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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

(Rule 14a-101)

Proxy Statement Pursuant to Section 14(a) of

The Securities Exchange Act of 1934

(Amendment No.     )

 

þ  Filed by the Registrant		¨  Filed by a Party other than the Registrant

 

Check the appropriate box:
¨		Preliminary Proxy Statement
¨		Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
þ		Definitive Proxy Statement
¨		Definitive Additional Materials
¨		Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12

REGIONS FINANCIAL CORPORATION

(Name of Registrant as Specified in its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

 

Payment of Filing Fee (Check the appropriate box):
þ		No fee required.
¨		Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
		(1)Title of each class of securities to which transaction applies:
		(2)Aggregate number of securities to which transaction applies:
		(3)Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
		(4)Proposed maximum aggregate value of transaction:
		(5)Total fee paid:
¨		Fee paid previously with preliminary materials.
¨		Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
		(1)Amount Previously Paid:
		(2)Form, Schedule or Registration Statement No.:
		(3)Filing Party:
		(4)Date Filed:

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REGIONS FINANCIAL CORPORATION

 

 

 

PROXY STATEMENT

AND

NOTICE OF 2015 ANNUAL MEETING OF STOCKHOLDERS

 

 

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REGIONS FINANCIAL CORPORATION

1900 Fifth Avenue North

Birmingham, Alabama 35203

To our Stockholders:

You are cordially invited to attend the 2015 annual meeting of stockholders of Regions Financial Corporation, to be held at 9:00 A.M., local time, on April 23, 2015, in the Upper Lobby Auditorium of Regions Bank, 1901 Sixth Avenue North, Birmingham, Alabama 35203. We hope that you will be able to attend.

The formal notice of the annual meeting setting forth the business that is expected to come before the meeting follows this letter. Our materials include our proxy statement, which contains a letter from our Lead Independent Director and form of proxy. If you have elected to receive your proxy statement by mail, then accompanying the proxy statement is our Annual Report on Form 10-K for the year ended December 31, 2014 and Chairman’s Letter. If you have elected to receive your proxy statement electronically, then our Annual Report on Form 10-K for the year ended December 31, 2014 and Chairman’s Letter are available on the Internet with the proxy statement.

We are continuing to use the Securities and Exchange Commission rule that allows us to furnish our proxy materials to stockholders over the Internet. This means most of our stockholders will receive only a notice containing instructions on how to access the proxy materials over the Internet and vote online. We believe this offers a convenient way for stockholders to review the materials and substantially reduces our printing and mailing expenses. If you receive the notice but would still like to receive paper copies of the proxy materials, please follow the instructions on the notice or on the website referred to on the notice. We ask you to consider signing up to receive these materials electronically in the future by following the instructions after you vote your shares over the Internet. By delivering proxy materials electronically to our stockholders, we reduce the costs of printing and mailing our proxy materials. To enroll for electronic delivery, visit http://enroll.icsdelivery.com/rf.

Your vote is important, and in order that we may be assured of a quorum, we urge you to vote as soon as possible, even if you plan to attend the meeting. The notice and the proxy statement contain instructions on how you can vote your shares over the Internet, by telephone or by mail if you have received a printed copy of the materials and proxy card.

If your shares are held for you by your broker, it is important that you instruct your broker on how you want to vote. Under New York Stock Exchange rules, your broker will not be able to use its discretion to vote your shares for the election of Directors or matters related to executive compensation or the Regions Financial Corporation 2015 Long Term Incentive Plan. Please instruct your broker on how you want to vote by following the instructions on the form sent by your broker.

Thank you for your continued investment in and support of Regions Financial Corporation, and I look forward to welcoming you to our annual meeting.

March 10, 2015

Sincerely,

 

O. B. Grayson Hall, Jr.

Chairman, President and Chief Executive Officer

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TABLE OF CONTENTS

TABLE OF CONTENTS

NOTICE OF 2015 ANNUAL MEETING OF STOCKHOLDERS			1
PROXY STATEMENT			2
PROXY SUMMARY			3
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING			14
OWNERSHIP OF REGIONS COMMON STOCK			19
Security Ownership of Certain Beneficial Owners			19
Security Ownership of Directors and Executive Officers			19
Section 16(a) Beneficial Ownership Reporting Compliance			20
PROPOSAL 1 — ELECTION OF DIRECTORS			21
What am I voting on?			21
What vote is required to approve this proposal?			21
What does the Board recommend?			21
What is the makeup of the Board, and how often are the members elected?			21
What if a nominee is unable or unwilling to serve?			21
What if a Director nominee does not receive a majority of votes cast?			21
What criteria were considered by the NCG Committee in selecting the nominees?			22
What is the average tenure of the Directors?			23
Who are this year’s nominees?			23
How much stock are Directors expected to own?			30
How are Directors compensated?			30
CORPORATE GOVERNANCE			32
Letter from the Lead Independent Director			32
Our Board Leadership Structure			33
Board, Committee and Individual Director Evaluation Program			34
Director Independence			34
Family Relationships			36
Transactions with Directors			36
Other Business Relationships and Transactions			37
Policies Relating to Transactions with Related Persons and Code of Conduct			37
Director Attendance			39
Director Attendance at the Annual Meeting			39
Meetings of Independent Directors			40
Communications between Stockholders and Other Interested Parties and the Board of Directors			40
Board’s Role in the Risk Management Process			40
Relationship of Compensation Policies and Practices to Risk Management			41
Compensation Consultant Disclosure			42
Compensation Committee Interlocks and Insider Participation			42
Committees of the Board of Directors			42
Board and Committee Meetings in 2014			43
Committee Composition			43
Audit Committee			44
Compensation Committee			45
Nominating and Corporate Governance Committee			46
Risk Committee			47

