Proxy Statement

The Board of Directors of KeyCorp (“Key,” the “Company,” “our,” “us” or “we”) is furnishing you with this proxy statement to solicit shareholder proxies to be voted at the 2019 Annual Meeting of Shareholders to be held on May 23, 2019 (the “Annual Meeting”), and at all postponements and adjournments thereof. The 2019 Annual Meeting will be held at One Cleveland Center, 1375 East Ninth Street, Cleveland, Ohio 44114.

The mailing address of our principal executive office is 127 Public Square, Cleveland, Ohio 44114. KeyCorp employs the cost-effective and environmentally-conscious “notice and access” delivery method. This allows us to give our shareholders access to a full set of our proxy materials online. Beginning on or about April 8, 2019, we will send to most of our shareholders, by mail or e-mail, a notice explaining how to access our proxy materials and vote online. This notice is not a proxy card and cannot be used to vote your shares. On or about April 8, 2019, we will also begin mailing paper copies of our proxy materials to shareholders who have requested them.

All record holders of KeyCorp common shares at the close of business on Friday, March 29, 2019, are entitled to vote. On that date, there were 1,001,555,441 KeyCorp common shares outstanding. Holders of KeyCorp common shares are entitled to one vote for each share held of record.

 

              

 

 

Proxy Statement Summary

This summary contains highlights of information contained elsewhere in our proxy statement and does not contain all of the information that you should consider. Please read the entire proxy statement before you vote.

Proposals for the Annual Meeting

 

 

Proposal		Page		Board  Recommendation
1.  Election of Directors You are being asked to elect 14 directors. Each of the nominees is standing for election to hold office until the 2020 Annual Meeting of Shareholders.		1		“FOR” each nominee
2.  Auditor Ratification You are being asked to ratify the Audit Committee’s appointment of Ernst & Young LLP as our independent auditor for fiscal year 2019. One or more representatives of Ernst & Young LLP will be present at the meeting to respond to appropriate questions from shareholders.		56		“FOR”
3.  Say-on-Pay You are being asked to give advisory approval of compensation paid to KeyCorp’s Named Executive Officers (as defined on page 24 of this proxy statement). This advisory vote is held on an annual basis.		57		“FOR”
4.  KeyCorp’s 2019 Equity Compensation Plan You are being asked to approve KeyCorp’s 2019 Equity Compensation Plan for KeyCorp’s employees and nonemployee directors. A copy of the 2019 Equity Compensation Plan is attached to this proxy statement as Appendix A.		58		“FOR”
5.  Increase Number of Authorized Common Shares You are being asked to approve an amendment to KeyCorp’s Articles of Incorporation to increase the number of authorized common shares.		68		“FOR”
6.  Authorize Board of Directors to Make Future Amendments to the Regulations You are being asked to approve an amendment to KeyCorp’s Regulations which would allow KeyCorp’s Board of Directors to make future amendments to KeyCorp’s Regulations.		70		“FOR”

2019 Director Nominees

 

 

Name

Age

Director Since

Independent

Committee Memberships

Audit

C&O

NCGC

Risk

Executive

Bruce D. Broussard

56

2015

Yes

✓

Charles P. Cooley

63

2011

Yes

Chair

✓

✓

Gary M. Crosby

64

2016

No

Alexander M. Cutler (1)

67

2000

Yes

✓

Chair

✓

H. James Dallas

60

2005

Yes

✓

Elizabeth R. Gile

63

2010

Yes

✓

Chair

Ruth Ann M. Gillis

64

2009

Yes

✓

William G. Gisel, Jr.

66

2011

Yes

Chair

✓

Carlton L. Highsmith

67

2016

Yes

✓

✓

Richard J. Hipple

66

2012

Yes

✓

Kristen L. Manos

59

2009

Yes

✓

✓

Beth E. Mooney

64

2010

No

Chair

Barbara R. Snyder

63

2010

Yes

✓

✓

David K. Wilson

64

2014

Yes

✓

(1)	Serves as KeyCorp’s independent Lead Director.

 

				i

Proxy Statement Summary

 

 

Voting Your Shares

 

 

Who May Vote:		Voting Online:		Voting by Telephone:
Shareholders of record as of the close of business on March 29, 2019.		Registered holders can go to www.envisionreports.com/key and follow the instructions. If you hold your shares in street name, please follow the instructions found on your voting instruction form.		Follow the instructions in the Notice of Internet Availability of Proxy Materials or on your proxy card.

 

Voting by Mail:		Voting in Person:
Complete, sign, and date the proxy card and return it in the envelope that was provided in the proxy statement mailing package.		If you choose to attend the Annual Meeting in person, you will be asked to present photo identification and proof that you own KeyCorp common shares before entering the meeting. If you want to vote shares that you hold in street name in person at the Annual Meeting, you must bring a legal proxy in your name from the broker, bank, or other nominee that holds your shares.

 

2018 Performance Highlights

 

We marked another successful year for Key in 2018, as we continued to grow the company, invest for our future, and deliver on our financial commitments. Building on our momentum over the past several years, we improved our operating performance and drove stronger returns for our shareholders, while maintaining strong discipline around credit quality and capital management.

We achieved our sixth consecutive year of positive operating leverage, with revenue growth once again outpacing the increase in expenses. The combination of record revenue levels and strong expense discipline drove meaningful improvement in our long-term financial targets, including a 300 basis point improvement in both our cash efficiency and return on average tangible common equity ratios for the year. ⁽¹⁾

Highlights from our 2018 performance are detailed below:

 

Driving Stronger         Returns		•     6 th consecutive year of positive operating leverage •    Record full-year revenue of $6.4 billion •    All-time highs in several fee-based businesses, including investment banking and debt placement fees ($650 million in fiscal year 2018) •    Loan and deposit growth reflect execution of relationship-based business model within moderate risk profile •    Well-managed expenses reflect focus on efficiency and investments for growth   •     Growth in both consumer and commercial relationships across the franchise   •     Significant progress on long-term financial targets •    More than 300 basis point improvement in cash efficiency and return on average tangible common equity ratios (1) •    Progress on $200 million cost savings initiative announced in October 2018
Strong Risk         Management		•     Steadfast commitment to maintaining moderate risk profile and strong underwriting standards   •     Net charge-offs to average loans of 0.26%; portfolios continued to perform well
Disciplined Capital         Management		•     Maintained strong capital position   •     Common share dividend increased 62% ($0.105 to $0.17 per common share) in 2018   •     $1.1 billion in common share repurchases in 2018

 

(1)	Non-GAAP financial measures. Please see the section entitled “GAAP to Non-GAAP Reconciliations” beginning on page 80 of our 2018 Annual Report on Form 10-K for more information on these non-GAAP measures and reconciliations to the most comparable GAAP measures.

 

ii

Proxy Statement Summary

 

 

Executive Compensation Highlights

 

The objectives of our executive compensation program are to:

 

•

Make pay decisions based on performance of the Company, the business unit, and the individual;

 

•

Deliver pay in a way that reinforces focus on balancing short- and long-term financial performance objectives; and

 

•

Support sustainable performance with policies that are focused on prudent risk-taking and the balance between risk and reward.

We manage to total pay opportunity (i.e., the sum of base salary and incentives), rather than making separate decisions on each element of pay, for each executive officer.

We support our compensation program with a number of best practices in governance and executive compensation, including the following:

 

What We Do:		What We Don’t Do:
✓  Impose robust stock ownership guidelines   ✓  Subject shares to post-vesting holding period   ✓  “Double trigger” change of control agreements   ✓  Use tally sheets   ✓  Review share utilization   ✓  Retain an independent compensation consultant   ✓  Subject all incentives to risk adjustment and clawback		×    No employment agreements for executive officers   ×    No tax gross-ups   ×    No active SERPs   ×    No hedging or pledging of KeyCorp securities   ×    No “timing” of equity grants   ×    No repricing of stock options

2018 was a successful year for KeyCorp. We continue to grow, invest for our future, and deliver on our financial commitments. We continue to deliver results and drive shareholder returns through sound profitable growth across our franchise, while effectively managing risk and capital. We believe that our distinctive business model, targeted scale, and focused execution position us to outperform. Our 2018 compensation highlights include:

 

What we did…		How we delivered…
We delivered on our short-term financial plan.		•    The KeyCorp 2018 Annual Incentive Plan performed at 105% based on the achievement of our short-term financial goals, although we opted to limit awards to Named Executive Officers to 100% of funding.
We achieved our long-term financial performance targets.		•    The 2016-2018 Long-Term Incentive Plan (performance awards) performed at 98.1% of target as our Return on Assets was above the 50th percentile of our Peer Group and Cumulative Earnings per Share exceeded our three-year financial plan, although results were offset by our total shareholder return, which fell short of the 50th percentile of our peer group.   •    The payout under the 2016-2018 Long-Term Incentive Plan (performance awards) also reflected significant share price appreciation from 2016-2018 (grant date share price of $10.49 and settlement date share price of $17.51.)
Our Chief Executive Officer was awarded $10.08 million in total direct compensation for our performance for 2018.		•    2018 compensation of our Chief Executive Officer included a $2.50 million annual incentive paid for 2018 and a $6.38 million long-term incentive granted in 2019.

 

				iii

Proxy Statement Summary

 

 

Corporate Governance Practices

 

We are committed to meeting high standards of ethical behavior, corporate governance, and business conduct. Some of our corporate governance best practices include:

 

Director Elections		•     Annual elections for all directors (page 1)   •     Majority voting in uncontested elections (page 3)

 

Board Independence		•     All director nominees, other than Ms. Mooney and Mr. Crosby, are independent under the New York Stock Exchange’s and KeyCorp’s standards of independence (page 16)   •     Our standing Board committees (Audit, Compensation and Organization, Nominating and Corporate Governance, and Risk) consist solely of independent directors (page 11)   •     Independent Lead Director—Alexander M. Cutler—with extensive responsibilities (page 11)   •     Annual Lead Director evaluation and review of Board leadership structure by independent directors (pages 11 and 12)   •     Prior approval from the Lead Director of the Board agenda, schedule, and materials (page 11)

 

Standing Board Committees		•    Audit Committee		14 meetings in 2018		(page 13)
		•    Compensation and Organization Committee		7 meetings in 2018		(page 14)
		•    Nominating and Corporate Governance Committee		6 meetings in 2018		(page 13)
		•    Risk Committee		8 meetings in 2018		(page 14)

 

Practices and Policies		•     Experienced, diverse Board membership   •     Commitment to Board refreshment, with an average tenure of approximately seven years and three new directors added since 2015 (page 11)   •     Independent and non-management members of the Board met in executive session at every regular 2018 Board meeting (page 12)   •     Approximately 96% average attendance by directors at Board and committee meetings (page 12)   •     Annual self-assessments conducted by the Board, each committee, and each director   •     Strong Board leadership in the oversight of enterprise risk (pages 15 and 16)   •     Annual disclosure of KeyCorp political spending (page 19)   •     Strong director education program (page 18)

 

Shareholder Engagement		•     Active shareholder engagement program (pages 17 and 18)   •     Directors are available to meet with our shareholders

For a more detailed discussion concerning KeyCorp’s corporate governance practices, please refer to the section entitled “The Board of Directors and Its Committees” beginning on page 11 of this proxy statement.

