated Future

Payouts Under

Equity Incentive

Plan Awards (2)

 

   

 

All Other

Stock

Awards:

Number of
Shares of
Stock or

Units

(#) (3)

 

   

 

All Other

Option

Awards:

Number of

Securities

Underlying

Options

(#) (4)

 

   

Exercise
or Base
Price of
Option

Awards
($/Sh)
(5)

 

   

 

Grant
Date

Fair
Value of
Stock
and
Option

 
     

 

Threshold

($)

 

   

 

Target

($)

 

   

 

Maximum

($)

 

   

 

Threshold

(#)

 

   

 

Target

(#)

 

   

 

Maximum

(#)

 

         

Awards

($) (6)

 

 

 

Steinour

                                             

 

Annual Incentive

 

                   

 

825,000

 

 

 

   

 

1,650,000

 

 

 

   

 

3,300,000

 

 

 

                                                       

 

PSUs

 

   

 

5/1/2017

 

 

 

   

 

4/19/2017

 

 

 

                           

 

95,493

 

 

 

   

 

190,985

 

 

 

   

 

286,478

 

 

 

                           

 

2,326,198

 

 

 

 

Options

 

   

 

5/1/2017

 

 

 

   

 

4/19/2017

 

 

 

                                                           

 

266,903

 

 

 

   

 

13.09

 

 

 

   

 

749,998

 

 

 

 

RSUs

 

   

 

5/1/2017

 

 

 

   

 

4/19/2017

 

 

 

                                                   

 

133,689

 

 

 

                   

 

1,749,989

 

 

 

 

McCullough

 

                                             

 

Annual Incentive

 

                   

 

317,308

 

 

 

   

 

634,615

 

 

 

   

 

1,269,231

 

 

 

                                                       

 

PSUs

 

   

 

5/1/2017

 

 

 

   

 

4/19/2017

 

 

 

                           

 

26,738

 

 

 

   

 

53,475

 

 

 

   

 

80,213

 

 

 

                           

 

651,326

 

 

 

 

Options

 

   

 

5/1/2017

 

 

 

   

 

4/19/2017

 

 

 

                                                           

 

74,733

 

 

 

   

 

13.09

 

 

 

   

 

210,000

 

 

 

 

RSUs

 

   

 

5/1/2017

 

 

 

   

 

4/19/2017

 

 

 

                                                   

 

37,433

 

 

 

                   

 

489,998

 

 

 

 

Heller

 

                                             

 

Annual Incentive

 

                   

 

307,692

 

 

 

   

 

615,385

 

 

 

   

 

1,230,769

 

 

 

                                                       

 

PSUs

 

   

 

5/1/2017

 

 

 

   

 

4/19/2017

 

 

 

                           

 

26,738

 

 

 

   

 

53,475

 

 

 

   

 

80,213

 

 

 

                           

 

651,326

 

 

 

 

Options

 

   

 

5/1/2017

 

 

 

   

 

4/19/2017

 

 

 

                                                           

 

74,733

 

 

 

   

 

13.09

 

 

 

   

 

210,000

 

 

 

 

RSUs

 

   

 

5/1/2017

 

 

 

   

 

4/19/2017

 

 

 

                                                   

 

37,433

 

 

 

                   

 

489,998

 

 

 

 

Houston

 

                                             

 

Annual Incentive

 

                   

 

290,385

 

 

 

   

 

580,769

 

 

 

   

 

1,161,538

 

 

 

                                                       

 

PSUs

 

   

 

5/1/2017

 

 

 

   

 

4/19/2017

 

 

 

                           

 

22,918

 

 

 

   

 

45,836

 

 

 

   

 

68,754

 

 

 

                           

 

558,282

 

 

 

 

Options

 

   

 

5/1/2017

 

 

 

   

 

4/19/2017

 

 

 

                                                           

 

64,056

 

 

 

   

 

13.09

 

 

 

   

 

179,997