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PROPOSAL 2 — RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM			48
What am I voting on?			48
What vote is required to approve this proposal?			48
What does the Board recommend?			48
What services are provided by Ernst & Young LLP?			48
How much was Ernst & Young LLP paid for 2014 and 2013?			48
Will a representative of Ernst & Young LLP be present at the meeting?			49
How long has Ernst & Young LLP been Regions’ independent auditor?			49
AUDIT COMMITTEE REPORT			50
PROPOSAL 3 — NONBINDING STOCKHOLDER APPROVAL OF EXECUTIVE COMPENSATION (“SAY-ON-PAY”)			51
What am I voting on?			51
What vote is required to approve this proposal?			51
What does the Board recommend?			51
What is the effect of this resolution?			51
COMPENSATION DISCUSSION AND ANALYSIS			52
How Pay is Tied to Company Performance			52
Summary of our Pay for Performance Decisions for 2014			53
Compensation Philosophy and Objectives			54
2014 Compensation Decisions — What We Paid and Why			55
Other Benefits and Perquisites			61
Compensation Framework, Policies, Processes and Risk Considerations			62
Other Policies and Practices Impacting Compensation Decisions			64
Change-in-Control, Post-Termination and Other Employment Arrangements			67
COMPENSATION COMMITTEE REPORT			68
COMPENSATION OF EXECUTIVE OFFICERS			69
Summary Compensation Table			69
Grants of Plan-Based Awards			71
Outstanding Equity Awards at December 31, 2014			72
Option Exercises and Stock Vested			73
Pension Benefits			73
Nonqualified Deferred Compensation			75
Potential Payments by Regions Upon Termination or Change-in-Control			76
PROPOSAL 4 – APPROVAL OF THE REGIONS FINANCIAL CORPORATION 2015 LONG TERM INCENTIVE PLAN			80
What am I voting on?			80
What vote is required to approve this proposal?			80
What does the Board recommend?			80
What is the purpose of the 2015 Plan?			80
Does the 2015 Plan reflect best practices?			80
What are the features of the 2015 Plan?			80
What are the federal income tax consequences of participating in the 2015 Plan?			84
What are the 2015 Plan benefits?			85
Equity Compensation Plan Information			86

 

OTHER MATTERS			87
Important Notice Regarding Delivery of Security Holder Documents			87
Cost of Proxy Solicitation			87
Submission of Stockholder Proposals or Nominations for 2016 Annual Meeting of Stockholders			87
Other Business			88
APPENDIX A: GAAP TO NON-GAAP AND OTHER RECONCILIATIONS			A-1
APPENDIX B: REGIONS FINANCIAL CORPORATION 2015 LONG TERM INCENTIVE PLAN			B-1

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REGIONS FINANCIAL CORPORATION

1900 Fifth Avenue North

Birmingham, Alabama 35203

NOTICE OF 2015 ANNUAL MEETING OF STOCKHOLDERS

To be held Thursday, April 23, 2015

TO THE STOCKHOLDERS OF REGIONS FINANCIAL CORPORATION:

The 2015 Annual Meeting of Stockholders of Regions Financial Corporation (“Regions”), a Delaware corporation, will be held:

Date: Thursday, April 23, 2015

Time: 9:00 A.M., local time

Place: Upper Lobby Auditorium of Regions Bank, 1901 Sixth Avenue North, Birmingham, Alabama 35203

Record Date: February 23, 2015

The annual meeting is being held for the following purposes:

 

1.	Election to our Board of Directors of the 12 Director nominees named in the proxy statement to serve as Directors until the next annual meeting of stockholders or in each case until their successors are duly elected and qualified;

 

2.	Ratification of the selection of Ernst & Young LLP as Regions’ independent registered public accounting firm for the year 2015;

 

3.	Nonbinding stockholder approval of executive compensation; and

 

4.	Approval of the Regions Financial Corporation 2015 Long Term Incentive Plan.

We also will act on any other business that may properly come before the meeting, although we have not received notice of any other matters that may be properly presented.

The Regions Board of Directors fixed the close of business on February 23, 2015, as the record date for the annual meeting of stockholders. This means that only Regions common stockholders of record at such date are entitled to notice of, and to vote at, the annual meeting or any adjournment or postponement of the annual meeting. A complete list of Regions stockholders of record entitled to vote at the annual meeting will be made available for inspection by any Regions stockholder for 10 days prior to the annual meeting at the principal executive offices of Regions and at the time and place of the annual meeting.

The annual meeting will begin promptly at 9:00 A.M., local time, and check-in will begin at 8:00 A.M., local time. Please allow ample time for the check-in process. To be admitted to our annual meeting, you must present proof of your stock ownership as of the record date and a valid, government-issued photo identification. See page 15 for further details regarding proof of stock ownership. Your vote is important. Whether or not you plan to attend the annual meeting, you are encouraged to submit your proxy with voting instructions. To vote your shares, please follow the instructions in the Notice of Internet Availability of Proxy Materials or the proxy card you received in the mail. If you vote by telephone or via the Internet, you need not return a proxy card. You may revoke your proxy at any time before the vote is taken by notifying the Corporate Secretary of Regions in writing or by validly submitting another proxy by telephone, Internet or mail. If you are present at the meeting, you may vote your shares in person, which will supersede your proxy. If you hold shares through a broker or other custodian, check the voting instructions provided to you by that broker or custodian.

March 10, 2015

By Order of the Board of Directors

 

Fournier J. Gale, III

Corporate Secretary

 

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REGIONS FINANCIAL CORPORATION

1900 Fifth Avenue North

Birmingham, Alabama 35203

March 10, 2015

PROXY STATEMENT

The Board of Directors (the “Board”) of Regions Financial Corporation (“Regions” or the “Company”) is furnishing you with this proxy statement to solicit proxies on its behalf to be voted at the 2015 annual meeting of stockholders of Regions. The 2015 annual meeting will be held in the Upper Lobby Auditorium of Regions Bank, 1901 Sixth Avenue North, Birmingham, Alabama 35203 on Thursday, April 23, 2015, at 9:00 A.M., local time. The proxies also may be voted at any adjournments or postponements of the annual meeting.

The mailing address of our principal executive offices is 1900 Fifth Avenue North, Birmingham, Alabama 35203. We are first furnishing the proxy materials to stockholders on March 10, 2015.

All properly executed written proxies and all properly completed proxies submitted by telephone or Internet that are delivered pursuant to this solicitation will be voted at the 2015 annual meeting of stockholders in accordance with the directions given in the proxy, unless the proxy is revoked prior to completion of voting at the meeting.