 

iv

              

 

 

Table of Contents

 

PROPOSAL ONE: Election of Directors			1
Director Recruitment and Qualifications			1
Election Process			3
2019 Nominees for Director			3
The Board of Directors and Its Committees			11
Board Leadership Structure			11
Board and Committee Responsibilities			12
Board Oversight of Risk			15
Oversight of Compensation-Related Risks			15
Director Independence			16
Related Party Transactions			16
Shareholder Engagement			17
Director Education			18
Communication with the Board			18
Corporate Governance Documents			19
Corporate Governance Guidelines			19
Code of Ethics			19
Statement of Political Activity			19
Corporate Responsibility Report			19
Ownership of KeyCorp Equity Securities			20
Executive Officer and Director Equity Ownership Guidelines			22
Pledging and Speculative Trading of KeyCorp Securities			22
Section 16(a) Beneficial Ownership Reporting Compliance			22
Equity Compensation Plan Information			22
Compensation Discussion and Analysis			24
Table of Contents			24
Overview of 2018 Performance			24
Objectives of Our Compensation Program			24
Elements of Our Pay Program			27
Total Pay of Our Named Executive Officers			31
Alignment of Pay and Performance			33
Other Elements of Compensation			34
How We Make Pay Decisions			35
Compensation and Organization Committee Report			38
Compensation of Executive Officers and Directors			39
2018 Summary Compensation Table			39
2018 Grants of Plan-Based Awards Table			41
2018 Outstanding Equity Awards at Fiscal Year-End Table			42

Compensation of Executive Officers and Directors (cont.)
2018 Option Exercises and Stock Vested Table			44
2018 Pension Benefits Table			45
2018 Nonqualified Deferred Compensation Table			46
Potential Payments Upon Termination or Change of Control			47
2018 Post-Termination Tables			48
Pay Ratio			50
Directors’ Compensation			51
2018 Director Compensation Table			52
Audit Matters			54
Ernst & Young’s Fees			54
Pre-Approval Policies and Procedures			54
Audit Committee Report			55
PROPOSAL TWO: Ratification of Independent Auditor			56
PROPOSAL THREE: Advisory Approval of KeyCorp’s Executive Compensation			57
PROPOSAL FOUR: Approval of KeyCorp’s 2019 Equity Compensation Plan			58
PROPOSAL FIVE: Approval of an Amendment to KeyCorp’s Articles of Incorporation to Increase the Number of Authorized Common Shares			68
PROPOSAL SIX: Authorize Board of Directors to Make Future Amendments to the Regulations			70
General Information about the Annual Meeting			72
Matters to Be Presented			72
How Votes Will Be Counted			72
Revoking a Proxy			72
Cost of Proxy Solicitation			72
Attending the Annual Meeting			73
Additional Information			74
Proxy Statement Proposals for the 2020 Annual Meeting of Shareholders			74
Other Proposals and Director Nominations for the 2020 Annual Meeting of Shareholders			74
Eliminating Duplicative Proxy Materials			74
Annual Report			74
Appendix A: KeyCorp’s 2019 Equity Compensation Plan			A-1

 

				v

PROPOSAL ONE: Election of Directors

 

 

PROPOSAL ONE: Election of Directors

Our Board of Directors (the “Board”), elected by KeyCorp’s shareholders, oversees the business and management of KeyCorp. Members of the Board monitor and evaluate KeyCorp’s business performance through regular communication with the Chief Executive Officer and senior management and by participating in Board and Board committee meetings. The Board is committed to sound and effective corporate governance policies and high ethical standards. The size of the Board is fixed at 14 members. Under KeyCorp’s Regulations, directors are elected to one-year terms expiring at each subsequent Annual Meeting of Shareholders.

Director Recruitment and Qualifications

 

The Nominating and Corporate Governance Committee is responsible for identifying, evaluating, and recommending to the Board a slate of nominees for election at each Annual Meeting of Shareholders. All director nominees must have a record of high integrity and other requisite personal characteristics and must be willing to make the time commitment required of directors. The Nominating and Corporate Governance Committee uses the following criteria when evaluating director nominee candidates:

 

•

demonstrated breadth and depth of management and/or leadership experience, preferably in a senior leadership role with a large or recognized organization (private sector (profit or nonprofit), governmental, or educational);

 

•

a high level of professional or business expertise relevant to KeyCorp (including, among others, information technology, marketing, finance, banking or the financial industry, or risk management);

 

•

in the case of non-employee directors, satisfaction of the “independence” criteria set forth in KeyCorp’s Standards for Determining Independence of Directors;

 

•

service as a director for not more than (i) two other public companies if he or she is a senior executive officer of a public company, or (ii) three other public companies if he or she is not a senior executive officer of a public company; and

 

•

the ability to think and act independently, as well as the ability to work constructively in the overall Board process.

The criteria used in director recruitment are flexible guidelines to assist in evaluating and focusing the search for director candidates.

The Board also considers whether the candidate would enhance the diversity of the Board in terms of gender, race, experience, and/or geography. The current composition of the Board reflects the Nominating and Corporate Governance Committee’s focus in this area and the importance of diversity to the Board as a whole, with five female directors, including the Chairman of our Board, and two minority directors.

In evaluating Board nominees who satisfy the above criteria, the committee also considers:

 

•

the skills and business experience currently needed for the Board by using a comprehensive skills matrix;

 

•

the current and anticipated composition of the Board in light of the business activities and strategic direction of KeyCorp and the diverse communities and geographies served by KeyCorp; and

 

•

the interplay of the candidate’s expertise and professional/business background in relation to the expertise and professional/business background of current Board members, as well as such other factors (including diversity) as the committee deems appropriate.

The Chair of the Nominating and Corporate Governance Committee extends an invitation to join the Board as a first-time director or to stand for election as a first-time nominee for director after discussion with and approval by the committee as a whole. The Nominating and Corporate Governance Committee then recommends the candidate to the entire Board for final approval.

The Nominating and Corporate Governance Committee retains an independent search firm to assist with identifying director candidates. The Nominating and Corporate Governance Committee has the sole authority to retain and terminate any search firm used to identify director candidates, including sole authority to approve its fees and the other terms of its engagement.

 

 

				1

PROPOSAL ONE: Election of Directors

 

 

The Nominating and Corporate Governance Committee utilizes a matrix approach that tracks each director’s and director nominee’s qualities and qualifications in a tabular format to assist the committee in maintaining a well-rounded, diverse, and effective Board. In addition, the matrix approach helps the Nominating and Corporate Governance Committee identify any qualities, qualifications, and experience for potential director nominees that would help improve the composition of and add value to the Board. The Nominating and Corporate Governance Committee seeks directors who have held leadership positions in public companies and have experience in the banking or financial industry, cybersecurity, finance, marketing, mergers and acquisitions, regulatory matters, retail and small business, and risk management. The chart below describes the qualifications and experience of our non-management directors who currently serve on the Board:

 

 

The Nominating and Corporate Governance Committee is continually in the process of identifying potential director candidates, and individual Board members are encouraged to submit any potential nominee to the Chair of the Nominating and Corporate Governance Committee. Shareholders may also submit potential director nominees by providing appropriate prior written notice to the Secretary of KeyCorp. The Nominating and Corporate Governance Committee will consider suggestions by shareholders concerning qualified candidates for election as directors. Page 74 of this proxy statement includes important information for shareholders who intend to submit a director nomination for the 2020 Annual Meeting of Shareholders.

 

2

PROPOSAL ONE: Election of Directors

 

 

Election Process

 

KeyCorp has adopted a majority voting standard in uncontested elections of directors and plurality voting in contested elections. In an uncontested election, a nominee must receive a greater number of votes “FOR” than “AGAINST” his or her election. If an uncontested nominee who is already a director receives more “AGAINST” votes than “FOR” votes, that director nominee will continue to serve as a “holdover director,” but must submit to the Board an offer to resign as a director. The Nominating and Corporate Governance Committee will consider the holdover director’s resignation and will submit a recommendation to accept or reject the resignation to the Board. The Board (excluding the holdover director) will act on the committee’s recommendation and publicly disclose its decision.

2019 Nominees for Director

 

Upon the recommendation of the Nominating and Corporate Governance Committee, the Board has nominated the individuals identified on the following pages for election as directors. Each nominee is currently a director of KeyCorp. Biographical information for each nominee is provided as of the most recent practicable date. The Board believes that the qualifications and experience of the director nominees, as described below, will continue to contribute to an effective and well-functioning Board. The Board and the Nominating and Corporate Governance Committee believe that the directors, individually and as a whole possess the necessary qualifications to provide effective oversight of KeyCorp’s business, as well as quality advice and counsel to KeyCorp’s management.

If elected, each nominee will continue to serve as a director until KeyCorp’s 2020 Annual Meeting of Shareholders or until his or her successor is duly elected and qualified or he or she resigns or is otherwise removed. There is no reason to believe that any of these director nominees will be unable or unwilling to serve if elected. Should any nominee be unable to accept nomination or election, the proxies may be voted for the election of a substitute nominee recommended by the Board. Alternatively, the Board may recommend a shareholder vote holding the position vacant, to be filled by the Board at a later date.

 

The Board of Directors unanimously recommends that shareholders vote “ FOR ” each of the following director nominees.