Only owners of record of shares of Regions common stock as of the close of business on February 23, 2015, the record date, are entitled to notice of, and to vote at, the meeting or at any adjournments or postponements of the meeting. Each owner of record on the record date is entitled to one vote for each share of common stock held. On February 23, 2015, there were 1,342,806,171 shares of common stock issued and outstanding.

 

Admission to the Annual Meeting

Admission to our annual meeting is limited to our registered and beneficial stockholders as of the record date and persons holding valid proxies from stockholders of record. To be admitted to our annual meeting, you must bring a valid, government-issued photo identification and proof of your stock ownership as of the record date, such as:

 

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If you are a stockholder of record, bring the Admission Ticket appearing on the top of your proxy card or bring the Notice of Internet Availability of Proxy Materials received in the mail.

 

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If your shares are held at a bank or broker, bring the Notice of Internet Availability of Proxy Materials you received in the mail or a brokerage statement evidencing ownership of Regions common stock as of the record date.

 

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If you received our meeting materials electronically, bring a copy of the e-mail notification.

Stockholders who do not present the Admission Ticket or other proof of stock ownership will be admitted upon verification of ownership at the registration desk.

The use of any electronic devices such as cameras (including cell phones with photographic capabilities), recording devices, smart phones, tablets, laptops and other similar devices is strictly prohibited. See page 15 for further details.

Individuals with a disability requesting assistance please contact Regions’ Americans with Disabilities Act Manager Kathy Lovell by email at kathy.lovell@regions.com, by phone at 205-264-7495 or toll-free 1-800-734-4667, or using Regions’ Telecommunication Device for the Deaf (TTY/TDD) toll free at 1-800-374-5791.

 

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QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING

 

QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING

What is the purpose of the meeting?

 

At our 2015 annual meeting, stockholders will act upon the matters outlined in the Notice of 2015 Annual Meeting of Stockholders on page 1 and described in this proxy statement.

What matters or proposals are scheduled to be presented, and what vote is required to approve each proposal?

 

The matters to be acted upon at the meeting are:

 

				Board Recommendation		More Information		Votes Required for Approval
PROPOSAL 1		Election of Directors		FOR each Director Nominee		Page 21		Affirmative “FOR” vote of a majority of the votes cast for or against each of these proposals.   Abstentions and broker non-votes have no effect on the vote results for these proposals.
PROPOSAL 2		Ratification of Selection of Independent Registered Public Accounting Firm		FOR		Page 48
PROPOSAL 3		Nonbinding Stockholder Approval of Executive Compensation		FOR		Page 51
PROPOSAL 4		Approval of the Regions Financial Corporation 2015 Long Term Incentive Plan		FOR		Page 80		Affirmative “FOR” vote of a majority of the votes cast on this proposal with abstentions treated as votes cast.   Abstentions have the same effect as a vote cast “Against” this proposal. Broker non-votes have no effect on the vote results for this proposal.

Could other matters be decided at the annual meeting?

 

We are not aware of any other matters that will be voted on at the annual meeting. However, if other matters properly come before the annual meeting, or at any adjournment or postponement thereof, the persons named as proxies for stockholders will vote on those matters in a manner they consider appropriate.

What is a proxy statement, and what is a proxy?

 

A proxy statement is a document that we are required to give you, or provide you access to, when we are soliciting your vote in accordance with the federal securities laws and the regulations of the SEC.

A proxy is your designation of another person to vote stock that you own. That other person is called a proxy. If you designate someone as your proxy in a written document, that document also is called a proxy or a proxy card. When you designate a proxy, you also may direct the proxy how to vote your shares. We refer to this as your “proxy vote.”

Fournier J. Gale, III, our General Counsel and Corporate Secretary, and Jeffrey A. Lee, our Deputy General Counsel, have been designated as the proxies to cast the votes of our stockholders at our 2015 annual meeting.

 

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QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING

What is Notice and Access?

 

Notice and Access is a SEC rule that allows us to furnish our proxy materials over the Internet to our stockholders instead of mailing paper copies of those materials to each stockholder. As a result, beginning on or about March 11, 2015, we will send to most stockholders by mail or e-mail a Notice of Internet Availability of Proxy Materials containing instructions on how to access our proxy materials over the Internet and vote online.

The Notice of Internet Availability of Proxy Materials is not a proxy card and cannot be used to vote your shares. If you received a notice this year, you will not receive paper copies of the proxy materials unless you request the materials by following the instructions on the notice or on the website referred to in the notice.

Who is entitled to vote at the meeting, and what are my voting rights?

 

The Board has set February 23, 2015 as the record date for the annual meeting. If you were a stockholder of record at the close of business on February 23, 2015, you are entitled to vote at the meeting. As of the record date, 1,342,806,171 shares of our common stock were issued and outstanding and, therefore, eligible to be voted at the meeting. Holders of our common stock are entitled to one vote per share. Therefore, a total of 1,342,806,171 votes are entitled to be cast at the meeting. There is no cumulative voting.

Holders of our Depositary Shares, each representing 1/40th interest in a share of our Non-Cumulative Perpetual Preferred Stock, Series A (the “Class A Depositary Shares”) or representing 1/40th interest in a share of our Non-Cumulative Perpetual Preferred Stock, Series B (the “Class B Depositary Shares”), are not entitled to vote at the meeting.

How many shares must be present to hold the meeting?

 

A majority of the outstanding shares of Regions common stock must be present, in person or by properly executed or otherwise documented proxy, to constitute a quorum at the annual meeting. Abstentions and broker non-votes will be counted for the purpose of determining whether a quorum is present.

We urge you to vote promptly by proxy, even if you plan to attend the meeting, so that we will know as soon as possible that enough shares will be present for us to hold the meeting.

Who can attend the annual meeting?

 

Only common stockholders of Regions at the close of business on February 23, 2015, the record date, may attend the annual meeting.

Admission to the annual meeting will be on a first-come, first-served basis. You will need a valid government-issued identification to gain admission. Admission to our annual meeting is limited to our registered and beneficial stockholders as of the record date and persons holding valid proxies from stockholders of record.

To be admitted to our annual meeting, you also must bring proof of your stock ownership as of the record date, such as the Admission Ticket appearing on your proxy card or the Notice of Internet Availability of Proxy Materials if you are a stockholder of record. If your shares are held at a bank or broker, bring the Notice of Internet Availability of Proxy Materials you received in the mail or a brokerage statement evidencing ownership of Regions common stock as of the record date. Stockholders who do not present the Admission Ticket or other proof of ownership will be admitted upon verification of ownership at the registration desk.

For security reasons, no large bags, briefcases or packages will be permitted in the annual meeting, and security measures will be in effect to provide for the safety of attendees. The use of any electronic devices such as cameras (including cell phones with photographic capabilities), recording devices, smartphones, tablets, laptops and other similar devices is strictly prohibited.

What is the difference between being a stockholder of record and a “street name” holder or “beneficial owner”?

 

If your shares are registered directly in your name with our transfer agent, Computershare Investor Services, you are considered the stockholder of record with respect to those shares.

If your shares are held in a brokerage account or by another nominee or custodian, you are considered the “beneficial owner” of shares held in “street name.” If you hold your shares in street name, you will have the opportunity to instruct your broker, bank, trustee or other nominee as to how to vote your shares. Street name stockholders may only vote in person if they have a legal proxy as subsequently discussed in detail.

 

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QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING

 

How do I vote my shares as a stockholder of record?

 

If you are the record holder of your shares, there are several ways you can vote by proxy:

 

		To vote with your mobile device (tablet or smartphone), scan the Quick Response Code that appears on your proxy card or Notice of Internet Availability of Proxy Materials (may require free software).
		To vote over the Internet visit www.proxyvote.com and enter your 12 digit control number that appears on your proxy card, e-mail notification or Notice of Internet Availability of Proxy Materials.
		To vote by telephone call 1-800-690-6903 and follow the recorded instructions. If you vote by telephone, you also will need your control number referred to above.
		If you request printed copies of the proxy materials be sent to you by mail, vote by proxy by filling out the proxy card and return it in the envelope provided to: Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
		Additionally, you may vote in person at the meeting.

If you have Internet access, we encourage you to record your vote through the Internet to reduce corporate expenses. The deadline for voting by telephone or through the Internet is 11:59 P.M., Eastern Time on April 22, 2015. If you vote by mail, your proxy card must be received by April 22, 2015.

How do I vote my shares held in street name?

 

If your shares are held in nominee or street name, you may vote your shares before the meeting by phone or over the Internet by following the instructions on the Notice of Internet Availability of Proxy Materials you received or, if you received a Voting Instruction Form from your brokerage firm, by mail by completing, signing and returning the form you received. You should check your Voting Instruction Form to see if Internet or telephone voting is available to you. Although most brokers and nominees offer telephone and Internet voting, availability and specific processes will depend on their voting arrangements. See the Notice of Internet Availability of Proxy Materials or Voter Instruction Form for available options.

If you have Internet access, we encourage you to record your vote through the Internet to reduce corporate expenses. The deadline for voting by telephone or through the Internet for most street name holders is 11:59 P.M., Eastern Time on April 22, 2015. If you vote by mail, your Voter Instruction Form must be received by April 22, 2015.

If you hold your shares through a broker, bank or other nominee and you wish to vote in person at the meeting, you will need to bring a legal proxy to the meeting, which you must request through your broker, bank, or other nominee. Note that if you request a legal proxy, any proxy with respect to your shares of our common stock previously executed by your broker, bank or other nominee will be revoked and your vote will not be counted unless you appear at the meeting and vote in person or legally appoint another proxy to vote on your behalf.

How do I vote if I hold my stock through the Regions 401(k) Plan?

 

If you are a participant in the Regions 401(k) Plan, the electronic voting instructions constitute the voting instruction form and cover all shares you may vote under the Plan. Under the terms of the Plan, the Plan trustee votes all shares held by the Plan, but each participant may direct the trustee how to vote the shares of Regions common stock allocated to his or her Regions 401(k) Plan account. If you own shares through the Regions 401(k) Plan and do not submit voting instructions, the Plan trustee will vote the shares in favor of Proposals 1, 2, 3 and 4. To vote your stock held in the Regions 401(k) Plan, you must do one of the following by 11:59 P.M. on April 20, 2015 (the “cut off date”):

 

		To vote with your mobile device (tablet or smartphone), scan the Quick Response Code that appears on your proxy card or Notice of Internet Availability of Proxy Materials (may require free software).
		To vote by telephone, call 1-800-690-6903 and follow the recorded instructions. If you vote by telephone, you will also need your control number referred to above.
		If you request printed copies of the proxy materials be sent to you by mail, vote by proxy by filling out the proxy card and return it in the envelope provided to: Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
		To vote over the Internet visit www.proxyvote.com and enter your 12 digit control number that appears on your proxy card, e-mail notification or Notice of Internet Availability of Proxy Materials.

 

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QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING

How do I vote if I hold my stock through the dividend reinvestment plan?

 

If you are a participant in the Computershare Investment Plan for Regions Financial Corporation (the dividend reinvestment plan), the proxy card or electronic voting instructions cover all shares allocated to your account under the plan. If you do not return your proxy card, or vote by telephone or over the Internet, your shares in the plan will not be voted. To vote your stock held in the dividend reinvestment plan, follow the above instructions.

Can I change my vote after submitting my proxy?

 

If you voted over the Internet or by telephone, you can change your vote by voting again over the Internet or by telephone before 11:59 P.M., Eastern Time on April 22, 2015.

You can revoke your proxy at any time before the vote is taken at the annual meeting by submitting to our Corporate Secretary written notice of revocation or a properly executed proxy of a later date, or by attending the annual meeting and voting in person. Written notices of revocation and other communications about revoking Regions proxies should be addressed to:

Regions Financial Corporation

1900 Fifth Avenue North

Birmingham, Alabama 35203

Attention: Fournier J. Gale, III, Corporate Secretary

If your shares are held in street name, you should follow the instructions of your broker regarding the revocation of proxies.