 

Bruce D. Broussard
Age: 56   Director Since: 2015   KeyCorp Committee(s): •   Compensation and Organization		Biography:   Mr. Broussard is President and Chief Executive Officer and a director of Humana, Inc., a publicly-held health and well-being company. Prior to his election as Humana’s Chief Executive Officer in 2013 and as President in 2011, Mr. Broussard held numerous senior executive and senior financial roles with McKesson Corporation, a health care services company, and its predecessor U.S. Oncology. Mr. Broussard also previously served as a director of U.S. Physical Therapy, Inc. from 1999 to 2011. Mr. Broussard is a member of The Business Council and the World Economic Forum Health Governors Board.
		Select Qualifications and Experience:   •  Significant executive leadership experiences in the highly-regulated healthcare and insurance industries, including Chief Executive and Chief Financial Officer roles with Humana, McKesson Corporation, Harbor Dental, Inc., Sun Healthcare Group, Inc., and Regency Health Services, Inc.   •  Extensive financial and accounting background with healthcare and health insurance companies and major global accounting firms.
		Other Public Directorships:   •     Humana, Inc. (since 2013)

 

				3

PROPOSAL ONE: Election of Directors

 

 

 

 

Charles P. Cooley
Age: 63   Director Since: 2011   KeyCorp Committee(s): •   Audit (Chair)   •   Nominating and Corporate Governance   •   Executive		Biography:   Mr. Cooley was Chief Financial Officer of The Lubrizol Corporation, a manufacturer of specialty chemicals and technologies in the global transportation, industrial, and consumer markets, from 1998 until his retirement in 2011. Mr. Cooley had global responsibility for The Lubrizol Corporation’s finance function and its corporate development and strategic planning activities. Mr. Cooley is Chair of the board of trustees of Hawken School in Cleveland and a trustee of the Cleveland Institute of Music. He is also a member of the board of directors of KeyBank National Association.
		Select Qualifications and Experience:   •     Former Chief Financial Officer of The Lubrizol Corporation, where he was responsible for finance, accounting, and capital planning. Held finance positions of increasing responsibility at Atlantic Richfield Company for over fifteen years, including treasury, capital markets, corporate development, financial reporting, and operating segment financial management. Mr. Cooley qualifies as an “audit committee financial expert” as defined by the Securities and Exchange Commission.   •     As Chief Financial Officer of The Lubrizol Corporation, had significant responsibility for financial risk management of a global publicly-traded enterprise.
		Other Public Directorships:   •     Modine Manufacturing Company (since 2006)

 

Gary M. Crosby
Age: 64   Director Since: 2016		Biography:   Mr. Crosby joined the Board in August 2016 in connection with the First Niagara merger. Mr. Crosby served as President and Chief Executive Officer and as a director of First Niagara from 2013 through the consummation of the merger. He joined First Niagara as Chief Administrative Officer in 2009 and served as Chief Operating Officer from 2010-2013. In 2004, Mr. Crosby was asked to help the Buffalo City School District as Chief Financial Officer and Chief Operating Officer and provided his service to the district by spearheading its financial management reform until 2009. Mr. Crosby also was a venture capital partner with Seed Capital Partners and a founding shareholder of ClientLogic Corporation, serving as Chief Financial and Chief Operating Officer. He has also held senior financial leadership positions in banking and manufacturing and was a CPA with KPMG Peat Marwick. Mr. Crosby is President of the board of First Niagara Foundation, director of the Buffalo Public Schools Foundation, Trustee Emeritus of the YMCA Buffalo Niagara, director of the Community Foundation for Greater Buffalo, a director of AAA Western and Central New York, and a director of Kaleida Health.
		Select Qualifications and Experience:   •     As former Chief Executive Officer of First Niagara, brings extensive knowledge of the First Niagara businesses and the geographic markets in which First Niagara operated as well as leadership experience in the banking industry.   •     Significant experience in financial management, accounting, operations, risk management, mergers and acquisitions, and integration of acquired companies from a distinguished career as Chief Financial Officer, Chief Operating Officer, and Chief Executive Officer across a wide variety of industries and public companies.

 

4

PROPOSAL ONE: Election of Directors

 

 

 

 

Alexander M. Cutler
Age: 67   Director Since: 2000   KeyCorp Committee(s): •   Nominating and Corporate Governance (Chair)   •   Compensation and Organization   •   Executive		Biography:   Mr. Cutler is KeyCorp’s independent Lead Director. From 2000 through May of 2016, he was Chairman and Chief Executive Officer of Eaton Corporation plc, a publicly-held, global diversified power management company with approximately 96,000 employees that sells products to customers in more than 175 countries. He is a member of the board of directors of the United Way of Greater Cleveland and the Musical Arts Association.
		Select Qualifications and Experience:   •     Experience across a wide range of senior management and executive roles with Eaton Corporation plc and certain of its predecessor companies. Significant corporate governance experience and public company board experience through his role as Chairman of Eaton Corporation plc, his service on the DowDuPont Inc. board, and as a former member of the Executive Committee of the Business Roundtable.   •     Extensive experience negotiating and completing acquisitions and divestitures and integrating acquired companies gained through leadership positions with Eaton Corporation plc.
		Other Public Directorships:   •    DowDuPont Inc. (since 2008)   •    Eaton Corporation plc (2000–2016)

 

H. James Dallas
Age: 60   Director Since: 2005   KeyCorp Committee(s): •  Audit		Biography:   In 2013, Mr. Dallas retired as Senior Vice President of Quality and Operations at Medtronic Inc., a global medical technology company. Mr. Dallas, who joined Medtronic Inc. in 2006, had previously served as Senior Vice President and Chief Information Officer at Medtronic Inc. Mr. Dallas’s responsibilities included executing cross-business initiatives to maximize the company’s global operating leveraging. Mr. Dallas also served as a member of Medtronic Inc.’s executive management team. Mr. Dallas is an independent consultant focusing on change management, information technology strategy, and risk. He also serves as Chairman of the Atlanta Community Food Bank and a director of Grady Memorial Hospital Corporation.
		Select Qualifications and Experience:   •     Significant experience with information technology, information technology security, and data privacy, including prior service as the Chief Information Officer of Medtronic Inc. and, prior to that, as Chief Information Officer of Georgia-Pacific Corporation.   •     As Chief Information Officer for major public corporations, had primary responsibility for risks related to information technology and security. As Senior Vice President of Quality and Operations with Medtronic Inc., held significant responsibility for operational risk management.
		Other Public Directorships:   •    WellCare Health Plans, Inc. (since 2016)   •    Strategic Education, Inc. (formerly Cappella Education Company) (since 2015)

 

				5

PROPOSAL ONE: Election of Directors

 

 

 

 

Elizabeth R. Gile
Age: 63   Director Since: 2010   KeyCorp Committee(s): •   Risk (Chair) •   Nominating and Corporate Governance		Biography:   In 2005, Ms. Gile retired from Deutsche Bank AG where she was Managing Director and the Global Head of the Loan Exposure Management Group since 2003. From 2007 to 2009, Ms. Gile was Managing Director and Senior Strategic Advisor to BlueMountain Capital Management, a hedge fund management company. Ms. Gile has been a director of Deutsche Bank Trust Corporation and Deutsche Bank Trust Company Americas since 2005 and a director of Watford Re Ltd. since 2017. Ms. Gile is a trustee and Secretary of the board of the Brooklyn Botanic Garden.
		Select Qualifications and Experience:   •     A distinguished career in the banking, finance, and capital markets industries with leading global financial institutions. Significant roles with J.P. Morgan, Deutsche Bank AG, and Toronto Dominion Securities managing loan portfolios, capital markets, derivatives and corporate lending transactions, and credit research.   •     As Global Head of the Loan Exposure Management Group for Deutsche Bank AG, had global responsibility for managing the credit risk of loans and lending-related commitments, giving her experience in identifying, assessing, and managing risk exposures of a large, complex financial firm.

 

Ruth Ann M. Gillis
Age: 64   Director Since: 2009   KeyCorp Committee(s): •  Risk		Biography:   From 2008 until her retirement in 2014, Ms. Gillis served as Executive Vice President and Chief Administrative Officer of Exelon Corporation, a publicly-held electric utility company. Ms. Gillis also served as President of Exelon Business Services Company, a subsidiary of Exelon Corporation. She served as a member of Exelon Corporation’s executive committee, pension investment committee, and the corporate risk management committee, and was a member of the Exelon Foundation Board. Prior to those roles, she served as Executive Vice President of Commonwealth Edison Company and as Chief Financial Officer of Exelon Corporation. Ms. Gillis is an honorary trustee of the University of Chicago Cancer Research Foundation, serves on the board of directors of the Lyric Opera of Chicago, and is a life trustee of the Goodman Theatre.
		Select Qualifications and Experience:   •     Extensive finance, management, operational and risk management expertise and history of accomplishment and executive ability as Chief Administrative Officer and Chief Financial Officer of Exelon Corporation.   •     Significant experience leading complex organizations in highly-regulated industries such as banking, healthcare, and utilities.
		Other Public Directorships:   •    Voya Financial Inc. (since 2015)   •    Snap-on Incorporated (since 2014)   •    Potlatch Corporation (2003–2013)

 

6

PROPOSAL ONE: Election of Directors

 

 

 

 

William G. Gisel, Jr.
Age: 66   Director Since: 2011   KeyCorp Committee(s): •   Compensation and Organization (Chair) •   Nominating and Corporate Governance		Biography:   Mr. Gisel is Chief Executive Officer of Rich Products Corporation, a global manufacturer and supplier of frozen foods with annual sales of approximately $3.5 billion. Rich Products Corporation is a leading supplier to the consumer products, food service, and bakery segment of the food industry internationally. Prior to becoming Chief Executive Officer in 2006, Mr. Gisel began his career at Rich Products Corporation as General Counsel and also spent four years at Philips, Lytle, LLC. Mr. Gisel is a member of the board of directors of the Grocery Manufacturers Association and Director and Chairman of the John R. Oishei Foundation.
		Select Qualifications and Experience:   •     In various capacities with Rich Products Corporation, led the company’s expansion into foreign markets, including Asia, Africa, Europe, and Latin America. As President of Rich Products Corporation’s Food Group and its Chief Operating Officer, managed the international expansion of Rich Products Corporation through acquisitions and organic growth.   •     As Chief Executive Officer of Rich Products Corporation, responsible for directing the company’s overall strategy and its worldwide business operations. Has held positions of increasing responsibility with Rich Products Corporation, including as Chief Operating Officer and President of the company’s Food Group and Executive Vice President for International and Strategic Planning.
		Other Public Directorships:   •    Moog Inc. (since 2012)   •    MOD-PAC CORP. (2002–2013)

 

Carlton L. Highsmith
Age: 67   Director Since: 2016   KeyCorp Committee(s): •   Nominating and Corporate Governance •   Risk		Biography:   Mr. Highsmith joined the Board in August 2016 in connection with the First Niagara merger. He was a member of the board of First Niagara since 2011, serving on the Governance/Nominating Committee and the Audit Committee. He previously served on the board of NewAlliance Bancshares from 2006 until it was acquired by First Niagara in 2011. He founded The Specialized Packaging Group (“SPG”) based in Hamden, Connecticut in 1983, and served as its President and Chief Executive Officer from 1983 to 2009. Mr. Highsmith is Vice Chairman of the board of trustees of Quinnipiac University, Chairman of the Connecticut Center for Arts & Technology, Treasurer of the National Center for Arts & Technology, a trustee of the Yale-New Haven Hospital System, and a trustee and Chairman of the Investment Committee of the Community Foundation for Greater New Haven. He previously served on the Federal Reserve Bank of Boston Community Development Advisory Council of New England.
		Select Qualifications and Experience:   •     Successful corporate executive and entrepreneur with significant bank board experience, having served on the board of directors of both NewAlliance and First Niagara.   •     Under Mr. Highsmith’s leadership, SPG grew to become the largest minority owned, and 7 th largest overall, manufacturer of paperboard packaging in North America before it merged with PaperWorks Industries in 2009.