What if I do not specify how I want my shares voted?

 

If you requested printed copies of the proxy materials and sign and return your proxy card without giving specific voting instructions, your proxy will be voted in accordance with the Board’s recommendations.

Our telephone and Internet voting procedures do not permit you to submit your proxy vote by telephone or Internet without specifying how you want your shares voted.

Will my shares be voted if I don’t provide my proxy and don’t attend the Annual Meeting?

 

If you do not provide a proxy or vote your shares held in your name, your shares will not be voted.

As previously described, if you hold your shares through the Regions 401(k) Plan and do not vote your shares, your shares (along with all other shares in the Plan for which votes are not cast) will be voted by the Plan trustee and in favor of Proposals 1, 2, 3 and 4.

If you are a participant in the Computershare Investment Plan for Regions and do not return your proxy card, or vote by telephone or over the Internet, your shares in that plan will not be voted.

If you hold your shares in street name and do not give your broker instructions on how to vote your shares, see the next question.

What if I am a beneficial owner and do not give voting instructions to my broker?

 

As a beneficial owner, in order to ensure your shares are voted in the way you would like, you must provide voting instructions to your broker by the deadline provided in the materials you receive from your broker. If you do not provide voting instructions to your broker, whether your shares can be voted depends on the item being considered for vote. Brokers may not vote shares held in street name on non-routine matters unless they have received voting instructions from the beneficial owners on how to vote those shares. If you hold your shares in street name and do not give your broker instructions on how to vote your shares, the broker will return the proxy card without voting on proposals not considered “routine.” This is known as a broker non-vote.

Therefore, without instructions from you, the broker may not vote on any proposal other than Proposal 2 (the ratification of selection of Ernst & Young LLP as our independent registered public accounting firm for 2015).

Brokers and other nominees will not be able to vote your shares regarding Proposal 1 (election of Directors), Proposal 3 (nonbinding stockholder approval of executive compensation), or Proposal 4 (approval of the Regions Financial Corporation 2015 Long Term Incentive Plan) unless you return your voting instruction form or submit your voting instructions by telephone or over the Internet.

 

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QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING

 

Has Regions hired a proxy solicitor?

 

We have made arrangements with Innisfree M&A Incorporated to assist us in soliciting proxies. We also may use several of our associates, without additional compensation, to solicit proxies from Regions stockholders, either personally or by telephone, facsimile, e-mail or letter on Regions’ behalf.

If you have any questions or need assistance voting your shares, please contact our proxy solicitor, Innisfree M&A Incorporated:

 

		Innisfree M&A Incorporated, 501 Madison Avenue, 20th Floor, New York, NY 10022.
		Stockholders may call Innisfree toll-free: 1-888-750-5834.
		Banks and brokers may call Innisfree collect: 1-212-750-5833.

How does the Board recommend that I vote?

 

For the reasons set forth in more detail later in this proxy statement, the Board recommends you vote:

 

•

FOR all the Director nominees named in this proxy statement (Proposal 1);

 

•

FOR the ratification of selection of Ernst & Young LLP as Regions’ independent registered public accounting firm for the year 2015 (Proposal 2);

 

•

FOR the nonbinding stockholder approval of executive compensation (Proposal 3); and

 

•

FOR approval of the Regions Financial Corporation 2015 Long Term Incentive Plan (Proposal 4).

All shares represented by valid proxies that we receive through this solicitation, and that are not revoked, will be voted in accordance with the instructions received.

Who counts the votes?

 

We have hired Broadridge Financial Solutions, Inc. to count the votes represented by proxies and cast in person by ballot and to act as Inspector of Election. A representative from Broadridge will be present at the annual meeting.

When will the Company announce the voting results?

 

We will announce the preliminary voting results at the annual meeting. The Company will report the final voting results in a Current Report on Form 8-K filed with the SEC within 4 business days of the annual meeting.

How can I access Regions’ proxy materials and annual report electronically?

 

This proxy statement, the Company’s 2014 Annual Report on Form 10-K, and the Chairman’s Letter are available to Regions stockholders on the Internet in the Investor Relations section of www.regions.com and at www.proxyvote.com through the notice and access process.

Most stockholders can elect to view future proxy statements and annual reports over the Internet instead of receiving paper copies in the mail. If you already have Internet access, there will be no additional charge for you to have electronic access through the Internet to our proxy materials and annual report.

If you are a registered stockholder, you can choose to receive future proxy statements and annual reports electronically by following the prompt if you choose to vote through the Internet. Stockholders who choose to view future proxy statements and annual reports through the Internet will receive an e-mail with instructions containing the Internet address of those materials, as well as voting instructions, approximately four weeks before future meetings.

If you elect to view our future proxy statements and annual reports electronically and vote your proxy through the Internet, your enrollment will remain in effect for all future stockholder meetings until you cancel it. To cancel, registered stockholders should access http://enroll.icsdelivery.com/rf and follow the instructions to cancel your enrollment. If you hold your Regions stock in nominee name, check the information provided by your broker or nominee for instructions on how to cancel your enrollment.

If at any time you would like to receive a paper copy of the proxy statement or annual report, please email investors@regions.com, call 205-326-5807, or write to Investor Relations, Regions Financial Corporation, 1900 Fifth Avenue North, Birmingham, Alabama 35203.

We also encourage you to visit the Investor Relations section of www.regions.com which, among other things, will enable you to learn more about Regions and elect to view future proxy statements and annual reports over the Internet instead of receiving paper copies in the mail.

 

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OWNERSHIP OF REGIONS COMMON STOCK

OWNERSHIP OF REGIONS COMMON STOCK

 

 

Security Ownership of Certain Beneficial Owners

 

The following table sets forth the beneficial ownership of our common stock by any stockholder known to or reasonably believed by us to own more than 5 percent of the outstanding shares of our common stock as of the Record Date. The number of shares and percentage of our outstanding common stock indicated in the table are as reported by the respective stockholder in its most recent Schedule 13G filed with the SEC:

 

		Amount and Nature of Beneficial Ownership
Name and Address of Beneficial Owner		No. of Common Shares				% of Class
BlackRock, Inc. (and subsidiaries) (1) 55 East 52nd Street New York, NY 10022			101,466,008				7.4%
The Vanguard Group, Inc. (and subsidiaries) (2) 100 Vanguard Blvd. Malvern, PA 19355			103,906,457				7.54%
State Street Corporation (and subsidiaries) (3) One Lincoln Street Boston, MA 02111			68,402,880				4.9%

(1)

This information was derived from the Schedule 13G filed on January 26, 2015 by BlackRock, Inc. and subsidiaries, which states that BlackRock has sole voting power over 88,765,790 shares and sole dispositive power over 101,466,008 shares as of December 31, 2014, which constitutes 7.6 percent of our outstanding common stock as of the Record Date.

(2)

This information was derived from the Schedule 13G filed on February 10, 2015 by The Vanguard Group, Inc. and subsidiaries, which states that The Vanguard Group, Inc. has sole voting power over 2,384,185 shares, sole dispositive power over 101,651,136 shares, and shared dispositive power over 2,255,321 shares as of December 31, 2014, which constitutes 7.7 percent of our outstanding common stock as of the Record Date.

(3)

This information was derived from the Schedule 13G filed on February 11, 2015 by State Street Corporation and subsidiaries, which states that State Street Corporation has shared voting and shared dispositive power over 68,402,880 shares as of December  31, 2014, which constitutes 5.1 percent of our outstanding common stock as of the Record Date.

Security Ownership of Directors and Executive Officers

 

 

 

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OWNERSHIP OF REGIONS COMMON STOCK

 

 

Name of Beneficial Owner		Shares of Common Stock (1)				Number of Shares Subject to Exercisable Options				Total Number of Shares Beneficially Owned				Percent of Class				Additional Underlying Units (2)				Total Shares Beneficially Owned Plus Additional Underlying Units
Current Directors including Nominees for Director
George W. Bryan (3)			121,526				14,000				135,526				*				4,198				139,724
Carolyn H. Byrd			38,773				0				38,773				*				28,017				66,790
David J. Cooper, Sr.			147,305				21,177				168,482				*				18,057				186,539
Don DeFosset			63,822				21,177				84,999				*				14,500				99,499
Eric C. Fast			50,981				0				50,981				*				66,473				117,454
O. B. Grayson Hall, Jr. (4)			478,281				451,700				929,981				*				1,210,216				2,140,197
John D. Johns (5)			36,389				0				36,389				*				38,134				74,523
James R. Malone (6)			37,224				27,237				64,461				*				65,037				129,498
Ruth Ann Marshall			45,808				0				45,808				*				36,349				82,157
Susan W. Matlock			51,200				14,000				65,200				*				78,893				144,093
John E. Maupin, Jr.			46,770				14,000				60,770				*				52,382				113,152
Charles D. McCrary			80,026				27,237				107,263				*				137,234				244,497
Lee J. Styslinger III			76,049				14,000				90,049				*				118,605				208,654
Other Named Executive Officers (See Summary Compensation Table)
David J. Turner, Jr. (7)			217,655				141,222				358,877				*				289,179				648,056
John B. Owen (8)			164,194				128,191				292,385				*				288,162				580,547
C. Matthew Lusco (9)			61,081				0				61,081				*				202,170				263,251
Fournier J. Gale, III (10)			45,627				114,065				159,692				*				202,248				361,940
Directors and Executive Officers as a group (28 persons)			2,810,028				4,434,490				7,244,518				*				4,516,135				11,760,653

*	Less than 1 percent

(1)	Includes share equivalents held in the Regions 401(k) Plan.

(2)	Additional underlying units may include notional shares allocated under the DDSIP, share equivalents held in the Regions Supplemental 401(k) Plan, restricted stock units or performance stock units.

(3)	Includes 18,580 shares held by Director Bryan’s spouse.

(4)	Includes 80 shares held for a child.

(5)	Includes 384 shares held by Director Johns’ spouse, 1,661 shares held in an IRA, and 7,100 shares held for Mr. Johns’ child.

(6)	Includes 27,537 shares pledged as collateral for a loan.

(7)	Includes 1,689 shares held by Mr. Turner’s spouse, 575 shares held for Mr. Turner’s children and 65,000 shares held in family trusts.

(8)	Includes 6,000 shares held by Mr. Owen’s spouse.

(9)	Includes 10,000 shares held in an IRA.

(10)	Includes 7,400 shares held in an IRA.

 

 

Section 16(a) Beneficial Ownership Reporting Compliance

 

 

 

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PROPOSAL 1 — ELECTION OF DIRECTORS

PROPOSAL 1 — ELECTION OF DIRECTORS

What am I voting on?

 

You are voting on a proposal to elect 12 nominees for a one-year term as Directors of the Company.

What vote is required to approve this proposal?

 

Each nominee requires the affirmative “FOR” vote of a majority of the votes cast for or against the nominee. Abstentions and broker non-votes have no effect on the vote results.

What does the Board recommend?

 

The Board unanimously recommends that you vote “FOR” each nominee standing for election as Director.

The nominees are: George W. Bryan; Carolyn H. Byrd; David J. Cooper, Sr.; Don DeFosset; Eric C. Fast; O. B. Grayson Hall, Jr.; John D. Johns; Ruth Ann Marshall; Susan W. Matlock; John E. Maupin, Jr.; Charles D. McCrary; and Lee J. Styslinger III.

What is the makeup of the Board, and how often are the members elected?

 

All Directors are elected at the annual meeting of stockholders each year. Our Board currently has 13 members.

Under the Company’s Corporate Governance Principles, each Director is required to retire immediately prior to the call to order of the next annual stockholders’ meeting of the Company following his or her 72^nd birthday. Director James R. Malone, having reached the Board retirement age, will not stand for re-election at our 2015 annual meeting. Our Board extends its sincere gratitude to Mr. Malone for over 20 years of service. Mr. Malone, a former Chair of our Compensation Committee and of our Risk Committee, has brought deep expertise in the areas of risk management and executive compensation to our Board, and this has made Regions a stronger company. All of us at Regions are infinitely grateful for his many contributions to the Company over his years of service and wish him great success in his future endeavors.