 

				7

PROPOSAL ONE: Election of Directors

 

 

 

 

Richard J. Hipple
Age: 66   Director Since: 2012   KeyCorp Committee(s): •  Audit		Biography:   Mr. Hipple retired as Executive Chairman of Materion Corporation, a publicly-held manufacturer of highly engineered advanced materials and related services, in December 2017. Mr. Hipple previously served as Chairman of the Board and Chief Executive Officer of Materion Corporation from 2006 to 2017 and President from 2005 to 2017. Prior to that, Mr. Hipple served in the steel industry for 26 years in a number of capacities, including project engineer, strategic planning, supply chain management, operations, sales and marketing, and executive management. Mr. Hipple is Chairman of the board of trustees of the Cleveland Institute of Music.
		Select Qualifications and Experience:   •     Extensive exposure to global commerce as former Chief Executive Officer of Materion Corporation, which serves customers in more than 50 countries and employs 2,500 people worldwide. Additionally, experience as a director at Ferro Corporation, Barnes Group Inc., and Luxfer Holdings PLC which represent manufacturing companies with leading technologies, broad international footprints, and market diversity. With significant experience in the oversight and management of financial risks, Mr. Hipple qualifies as an “audit committee financial expert” as defined by the Securities and Exchange Commission.   •     Significant corporate governance and executive-level management experience, including as the Executive Chairman and President and Chief Executive Officer of Materion Corporation and as Chairman of the compensation committee of both Ferro Corporation and Luxfer Holdings PLC.
		Other Public Directorships:   •    Luxfer Holdings PLC (since 2018)   •    Barnes Group Inc. (since 2017)   •    Ferro Corporation (2007–2018)   •    Materion Corporation (2006–2017)

 

Kristen L. Manos
Age: 59   Director Since: 2009   KeyCorp Committee(s): •  Audit •  Executive		Biography:   Ms. Manos is a partner with Sanderson Berry, a business strategy and advisory services firm. In 2014, Ms. Manos retired as President, Americas of Wilsonart LLC, the leading producer of high pressure decorative laminate products in North America. From 2004 to 2009, Ms. Manos served as President of Herman Miller North American Office and Executive Vice President of Herman Miller Inc., a global manufacturer and distributor of furnishings for a wide variety of professional and residential environments. Ms. Manos serves on the boards of two employee-owned companies, Columbia Forest Products, Inc. and Dexter Apache Holdings, Inc., and two private-equity-backed companies, C.H.I. Overhead Doors, LLC and Innovative Ergonomic Solutions LLC. She previously served on the board of International Relief and Development, where she also served as Interim Chief Executive Officer for four months in 2014. Ms. Manos is currently a director of the board of Kickstart International.
		Select Qualifications and Experience:   •     As President, Americas, of Wilsonart LLC, responsible for the direction and operation of a $600 million organization, and led the company through its sale to a private equity firm. In prior roles as Executive Vice President and President of Herman Miller North American Office Environments, was responsible for the direction and operation of a $1.5 billion organization. Participated in corporate risk evaluation, risk management, and scenario planning for both Wilsonart and Herman Miller, as well as for Herman Miller clients related to their facilities.   •     During her tenure with Herman Miller, Inc., held responsibility for marketing and development where she established a branding strategy and a vertical selling strategy in education and healthcare. Responsible for high-level business strategy, development, and assessment as a partner with Sanderson Berry.
		Other Public Directorships:   •    American Capital, Ltd. (2015–2017)

 

8

PROPOSAL ONE: Election of Directors

 

 

 

 

Beth E. Mooney
Age: 64   Director Since: 2010   KeyCorp Committee(s): •  Executive (Chair)		Biography:   Ms. Mooney has been KeyCorp’s Chairman and Chief Executive Officer since May 1, 2011. She was elected President and Chief Operating Officer on November 18, 2010, and served in that role until she became Chairman and Chief Executive Officer. Ms. Mooney joined KeyCorp in 2006 as Vice Chair and head of Key Community Bank. Prior to joining KeyCorp, Ms. Mooney served in a number of executive and senior finance roles with banks and bank holding companies including AmSouth Bancorp (where she served as Chief Financial Officer), Bank One Corporation, Citicorp Real Estate, Inc., Hall Financial Group, and Republic Bank of Texas/First Republic. Ms. Mooney is a member of The Clearing House, The Business Council, and the Bank Policy Institute, a board member of the Greater Cleveland Partnership, Catalyst, and the United Way of Greater Cleveland, a trustee and Treasurer of the board of the Musical Arts Association, and Vice Chair and a trustee of the Cleveland Clinic Foundation. On January 1, 2019, Ms. Mooney was appointed to a third one-year term as the Fourth Federal Reserve District’s representative on the Federal Advisory Council.
		Select Qualifications and Experience:   •     Over 30 years of financial services experience in retail banking, commercial lending, and real estate financing with KeyCorp and other significant banking organizations across the United States. Significant executive and leadership experience in prior roles such as Chief Operating Officer of KeyCorp and Chief Financial Officer of AmSouth Bancorp.   •     As Chief Executive Officer and former Chief Operating Officer of KeyCorp, leads the operations of one of the largest financial service companies in the United States with nearly 20,000 employees. Provides critical insight on KeyCorp’s business and operations to the Board of Directors.
		Other Public Directorships:   •    AT&T (since 2013)

 

Barbara R. Snyder
Age: 63   Director Since: 2010   KeyCorp Committee(s): •   Compensation and Organization •  Executive		Biography:   Ms. Snyder has been President of Case Western Reserve University, a private research university located in Cleveland, Ohio, since 2007. Prior to joining Case Western Reserve University, Ms. Snyder served as Executive Vice President and Provost of The Ohio State University (“OSU”). She served as a faculty member of OSU’s Moritz College of Law from 1998 to 2007. From 2000 to 2007, she held the Joanne W. Murphy/Classes of 1965 and 1973 Professorship at OSU. Ms. Snyder serves on the boards of several nonprofit organizations including the Greater Cleveland Partnership, the Ohio Business Roundtable, and Internet 2, a consortium of research organizations to develop networking and advanced technologies for research and education. She was Chair of the board and is currently a director of the Business-Higher Education Forum, an organization of senior business and higher education leaders dedicated to strengthening America’s competitiveness by partnering on workforce solutions, and is Chair of the board of the American Council on Education, which represents 1,800 colleges and universities.
		Select Qualifications and Experience:   •     President of Case Western Reserve University, one of the nation’s leading universities and a major private research institution with significant focus on science, engineering, and technology. Since 2007, Case Western Reserve University has tripled undergraduate admissions applications, become twice as selective, and dramatically increased the academic quality of the entering class.   •     Under Ms. Snyder’s leadership, Case Western Reserve University has experienced unprecedented fundraising success, setting new records for annual attainment and reaching a $1.5 billion capital campaign goal one and a half years ahead of schedule, with a final attainment of $1.82 billion.
		Other Public Directorships:   •    Progressive Insurance Corporation (since 2014)

 

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PROPOSAL ONE: Election of Directors

 

 

 

 

David K. Wilson
Age: 64   Director Since: 2014   KeyCorp Committee(s): •  Risk		Biography:   Until his retirement in January 2014, Mr. Wilson served in a variety of positions with the Office of the Comptroller of the Currency (“OCC”) over the course of a 32-year career, including as Examiner-In-Charge (“EIC”) of two global banks and in a number of policy focused roles. In 2009, Mr. Wilson transitioned from Large Bank EIC into policy work, initially as Senior National Bank Examiner and co-chair of the OCC’s National Risk Committee. In 2010, he was appointed Deputy Comptroller for Credit and Market Risk. He then briefly served as Senior Deputy Comptroller and Chief National Bank Examiner before returning to the field as an EIC. Mr. Wilson is an independent consultant focusing on bank regulatory and risk strategy matters. He is also a member of the board of directors of KeyBank National Association.
		Select Qualifications and Experience:   •  Significant bank regulatory and risk strategy expertise, including providing advice and counsel to the Comptroller of the Currency, testifying before Congress, developing policy, and regulatory rulemaking following the Dodd-Frank Act.   •  Extensive experience and understanding of the financial services regulatory climate, including participating in the Financial Stability Oversight Council (“FSOC”), serving as the OCC representative on FSOC’s Systemic Risk Committee, and chairing the Federal Financial Institutions Examination Council Task Force on Supervision.

 

10

The Board of Directors and Its Committees

 

 

The Board of Directors and Its Committees

The Board is comprised of 12 independent directors, one member of management (Ms. Mooney), and one non-management, non-independent director (Mr. Crosby). Three of our directors have joined the Board since 2015, including two directors as a result of the First Niagara merger. The average tenure of our current Board members is approximately seven years.

Board Leadership Structure

 

Our Board is committed to independent Board leadership. The Board’s independent leadership and oversight responsibilities are realized through the guidance of our independent Lead Director, our independent Board committee chairs, and the full involvement of each of our independent directors. KeyCorp’s independent directors have elected Alexander M. Cutler as the Board’s independent Lead Director for 2019.