The Board has determined that effective at the annual meeting of stockholders, and in accordance with the By-Laws, the Board will consist of 12 members, to be elected for a term of one year expiring at the 2016 annual meeting. Any Director vacancies created between annual stockholder meetings (such as by a current Director’s death, resignation, removal or an increase in the number of Directors) may be filled by a majority vote of the remaining Directors then in office. Any Director appointed in this manner would hold office until the next election.

What if a nominee is unable or unwilling to serve?

 

This is not expected to occur, as all Director nominees have previously consented to serve for the upcoming one-year term. However, if it does occur and the Board does not elect to reduce the size of the Board, shares represented by proxies will be voted for a substitute candidate nominated by the Board.

What if a Director nominee does not receive a majority of votes cast?

 

Under our By-Laws, each of the 12 nominees for Director will be elected if a majority of the votes cast at the annual meeting at which a quorum is present are voted in favor of the Director. This means that the number of shares voted “for” a nominee must exceed the number of shares voted “against” the nominee. Shares voting “abstain” and broker non-votes will have no effect on the election.

Under the Corporate Governance Principles, an incumbent Director nominee who fails to receive a majority of the votes cast with respect to the election must submit his or her resignation. The NCG Committee will consider the resignation and any factors it deems relevant in deciding whether to accept the resignation and recommend to the Board the action to be taken. The Director whose resignation is under consideration will abstain from participating in any decision regarding his or her resignation.

The Board will take action within 90 days following certification of the stockholder vote unless such action would cause Regions to fail to comply with requirements of the New York Stock Exchange (the “NYSE”) or the securities laws, in which event Regions will take action as promptly as practicable while continuing to meet such requirements.

The Board will promptly disclose its decision and the reasons for the decision in a Current Report on Form 8-K filed with the SEC. If the resignation is not accepted, the Director will continue to serve until the next annual meeting and until the Director’s successor is duly elected and qualified.

 

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PROPOSAL 1 — ELECTION OF DIRECTORS

 

What criteria were considered by the NCG Committee in selecting the nominees?

 

The NCG Committee is charged with identifying and evaluating individuals to be recommended to the Board and are believed to be qualified to become Directors. The NCG Committee will consider and assess candidates consistent with criteria established by the Board and set forth in the Corporate Governance Principles and will consider such pertinent issues and factors bearing on the qualifications of candidates in light of such criteria. The NCG Committee may, from time to time, use its authority under its charter to retain a professional search firm to help identify candidates. The NCG Committee did not engage a professional search firm to assist in compiling information concerning potential Director nominees during 2014.

The Corporate Governance Principles affirm that the Board will seek members from diverse professional backgrounds who combine a broad spectrum of experience and expertise with a reputation for integrity, to ensure that the Board maintains an appropriate mix of skills and characteristics to meet the needs of the Company. Directors should have experience in positions with a high degree of responsibility, be leaders in the companies or institutions with which they are affiliated and be selected based upon contributions they can make to the Board and management, regardless of gender or race. To ensure full flexibility in choosing candidates for nomination, there is no formal process for implementing this policy. Board diversity is one component of the Board’s annual self-evaluation.

In addition to the items specified in the Corporate Governance Principles, the NCG Committee also considers the technical and professional skills that these nominees have gained through their leadership roles. Such skills may be in areas such as, but are not limited to, corporate governance, strategic planning, financial, information technology, business risk assessment, financial modeling, marketing, real estate, regulatory, international, human resources and legal.

Regions’ By-Laws establish the procedures and requirements for a stockholder to nominate candidates for Director. For Regions’ 2016 annual meeting, such notice must be submitted to the Corporate Secretary and be delivered no earlier than November 12, 2015 and no later than December 11, 2015. The notice must be accompanied by all required information relating to each nominee as described in Regions’ By-Laws, including information to be disclosed in solicitations of proxies for election of Directors in an election contest, or is otherwise required, in each case pursuant to Regulation 14A under the Exchange Act; such candidate’s written statement confirming the candidate will serve if nominated by the Board and elected by the stockholders, consenting to being named in the proxy statement as a nominee, agreeing to comply with the Company’s Code of Business Conduct and Ethics, General Policy on Insider Trading, Corporate Governance Principles and any other rule, regulation, policy or standard of conduct applicable to the Directors, and agreeing to provide any information required or requested by the Company or its subsidiaries, or banking or other regulators, including, without limitation, all information requested by the form of Directors questionnaire used by the Company; and whether each nominee is eligible for consideration as an independent director under the relevant standards contemplated by Item 407(a) of Regulation S-K under the Securities Act of 1933, as amended (or the corresponding provisions of any successor regulation) and the relevant listing standards of any exchange where the Company’s equity securities are listed. The Company’s By-Laws include additional information that is required to be submitted with the notice about the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made.

See the section Submission of Stockholder Proposals or Nominations for 2016 Annual Meeting of Stockholders on page 87 for further instructions. It is the current policy and practice of the NCG Committee to evaluate any qualified candidate for Director under the applicable criteria without regard to the source of the recommendation of the candidate. A stockholder who desires to recommend a candidate for Director should follow the procedure set forth in our By-Laws.

All of the 2015 nominees for Directors being voted upon at the annual meeting are Directors standing for re-election.

The NCG Committee considers a wide breadth of factors and characteristics when evaluating nominees. In selecting the 2015 nominees for directorships, the NCG Committee believes it selected candidates who possess the highest personal and professional ethics, integrity and values, and are committed to representing the long-term interests of Regions stockholders. In addition to reviewing a candidate’s background and accomplishments, the NCG Committee reviewed candidates for Director in the context of the current composition of the Board and Regions’ evolving needs. The NCG Committee also considered the number of boards on which the candidates already serve. It is the Board’s policy that at all times at least a substantial majority of its members meet the standards of independence promulgated by the SEC and the NYSE, and as set forth in the Company’s Corporate Governance Principles. The NCG Committee also sought to ensure that the Board reflects a range of talents, ages, skills, diversity, and expertise, particularly in the areas of accounting and finance, management, strategic planning, leadership, and financial related industries, sufficient to provide sound and prudent guidance with respect to Regions’ operations and interests.