Among his specific responsibilities, the independent Lead Director:

 

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presides at all meetings of the Board at which the Chairman is not present, including executive sessions of the independent and non-management directors held after each regularly scheduled Board meeting;

 

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serves as liaison between the Chairman and the independent and non-management directors;

 

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approves Board meeting schedules as well as meeting materials and agendas for each full Board meeting and executive sessions of independent and non-management directors;

 

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has the authority to call meetings of the independent and non-management directors or the full Board at any time;

 

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participates in discussions with major shareholders regarding governance matters as part of KeyCorp’s proactive shareholder engagement;

 

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is in frequent contact with the Chairman with respect to major issues and strategic opportunities before KeyCorp, and any significant actions contemplated by KeyCorp are discussed with the Lead Director at an early stage;

 

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advises on the retention of independent consultants to the Board;

 

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interviews all candidates for election to the Board;

 

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oversees changes to the composition of Board committees;

 

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assists the Board and management in assuring compliance with applicable securities laws and fiduciary duties to shareholders;

 

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oversees initiatives to implement enhancements to KeyCorp’s governance policies and the Corporate Governance Guidelines;

 

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serves as a focal point for independent Committee Chairs, providing guidance, coordination, and advice for the committees;

 

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together with the Chair of the Compensation and Organization Committee, facilitates the evaluation of the performance of KeyCorp’s Chief Executive Officer; and

 

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is available for additional duties as they may arise.

The Lead Director seeks input from independent and non-management directors during executive sessions with respect to items to be included on the agenda for each Board meeting and provides feedback from the independent and non-management directors while engaging in the agenda-building process.

Annually, the independent and non-management directors assess the effectiveness of the Lead Director and provide feedback on the performance of the Lead Director’s specified responsibilities. The formal evaluation process is conducted with the Lead Director excused from participation.

Each standing committee of the Board is chaired by an independent director and consists solely of independent directors. Our independent directors have extensive corporate governance and leadership experience, and many have significant public company experience. Three of our independent directors are or have been chief executive officers with public companies.

 

				11

The Board of Directors and Its Committees

 

 

In 2011, the Board elected Beth Mooney as KeyCorp’s Chairman and Chief Executive Officer. The Board believes that KeyCorp has been well served by Ms. Mooney’s combined role as Chairman and Chief Executive Officer. Ms. Mooney’s combined leadership role has allowed her to set the overall tone and direction for KeyCorp, maintain consistency in the internal and external communication of our strategic and business priorities, and have primary responsibility for managing KeyCorp’s operations. Our many conversations between our directors and our shareholders regarding their views on Board leadership and independent oversight have confirmed our view that a strong, effective Lead Director, like Mr. Cutler, an independent Board, and independent key committees provide the independent leadership necessary to balance the combined Chairman and Chief Executive Officer role and, with the formal and informal mechanisms we have in place to facilitate the work of the Board and its committees, results in the Board effectiveness and efficiency that our shareholders expect.

The Board annually (or more often if a new Chief Executive Officer is selected) evaluates KeyCorp’s leadership structure to assess whether it remains appropriate for the Company, taking into account a variety of factors including KeyCorp’s size, the nature of its business, the regulatory framework in which it operates, and the leadership structure of its peers. Additionally, our Regulations provide the Board with flexibility to separate or combine the roles of Chairman and Chief Executive Officer as it deems necessary from time to time and on a case-by-case basis. The Board believes that a primary consideration for KeyCorp is that, as a large financial institution subject to significant regulation, KeyCorp must communicate swiftly and consistently with our stakeholders, including our regulators. We believe that swift and consistent communication is significantly furthered by KeyCorp’s leadership, through our Chairman and Chief Executive Officer, speaking as a single voice on behalf of both the Board and management.

Board and Committee Responsibilities

 

KeyCorp’s Board of Directors delegates various responsibilities and authority to its four standing committees: Audit, Nominating and Corporate Governance, Compensation and Organization, and Risk. The Board has also established an Executive Committee that serves the functions described on page 14 of this proxy statement. The committees regularly report on their activities and actions to the full Board. The Board, with the recommendation of the Nominating and Corporate Governance Committee and in consultation with the Lead Director, appoints the members of the committees, and has determined that each member of a standing committee is an independent director under New York Stock Exchange independence standards.

The Board held nine meetings during 2018. At every regularly-scheduled Board meeting, the independent and non-management members of the Board met in executive session (i.e., without Ms. Mooney or any other employee of KeyCorp present). The members of the Board attended, on average, approximately 96% of Board meetings and committee meetings held during 2018. No director attended less than 75% of such meetings. KeyCorp Board members are expected to attend the Annual Meeting of Shareholders, and all Board members serving at that time did so for the 2018 Annual Meeting of Shareholders.

 

 

12

The Board of Directors and Its Committees

 

 

The following describes the responsibilities and current membership of the standing committees of the Board and the number of times each committee met in 2018.

 

Audit Committee
Chair: Charles P. Cooley   Other Members: H. James Dallas Richard J. Hipple Kristen L. Manos   Number of Meetings in 2018 :  14		Primary Responsibilities •     Oversees the development of, and reviews, the financial information provided to KeyCorp’s shareholders   •     Is directly responsible for the appointment, compensation, retention, and oversight of our independent auditor, oversees the audit fees negotiations with our independent auditor, and has sole authority to approve audit fees   •     Has responsibility over all KeyCorp internal audit and credit risk review functions, financial reporting, legal matters, and fraud risk   •     Oversees any material examinations of KeyCorp and its affiliates conducted by federal, state, or other authorities, and may supervise and direct any other special projects or investigations the committee deems necessary   •     Together with the Risk Committee, oversees and reviews our allowance for loan and lease losses methodology and monitors operational risk, and   •     Serves as the audit committee for KeyCorp’s subsidiary, KeyBank National Association.   Independence The Audit Committee has been established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934 (the “Exchange Act”). The Board has determined that all members of the Audit Committee are “independent” as that term is defined in Section 303A.02 of the New York Stock Exchange’s listing standards.   Audit Committee Financial Experts The Board of Directors has determined that Mr. Cooley and Mr. Hipple each qualify as an “audit committee financial expert,” as defined in Item 407(d)(5) of Regulation S-K.

 

Nominating and Corporate Governance Committee
Chair: Alexander M. Cutler   Other Members: Charles P. Cooley Elizabeth R. Gile William G. Gisel, Jr. Carlton L. Highsmith   Number of Meetings in 2018:  6		Primary Responsibilities •     Recommends to the Board nominees to stand for election as directors   •     Oversees the annual Board self-assessment process (including individual director self-assessments and the evaluation of the Lead Director), as well as KeyCorp’s policies and practices on significant issues of corporate social responsibility   •     Oversees corporate governance matters generally   •     Oversees and reviews KeyCorp’s directors’ and officers’ liability insurance program   •     Supports the Compensation and Risk Committees by facilitating a meeting of all independent Board committee Chairs to discuss the linkage between enterprise risk and compensation at KeyCorp, and   •     With the aid of market data, annually reviews and recommends to the Board a director compensation program that may include equity-based incentive compensation (no executive officer of KeyCorp has any role in determining the amount of director compensation, although the committee may seek assistance from our executive officers in designing equity compensation programs for directors).

 

				13

The Board of Directors and Its Committees

 

 

 

Compensation and Organization Committee
Chair: William G. Gisel, Jr.   Other Members: Bruce D. Broussard Alexander M. Cutler Barbara R. Snyder   Number of Meetings in 2018:  7		Primary Responsibilities •     Supports KeyCorp’s efforts to attract, retain, develop, and reward talent so that we can achieve our business objectives   •     Is responsible for overseeing the compensation of our senior executives, certain of our compensation programs, and our talent management and organizational development processes   •     Evaluates the competitiveness of our compensation programs and assesses the effectiveness of our leadership development and strategic hiring objectives   •    Oversees the process for developing, implementing, and administering succession planning for the Chairman and Chief Executive Officer and assesses succession planning for key executives   •     Approves the performance goals, performance objectives, and the compensation of our Chief Executive Officer and other senior executives and evaluates their performance relative to those goals and objectives   •     Establishes our overall compensation philosophy and oversees the implementation of this philosophy as it relates to our incentive compensation arrangements, including through approval of our incentive compensation policy   •     Is responsible for enforcing the compensation clawback policy   •     Appoints, directs, and oversees its independent advisors and performs additional duties described in its Charter, and   •     May delegate its authority to a subcommittee of its members and may allow limited delegations to management.   Independence The Board of Directors has determined that all members of the Compensation Committee are “independent” as that term is defined in Section 303A.02 of the New York Stock Exchange’s listing standards.   Further discussion of the Compensation Committee can be found beginning on page 24 of this proxy statement under the heading “Compensation Discussion and Analysis.”

 

Risk Committee
Chair: Elizabeth R. Gile   Other Members: Ruth Ann M. Gillis Carlton L. Highsmith David K. Wilson   Number of Meetings in 2018:  8		Primary Responsibilities •     Is responsible for assisting the Board with strategies, policies, procedures, and practices relating to the assessment and management of KeyCorp’s enterprise-wide risks, including credit risk, market risk, liquidity risk, compliance risk, operational risk, and other risks   •     Plays a crucial role in overseeing KeyCorp’s capital adequacy and compliance with regulatory capital requirements   •     Reviews and approves KeyCorp’s capital plan and recommends share repurchase authorizations to the Board consistent with approved capital plans   •     May exercise such authority as the Board delegates in connection with the authorization, sale, and issuance by KeyCorp of debt and other equity securities, and   •     Together with the Audit Committee, oversees and reviews our allowance for loan and lease losses methodology.

The Board also has an Executive Committee, comprised of Ms. Mooney (Chair), Mr. Cooley, Mr. Cutler, Ms. Manos, and Ms. Snyder, which may exercise the authority of the Board, to the extent permitted by law, on any matter requiring Board or committee action between Board or committee meetings. The Executive Committee did not hold any meetings in 2018.

 

14

The Board of Directors and Its Committees

 

 

Board Overs ight of Risk

 

Our Board leadership and committee structure supports the Board’s risk oversight function. Generally, each Board committee oversees the following risks:

 

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The Risk Committee has primary oversight responsibility for enterprise-wide risk at KeyCorp, including credit risk, market risk, liquidity risk, compliance risk, operational risk (including cybersecurity), as well as reputational and strategic risks, and oversight of the actions taken to mitigate these risks.

 

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The Audit Committee has primary oversight responsibility for internal audit, financial reporting, legal matters, and fraud risk.

 

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The Compensation Committee has primary oversight responsibility for risks related to KeyCorp’s compensation policies and practices.

 

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The Nominating and Corporate Governance Committee has primary oversight responsibility for significant issues of corporate social responsibility.

The Audit and Risk Committees jointly oversee and review the allowance for loan and lease losses methodology and monitor operational risk.

The committees receive, review, and evaluate management reports on risk for their areas of risk oversight. At each Board meeting, the Chair of each Board committee reports to the full Board on risk oversight issues.

Our Board structure enables the Board to exercise vigorous oversight of key issues relating to management development, succession and compensation, compliance and integrity, corporate governance, cybersecurity, and company strategy and risk. With respect to risk, the Board oversees that Key’s risks are managed in a manner that is effective and balanced and adds value for Key’s shareholders. The Board understands Key’s risk philosophy, approves Key’s risk appetite, inquires about risk practices, reviews the portfolio of risks, compares the actual risks to the risk appetite, and is apprised of significant risks, both current and emerging, and determines whether management is responding appropriately. With respect to risk and other areas that it oversees, the Board challenges management and promotes accountability.

KeyCorp has formed a senior level management committee, the Enterprise Risk Management Committee (“ERM Committee”), consisting of Ms. Mooney and other senior officers at KeyCorp, including KeyCorp’s Chief Risk Officer. The ERM Committee meets weekly and is central to ensuring that the corporate risk profile is managed in a manner consistent with KeyCorp’s risk appetite. The ERM Committee also is responsible for implementation of KeyCorp’s Enterprise Risk Management Policy that encompasses KeyCorp’s risk philosophy, policy framework, and governance structure for the management of risks across the entire company. The Risk Committee of the Board oversees KeyCorp’s risk management program, including the ERM Committee. The Board of Directors approves the Enterprise Risk Management Policy and sets the overall level of risk KeyCorp is willing to accept and manage in pursuit of its strategic objectives.

Oversight of Compen sation-Related Risks

 

KeyCorp’s compensation program is designed to offer competitive pay for performance, aligned with KeyCorp’s short- and long-term business strategies, approved risk appetite and defined risk tolerances, and shareholders’ interests. Reviews of KeyCorp’s compensation plans by the Compensation Committee and KeyCorp management did not identify any plan that was reasonably likely to have a material adverse impact on KeyCorp or that would incentivize excessive risk-taking. The Compensation Committee also reviewed KeyCorp’s compensation plans to monitor compliance with KeyCorp’s risk management tolerances and safety and soundness requirements.

KeyCorp has a well-developed governance structure for its incentive compensation programs, including roles for the Board of Directors, senior management, lines of business and control functions. The Board oversees KeyCorp’s incentive compensation programs, primarily through the Compensation Committee, with additional input and guidance from its Nominating and Corporate Governance, Risk, and Audit Committees. In addition to directly approving compensation decisions for senior executives, the Compensation Committee also approves KeyCorp’s overall Incentive Compensation Policy and Program so that KeyCorp’s incentive compensation practices remain in alignment with KeyCorp’s risk management practices. KeyCorp’s Incentive Compensation Policy and Program are intended to enhance KeyCorp’s risk management practices by rewarding appropriate risk-based performance.

We maintain a detailed and effective strategy for implementing and executing incentive compensation arrangements that provide balanced risk-taking incentives. KeyCorp’s incentive compensation arrangements are designed, monitored, administered, and tested by a multidisciplinary team drawn from various areas of KeyCorp, including Risk Management. This

 

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The Board of Directors and Its Committees

 

 

team is charged with seeing that our incentive compensation arrangements align with risk management practices and support the safety and soundness of the organization. From initial plan design to individual awards, KeyCorp’s program incorporates sound compensation principles and risk-balancing at every stage of the incentive compensation process, including:

 

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the identification of employees who have the ability to influence or control material risk;

 

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the use of risk-balancing mechanisms across all incentive plans that take into account the primary risks associated with employee roles;

 

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the deferral of incentive compensation to balance risk and align an employee’s individual interests with KeyCorp’s future success and safety and soundness;

 

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the development of clawback policies and procedures to recoup certain incentive compensation paid to employees in the event of certain risk-based events; and

 

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the annual assessment of risk-balancing features, the degree to which selective plan design features affect risk-taking, the alignment of incentive metrics with business objectives, the overall competitiveness of the pay opportunity, the participation of control functions, and the effectiveness of monitoring and administration of the plans.

Director Ind ependence

 

The Board of Directors has determined that all members of the Board of Directors (i.e. , Mss. Gile, Gillis, Manos, and Snyder, and Messrs. Broussard, Cooley, Cutler, Dallas, Gisel, Highsmith, Hipple, and Wilson), other than Ms. Mooney and Mr. Crosby, are independent directors and independent for purposes of the committees on which they serve. Additionally, the Board of Directors previously determined that Austin A. Adams and Demos Parneros, who served as directors until their retirements on May 10, 2018 and July 11, 2018, respectively, were independent. These determinations were made after reviewing the relationship of these individuals to KeyCorp in light of KeyCorp’s Standards for Determining Independence of Directors and the independence requirements of the New York Stock Exchange. Due to Mr. Crosby’s former position as Chief Executive Officer of First Niagara, the Board determined that Mr. Crosby is not an independent director.

To determine the independence of the members of the Board, the Board considered certain transactions, relationships, or arrangements between those directors, their immediate family members, or their affiliated entities, on the one hand, and KeyCorp or one or more of its subsidiaries, on the other hand. Certain directors, their respective immediate family members, and/or affiliated entities have banking relationships with Key, such as consumer banking products or credit relationships. In addition, an affiliated entity of one of the directors received a charitable contribution from Key.

The Board determined that all of these transactions, relationships, or arrangements were made in the ordinary course of business, were made on terms comparable to those that could be obtained in arms’ length dealings with an unrelated third party, were not criticized or classified, non-accrual, past due, restructured or a potential problem, complied with applicable banking laws, were immaterial, and did not otherwise impair any director’s independence. Additionally, during the last three fiscal years, there were no transactions between KeyCorp and any affiliated entities of the directors under which payments made or received exceeded 1% of the consolidated gross revenue of either KeyCorp, on the one hand, or the affiliated entity, on the other hand.

Related Party Tr ansactions

 

Any transaction, relationship, or arrangement with KeyCorp or its subsidiaries in which a KeyCorp director, executive officer, or other related person has a direct or indirect material interest is subject to KeyCorp’s Policy for Review of Transactions between KeyCorp and its Directors, Executive Officers, and Other Related Persons. The Nominating and Corporate Governance Committee is responsible for applying the policy and uses the following factors identified in the policy in making its determinations:

 

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whether the transaction conforms to KeyCorp’s Code of Ethics and Corporate Governance Guidelines and is in KeyCorp’s best interests;

 

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whether the transaction is entered into in the ordinary course of KeyCorp’s business;

 

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whether the terms of the transaction are comparable to terms that could be obtained in arms’ length dealings with an unrelated third party;

 

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whether the transaction must be disclosed under Item 404 of Regulation S-K under the Exchange Act; and

 

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whether the transaction could call into question the independence of any of KeyCorp’s non-employee directors.

 

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The Board of Directors and Its Committees

 

 

The policy provides exceptions for certain transactions, including those available to all KeyCorp employees generally, those involving compensation or indemnification of executive officers or directors authorized by the Board of Directors or one of its committees, those involving the reimbursement of routine business expenses, and those occurring in the ordinary course of business.

  Banking and Credit Transactions with KeyCorp Executive Officers and Directors

From time to time during 2018, many of our directors and executive officers and some of their immediate family members and affiliated entities had deposit or credit relationships with KeyBank National Association (“KeyBank”) or other KeyCorp subsidiaries in the ordinary course of business. Additional transactions and banking relationships may continue in the future.

First Niagara Bank, National Association, which has since merged into KeyBank, previously made a residential mortgage loan to an immediate family member of Mr. Crosby under First Niagara’s loan program for employees, which included an interest rate discount. At December 31, 2018, the amount outstanding on the loan to Mr. Crosby’s immediate family member was $178,171.27, and the largest amount outstanding on the loan during 2018 was $183,841.62. The amount of principal and interest paid during 2018 was $10,897.92, and the amount of interest payable during the remainder of the loan is $71,107.57.

All other credit relationships with our directors, executive officers, and other related persons were made in the ordinary course of business on substantially the same terms, including interest rate and collateral terms, as those prevailing at the time for comparable transactions with unrelated third parties and did not present heightened risks of collectability or other unfavorable features to KeyCorp or its subsidiaries.

Additionally, loans and extensions of credit by KeyBank to our directors, executive officers, and their related interests were made in compliance with Regulation O under federal banking law and KeyBank’s related policies and procedures. In addition to satisfying the standard set forth in the preceding paragraph, our Regulation O policies and procedures require that:

 

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the amount of credit extended does not exceed individual and aggregate lending limits, depending upon the identity of the borrower and the nature of the loan; and

 

•

any extension of credit in excess of $500,000 be approved by the Board of Directors of KeyBank.

Shareholder En gagement

 

In order for management and the Board to better understand and consider shareholders’ perspectives, we regularly communicate with our shareholders, including to solicit and discuss their views on governance, executive compensation and other matters. We believe our regular engagement has been productive and provides an open exchange of ideas and perspectives for both the Company and our shareholders.

In October 2018, KeyCorp hosted an investor day in New York City for institutional investors and equity analysts. Key’s leadership team highlighted our strategy, the progress we’ve made in transforming our business, and how the company is positioned for growth. Additionally, throughout 2018, members of management and our independent Lead Director participated in discussions with a number of institutional shareholders, including many of our largest shareholders. Overall, participating investors expressed support for the Company’s governance and compensation practices. Feedback received during these meetings was presented to and discussed by the Nominating and Corporate Governance Committee, Compensation Committee and, as appropriate, other Board committees and the entire Board.

After considering feedback received from shareholders in recent years, we:

 

•

intend to amend the Regulations to adopt a meaningful proxy access right for shareholders reflecting terms described in Proposal Six of this proxy statement (subject to the approval by our shareholders of Proposal Six);

 

•

formalized additional responsibilities for the independent Lead Director and added disclosure about the Lead Director’s activities (see page 11 of this proxy statement);

 

•

formalized an annual evaluation of the Lead Director and incorporated the evaluation process in our Corporate Governance Guidelines;

 

•

increased our website disclosure with respect to our political spending and activity;

 

•

enhanced our public disclosures about employee diversity and pay equity;

 

•

provided additional disclosure about the Audit Committee’s oversight and engagement of the independent auditor in the Audit Committee Report at page 55 in this proxy statement; and

 

•

created a robust summary (at pages i to iv in this proxy statement) and enhanced our Compensation Discussion and Analysis that begins at page 24 in this proxy statement.

 

				17

The Board of Directors and Its Committees

 

 

In addition, our Chief Executive Officer, Chief Financial Officer, Director of Investor Relations, and other members of our senior management team receive regular feedback from the investment community—through investor visits, meetings, and conferences—regarding our strategy, financial results, and other topics of interest, and regularly brief our Board on this feedback.

Direct or Education

 

Throughout the year, our directors participate in continuing education activities and receive educational materials on a wide variety of topics (including, corporate governance, the financial services industry, cybersecurity, executive compensation, risk management, finance, and accounting). Annually, the Board holds director education sessions focusing on topics suggested by the directors at the November meeting of the Board and its committees. From time to time, our directors may also attend seminars and other educational programs at KeyCorp’s expense. These educational opportunities provide our directors with timely updates on best practices among our peers and in the general marketplace and further supplement our directors’ significant business and leadership experiences.

Communication with the Board

 

Interested parties may submit comments about KeyCorp to the directors in writing at KeyCorp’s headquarters at 127 Public Square, Cleveland, Ohio 44114. Correspondence should be addressed to “Lead Director, KeyCorp Board of Directors, care of the Secretary of KeyCorp” and marked “Confidential.”

Interested parties wishing to communicate with the Audit Committee regarding accounting, internal accounting controls, or auditing matters may directly contact the Audit Committee by mailing a statement of their comments and views to KeyCorp at its corporate headquarters at 127 Public Square, Cleveland, Ohio 44114. Such correspondence should be addressed to “Chair, Audit Committee, KeyCorp Board of Directors, care of the Secretary of KeyCorp” and should be marked “Confidential.”

 

18

Corporate Governance Documents

 

 

Corporate Gover nance Documents

The KeyCorp Board of Directors’ Committee Charters, KeyCorp’s Corporate Governance Guidelines, KeyCorp’s Code of Ethics, KeyCorp’s Standards for Determining Independence of Directors, KeyCorp’s Policy for Review of Transactions between KeyCorp and its Directors, Executive Officers, and Other Related Persons, KeyCorp’s Corporate Responsibility Report, and KeyCorp’s Statement of Political Activity for 2018 are all posted on KeyCorp’s website: www.key.com/ir. Copies of these documents will be delivered, free of charge, to any shareholder who contacts KeyCorp’s Investor Relations Department at (216) 689-4221.

Corporate Go vernance Guidelines

 

The Board has adopted written Corporate Governance Guidelines (the “Guidelines”) that detail the Board’s corporate governance duties and responsibilities, many of which are described herein. The Guidelines take into consideration, and are reviewed annually and updated periodically to reflect, best practices in corporate governance and applicable laws and regulations. The Guidelines address a number of matters applicable to directors (such as director qualification standards and independence requirements, share ownership guidelines, and succession planning and management) and management (such as stock ownership guidelines for management and procedures for the annual evaluation of our Chief Executive Officer).

Code of Ethics

 

We are committed to the highest standards of ethical integrity. Accordingly, the Board of Directors has adopted a Code of Ethics for all of KeyCorp’s (and its subsidiaries’) employees, officers, and directors, which was last amended in July 2018. We will promptly disclose any waiver or amendment to our Code of Ethics for our executive officers or directors on our website. Our Code of Ethics ensures that each employee, officer, and director understands the basic principles that govern our corporate conduct and our core values of Teamwork, Respect, Accountability, Integrity, and Leadership.

Statement of Political Activity

 

An important part of our commitment to our community includes active participation in the political and public policy process that impacts the lives of our customers, shareholders, and business. As a large financial institution, our business is highly regulated at the federal, state, and local levels. We believe it is critically important to take a constructive role in the political process that will shape the future of business, our industry, and our community.

The Nominating and Corporate Governance Committee of the Board meets annually with a member of KeyCorp’s Government Relations team to review KeyCorp’s policies and practices regarding political contributions. Policies and practices reviewed by the Nominating and Corporate Governance Committee include KeyCorp’s policies regarding doing business with public entities, the Government Relations pre-approval process for ballot issue support and the KeyCorp Advocates Fund (political action committee) annual report.

Corporat e Responsibility Report

 

Our purpose is to help our clients and communities thrive, which we drive through our commitment to responsible banking, responsible citizenship, and responsible operations. We are more focused than ever on participating in the economic expansion, revitalization, and resurgence of the communities we so proudly serve, as well as helping to strengthen the financial wellness of every client. Beyond traditional banking, we do this best through philanthropy, community development, sustainability, and diversity and inclusion.

The Nominating and Corporate Governance Committee of the Board oversees KeyCorp’s policies and practices on significant issues of corporate social responsibility. Detailed information regarding KeyCorp’s (and its subsidiaries’) and the KeyBank Foundation’s corporate responsibility priorities and progress can be found in our annual Corporate Responsibility Report. We use the Global Reporting Initiative (GRI) framework to provide transparent disclosure of Key’s most significant areas of impact in a manner comparable with peers and industry benchmarks.

 

				19

Ownership of KeyCorp Equity Securities

 

 

Ownership of KeyCorp Equity Securities

The following table reports the number of KeyCorp equity securities that were beneficially owned by the directors of KeyCorp, the Named Executive Officers, and all directors, nominees for director and all executive officers of KeyCorp as a group, and each person reported to us to beneficially own more than 5% of our common shares. Beneficially-owned KeyCorp equity securities include directly or indirectly owned KeyCorp common shares and any KeyCorp common shares that could be acquired within 60 days of the record date through the exercise of an option or through the vesting or distribution of deferred shares. The column “Other Deferred Shares Owned” reports the number of deferred shares owned that will not vest or be distributed within 60 days of the record date.

This information is provided as of the record date, March 29, 2019.

 

Name		Common Shares					Options (1)					Deferred Shares (2)(3)(4)					Total Beneficial Ownership (5)					Total Beneficial Ownership as a% of Outstanding     Common Shares (6)					Other Deferred Shares Owned (2)(3)(4)					Combined Beneficial Ownership and Other Deferred Shares Owned (5)
Bruce D. Broussard				15,724					—					8,395					24,119					—					6,129					30,248
Charles P. Cooley				25,005					—					3,065					28,070					—					85,496					113,566
Gary M. Crosby				536,989					—					6,654					543,643					—					—					543,643
Alexander M. Cutler				175,769					—					—					175,769					—					58,015					233,784
H. James Dallas				98,791					—					11,460					110,251					—					—					110,251
Elizabeth R. Gile				28,213					—					8,395					36,608					—					37,196					73,804
Ruth Ann M. Gillis				95,412					—					—					95,412					—					50,737					146,148
William G. Gisel, Jr.				17,900					—					—					17,900					—					64,646					82,546
Christopher M. Gorman				414,467					695,831					—					1,110,298					—					283,060					1,393,358
Carlton L. Highsmith				61,125					9,515					6,654					77,294					—					—					77,294
Richard J. Hipple				23,984					—					7,870					31,855					—					30,101					61,956
Donald R. Kimble				318,725					129,279					—					448,004					—					167,804					615,808
Kristen L. Manos				78,258					—					—					78,258					—					105,946					184,204
Mark W. Midkiff				12,458					—					—					12,458					—					61,066					73,523
Beth E. Mooney				1,230,701					1,196,748					—					2,427,449					—					500,775					2,928,225
Andrew J. “Randy” Paine III				229,268					183,573					—					412,841					—					210,683					623,524
Barbara R. Snyder				14,763					—					—					14,763					—					100,662					115,424
David K. Wilson				18,224					—					4,805					23,029					—					13,307					36,336
All directors and executive officers as a group (29 persons)				4,754,273					2,944,926					57,299					7,756,498					—					2,491,545					10,248,043
The Vanguard Group (7)				115,800,986					—					—					115,800,986					11.56	%
BlackRock, Inc. (8)				69,532,636					—					—					69,532,636					6.94	%
J.P. Morgan Chase & Co. (9)				52,334,060					—					—					52,334,060					5.23	%

 

(1)	This column includes options (including in-the-money and out-of-the-money options) to acquire KeyCorp common shares exercisable on or within 60 days of March 29, 2019.

 

(2)

Deferred shares issued under the prior KeyCorp Directors’ Deferred Share Plan or the current Directors’ Deferred Share Sub-Plan to the KeyCorp 2013 Equity Compensation Plan (the “Directors’ Deferred Share Sub-Plan”) are payable three years from their award date, one-half in cash and one-half in common shares, or immediately if a director separates from the Board for any reason prior to the third

 

20

Ownership of KeyCorp Equity Securities

 

 

anniversary of the award. A director may elect to defer the payment of all or some of his or her deferred shares beyond the third anniversary of the award date (“Further Deferred Shares”). In that case, the Further Deferred Shares will be distributed entirely in common shares on (and only on) the deferral date selected by the director. Deferred shares payable in common shares (other than Further Deferred Shares) are included in the column “Deferred Shares” because they may be distributed to the director as common shares immediately upon separation from the Board. Further Deferred Shares, and directors’ fees that have been deferred under the Directors’ Deferred Share Sub-Plan or, previously, the KeyCorp Second Directors’ Deferred Compensation Plan, are included in the column “Other Deferred Shares Owned” because they are only payable on the deferral date selected by the director, which is not on or within 60 days of March 29, 2019 for any director. Deferred shares payable in cash are not reflected in this table. For more information, please see “Directors’ Compensation” on page 51 of this proxy statement.

 

(3)

The column “Deferred Shares” includes deferred shares, performance units, and restricted stock units held by executive officers that will be payable in KeyCorp common shares on or within 60 days of March 29, 2019. Deferred shares, performance units, and restricted stock units payable in common shares to executive officers, but not on or within 60 days of March 29, 2019, are reported in the column “Other Deferred Shares Owned.” Performance units are subject to vesting based on the achievement of certain performance goals, as discussed in the Compensation Discussion and Analysis beginning on page 24 of this proxy statement. The number of performance units set forth in these columns reflects a “target” amount of performance units determined for each executive officer on the grant date. The number of performance units that ultimately vest as common shares for each executive officer may be higher or lower depending upon actual performance relative to the performance goals at the end of the measurement period.

 

(4)	Deferred shares, performance units, and restricted stock units payable in common shares do not have common share voting rights or investment power until the shares or units have been distributed as common shares in accordance with the plan or agreement under which they were granted or awarded.

 

(5)	Totals may not foot due to rounding.

 

(6)

No director or executive officer beneficially owns (and collectively all 29 directors and executive officers do not beneficially own) common shares, and options, deferred shares, performance units, and restricted stock units payable in common shares on or within 60 days of March 29, 2019, totaling more than 1% of the outstanding common shares of KeyCorp. The percentages set forth in this column for the holders of more than 5% of our common shares appear as reported by each such holder to the Securities and Exchange Commission on Schedules 13G, as discussed below.

 

(7)

Based solely upon information contained in the Schedule 13G/A filed by The Vanguard Group, Inc. (“Vanguard”) with the Securities and Exchange Commission on February 11, 2019. Vanguard reported that it owned beneficially 115,800,986 common shares, held sole voting power over 1,213,586 common shares, held sole power to dispose or to direct the disposition of 114,385,762 common shares, held shared voting power over 214,068 common shares, and held shared power to dispose or to direct the disposition of 1,415,224 common shares. Vanguard Fiduciary Trust Company, a wholly-owned subsidiary of Vanguard, is the beneficial owner of 892,452 common shares as a result of its serving as investment manager of collective trust accounts. Vanguard Investments Australia, Ltd., a wholly-owned subsidiary of Vanguard, is the beneficial owner of 830,497 common shares as a result of its serving as investment manager of Australian investment offerings. The reported address of Vanguard is 100 Vanguard Blvd., Malvern, PA 19355.

 

(8)

Based solely upon information contained in the Schedule 13G/A filed by BlackRock, Inc. (“BlackRock”), for itself and on behalf of various subsidiaries identified therein, with the Securities and Exchange Commission on February 6, 2019. BlackRock reported that it owned beneficially 69,532,636 common shares, held sole power to dispose or to direct the disposition of 69,532,636 common shares, and held sole power to vote or direct the voting power over 60,842,357 common shares. Each of the following entities has been identified by BlackRock as a direct or indirect subsidiary that beneficially owns KeyCorp common shares: BlackRock Life Limited; BlackRock International Limited; BlackRock Advisors, LLC; BlackRock (Netherlands) B.V.; BlackRock Institutional Trust Company, National Association; BlackRock Asset Management Ireland Limited; BlackRock Financial Management, Inc.; BlackRock Japan Co., Ltd.; BlackRock Asset Management Schweiz AG; BlackRock Investment Management, LLC; BlackRock Investment Management (UK) Limited; BlackRock Asset Management Canada Limited; BlackRock (Luxembourg) S.A.; BlackRock Investment Management (Australia) Limited; BlackRock Advisors (UK) Limited; BlackRock Fund Advisors; BlackRock Asset Management North Asia Limited; BlackRock (Singapore) Limited; and BlackRock Fund Managers Ltd. The reported address of BlackRock is 55 East 52nd Street, New York, NY 10055.

 

(9)

Based solely upon information contained in the Schedule 13G filed by J.P. Morgan Chase & Co. (“JP Morgan”), for itself and on behalf of various subsidiaries identified therein, with the Securities and Exchange Commission on February 13, 2019. JP Morgan reported that it owned beneficially 52,334,060 common shares, held sole power to dispose or to direct the disposition of 51,580,509 common shares, held sole power to vote or direct the voting power over 42,803,288 common shares, held shared voting power over 472,453 common shares, and held shared power to dispose or to direct the disposition of 743,670 common shares. Each of the following entities has been identified by JP Morgan as a direct or indirect subsidiary that beneficially owns KeyCorp common shares: J.P. Morgan Investment Management Inc.; JPMorgan Chase Bank, National Association; JPMorgan Asset Management (UK) Limited; J.P. Morgan International Bank Limited; J.P. Morgan (Suisse) SA; J.P. Morgan Trust Company of Delaware; J.P. Morgan Securities LLC; and J.P. Morgan Private Investments Inc. The reported address of JP Morgan is 270 Park Avenue, New York, NY 10017.

 

				21

Ownership of KeyCorp Equity Securities

 

 

Executive Offi cer and Director Equity Ownership Guidelines

 

KeyCorp’s Corporate Governance Guidelines state that, by the fifth anniversary of his or her election to the Board or as an officer of KeyCorp: (i) each non-employee director should own KeyCorp equity securities with a value at least equal to five times KeyCorp’s non-employee director annual retainer, including at least 1,000 directly-owned KeyCorp common shares; (ii) the Chief Executive Officer should own KeyCorp equity securities with a value at least equal to six times her base salary, including at least 10,000 directly-owned KeyCorp common shares; (iii) the senior executives who are members of KeyCorp’s Management Committee should own KeyCorp equity securities with a value at least equal to three times his or her base salary, including at least 5,000 directly-owned KeyCorp common shares; and (iv) other senior executives should own KeyCorp equity securities with a value at least equal to two times his or her base salary, including at least 2,500 directly-owned KeyCorp common shares. For more information, please see our Compensation Discussion and Analysis beginning on page 24 of this proxy statement.

Pledging and Speculati ve Trading of KeyCorp Securities

 

Our insider trading policy restricts our employees, officers and directors from engaging in speculative trading transactions (including hedging transactions, such as the use of prepaid variable forwards, equity swaps, collars, or exchange funds) involving KeyCorp securities and from pledging KeyCorp securities. During 2018, no director or executive officer pledged as collateral or engaged in speculative trading with respect to any KeyCorp securities.

Section 16(a) Beneficial O wnership Reporting Compliance

 

KeyCorp’s directors, executive officers, and beneficial owners of more than 10% of any class of equity securities of KeyCorp are required to report their initial ownership and certain changes in ownership of KeyCorp securities to the Securities and Exchange Commission. The Securities and Exchange Commission has established certain due dates and requirements for these reports. Based upon our review of records received by KeyCorp and written representations from the directors and executive officers, KeyCorp knows of no director, executive officer, beneficial owner of more than 10% of any class of equity securities of KeyCorp who failed to timely file any report required to be filed during 2018.

Equity Compensation Pla n Information

 

KeyCorp is authorized to issue its common shares under the KeyCorp 2013 Equity Compensation Plan (the “2013 Plan”) and the KeyCorp Amended and Restated Discounted Stock Purchase Plan (the “DSP Plan”). KeyCorp is no longer authorized to issue its common shares under, but still has awards outstanding under: (i) the KeyCorp 2010 Equity Compensation Plan (the “2010 Plan”); (ii) the KeyCorp Deferred Equity Allocation Plan; (iii) the KeyCorp Directors’ Deferred Share Plan; and (iv) the KeyCorp 2004 Equity Compensation Plan (the “2004 Plan”).

Shareholders approved the 2013 Plan at the 2013 Annual Meeting of Shareholders. At December 31, 2018, 24,147,422 common shares remained available for future issuance under the 2013 Plan. Shareholders approved the DSP Plan in 2003. At December 31, 2018, 1,467,162 common shares remained available for future issuance under the DSP Plan.

The following table provides information about KeyCorp’s equity compensation plans as of December 31, 2018:

 

		(a)					(b)					(c)
Plan Category		Securities to be issued upon exercise of outstanding options, warrants and rights (#)					Weighted- average exercise price of outstanding options, warrants and rights ($)					Securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (#)(2)
Equity compensation plans approved by security holders (1)				8,000,502					11.89					25,614,584
Equity compensation plans not approved by security holders (3)				—					—					—
Total				8,000,502					11.89					25,614,584

 

(1)

The table does not include 17,107,661 unvested shares of time-lapsed and performance-based restricted stock awarded under the 2013 Plan, the 2010 Plan, and the 2004 Plan, and 286,561 unvested shares of time-lapsed restricted stock grants assumed in connection with the First Niagara merger in 2016. These unvested restricted shares were issued when awarded and consequently are included in KeyCorp’s common shares outstanding.

 

22

Ownership of KeyCorp Equity Securities

 

 

 

(2)

The Compensation Committee of the Board has determined that KeyCorp may not grant options to purchase KeyCorp common shares, shares of restricted stock, or other share grants under its long-term compensation plans in an amount that exceeds six percent of KeyCorp’s outstanding common shares in any rolling three-year period.

 

(3)

The table does not include outstanding options to purchase 95,833 common shares assumed in connection with the First Niagara merger in 2016. At December 31, 2018, these assumed options had a weighted-average exercise price of $13.60 per share. No additional options may be granted under the plan that governs these options.

More information about these awards can be found in Note 16 (“Stock-Based Compensation”) to the Consolidated Financial Statements beginning on page 149 of our Annual Report on Form 10-K for the year ended December 31, 2018 (the “2018 Annual Report”), which was filed with the Securities and Exchange Commission on February 25, 2019.

 

				23

Compensation Discussion and Analysis

 

 

Compensation Di scussion and Analysis

This Compensation Discussion and Analysis describes the pay of our “Named Executive Officers” listed below, along with their titles as of December 31, 2018:

 

Beth E. Mooney		Andrew J. “Randy” Paine III
Chairman and Chief Executive Officer		Co-Head, Key Corporate Bank
Donald R. Kimble		Mark W. Midkiff
Chief Financial Officer and Vice Chairman		Chief Risk Officer
Christopher M. Gorman
President of Banking and Vice Chairman

Additional information on the compensation of our Named Executive Officers can be found in the 2018 Summary Compensation Table on page 39 of this proxy statement.

Table of C on tents

 

The contents of the Compensation Discussion and Analysis are organized as follows:

 

Overview of 2018 Performance			24
Objectives of Our Compensation Program			24
Elements of Our Pay Program			27
Total Pay of Our Named Executive Officers			31

Alignment of Pay and Performance			33
Other Elements of Compensation			34
How We Make Pay Decisions			35

 

Overview of 201 8 Performance

 

2018 was a successful year as we continue to grow, invest for our future, and deliver on our financial commitments. We continue to deliver results and drive shareholder returns through sound, profitable growth across our franchise, while effectively managing risk and capital. We believe that Key’s distinctive business model, targeted scale and focused execution position us to outperform. Highlights of 2018 performance include:

 

•

The sixth consecutive year of positive operating leverage, driven by record full year revenue and all-time high revenue in several fee-based businesses, including investment banking and debt placement.

 

•

Achievement of a meaningful increase in earnings per share (“EPS”) compared to 2017.

 

•

Reduction in our cash efficiency ratio to approach our long-term targeted range.

 

•

Meaningful improvement from the prior year in our return on tangible common equity ratio.

The Compensation Committee considered Key’s performance with respect to these financial metrics and strategic objectives when evaluating the performance of our Named Executive Officers and establishing 2018 pay.

Objectives of Our C ompe nsation Program

 

Our success depends on the ability to attract, retain, motivate, and develop our people. Competition for talent in our business is ongoing, and we make investments to hire and retain the people we need to serve our customers. Our compensation program is designed to reward employees based on performance, be informed by the market, and align with the interests of our shareholders and the expectations of regulators.

 

24