The Board seeks to maintain a diverse membership. The Board also requires that its members be able to dedicate the time and resources necessary to ensure the diligent performance of their duties on the Company’s behalf, including attending Board and applicable Committee meetings.

The following are some of the key qualifications and skills the NCG Committee considered in evaluating the Director nominees. The individual biographies that follow provide additional information about each nominee’s specific experiences, qualifications and skills.

 

•

CEO or senior executive officer experience. We believe that Directors with CEO or senior executive officer experience provide Regions with valuable insights. These individuals have a record of leadership qualities and a practical understanding of organizations, processes, strategy, risk and risk management and the ability to drive change and growth. Through their service as top leaders at other organizations, they also bring valuable perspective on common issues affecting both their company and Regions.

 

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PROPOSAL 1 — ELECTION OF DIRECTORS

 

•

Banking and/or financial services industry experience. We seek to have Directors with leadership experience as executives or directors or experience in other capacities in the financial services industry. The financial services industry has issues, risks and opportunities that do not exist or are different from other types of business. Directors with financial services industry experience have valuable perspective on issues specific to Regions’ business.

 

•

Financial and/or accounting acumen. We believe that an understanding of finance and financial reporting processes is important for our Directors. Regions measures its operating and strategic performance by reference to financial targets. In addition, accurate financial reporting and robust auditing are critical to Regions’ success. We seek to have a number of Directors who qualify as an Audit Committee Financial Expert, and we expect all of our Directors to be financially knowledgeable.

 

•

Outside board experience. Directors who sit on other public company boards are able to provide valuable comparisons to Regions’ corporate practices. They often gain significant experience and skills from service on other public boards that prove to be valuable to Regions.

 

•

Innovator/growth creator. Regions’ future success depends, in part, on its success in growing our businesses. Our Directors with innovator/growth creator experience provide valued perspective on our ability to grow.

 

•

Operations acumen. Directors who have significant expertise in operations will often have a better dialog with management on operational issues. They can probe more deeply into potential problems and opportunities with respect to business operations.

 

•

Corporate governance and/or regulatory acumen. The financial services industry is heavily regulated. A Director who has significant corporate governance or experience with regulators is better situated to oversee and advise management on governance and regulatory issues.

 

•

Risk, compliance and/or legal acumen. Risk management, compliance and the management of legal risk are critical elements of our business. Directors with significant knowledge in these areas are better situated to oversee and advise management with respect to these complex issues.

 

•

Executive compensation and/or benefits acumen. Directors with a significant understanding of the issues involved with executive compensation are able to understand the various forms of compensation, the purpose of each type and how various elements of compensation can be used to motivate executives and drive performance while not encouraging imprudent risk.

 

•

Strategic planning or strategy development experience. Directors who understand how to plan for the future of the Company in a strategic fashion are better able to interact, oversee and advise management effectively with respect to the formulation and execution of the Company’s strategic planning.

 

•

Environmental and/or sustainability acumen. Directors who have a significant understanding of environmental issues or issues involving sustainability are better situated to oversee and advise management with respect to these important issues. For Regions, sustainability is not just an environmental issue; it is also an issue regarding making our business and profits sustainable.

What is the average tenure of the Directors?

 

Our Directors have a variety of lengths of tenure, with the average tenure being 10 years. However, of the 12 Director nominees 8 have served on our Board for 10 years or less. The NCG Committee, which is responsible for nominating individuals to the Board, considers tenure, among many other factors, when making its determination with respect to Director nominations.

By nominating Directors for continued service on our Board, the NCG Committee believes that a Director is able to become intimately acquainted with all aspects of our business and best direct our course. Our long-serving Directors have vital expertise and institutional knowledge that provides the Board with a better understanding of our business. The NCG Committee believes that this knowledge and perspective continue to generate long-term value for all of our stakeholders. Notwithstanding a Director’s tenure, each Director is evaluated annually by the NCG Committee to ensure he or she continues to possess valuable skills, talents and expertise that Regions believes are necessary for the long-term success of our Company.

Who are this year’s nominees?

 

The following biographies show the age and principal occupations during at least the past five years for each Director nominee, the year the Director was first elected to the Board of Regions, and the directorships he or she now holds and have held within at least the last five years with corporations subject to the registration or reporting requirements of the Exchange Act or registered under the Investment Company Act of 1940. The Board believes that all the nominees are highly qualified. Each Director’s key experiences, qualifications, attributes or skills that led the Board to conclude that he or she should serve as a Director of Regions are subsequently described. There are no family relationships among our Directors and Executive Officers.

On July 1, 2004, Regions became the successor by merger to Union Planters Corporation and the former Regions Financial Corporation. Several of our Directors were previously members of the boards of directors of either of those companies. On

 

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PROPOSAL 1 — ELECTION OF DIRECTORS

 

November 4, 2006, AmSouth Bancorporation was merged with and into Regions. Several of the members of the board of directors of AmSouth Bancorporation joined the Board of Regions at that time.

The Directors of Regions also serve as the Board members of Regions Bank, an Alabama state-chartered commercial bank and wholly-owned subsidiary of Regions.

 

 

 

George W. Bryan Independent Director Since:  2004 Age:  70		Regions Committees:   •    Audit Committee (Audit Committee Financial Expert) •    Risk Committee (Chair)   Former Public Directorships Held During the Past Five Years:   •    Buckeye Technologies Inc.   Mr. Bryan served on the board of directors of Union Planters Corporation from 1986 to 2004. Mr. Bryan is retired from Sara Lee Corporation, a food processing and packaging company, where he was Chief Executive Officer of the Food Division. Since 2002, Mr. Bryan has been the Chief Executive Officer of the real estate firm, Old Waverly Properties, LLC.   Skills and Qualifications:   Mr. Bryan began his business career in 1964 at Bryan Foods, a family-owned meat products manufacturing business. Sara Lee Corporation acquired Bryan Foods in 1968. He became President of Bryan Foods in 1974 and Senior Vice President of Sara Lee in 1983. In addition, Mr. Bryan has developed residential and commercial real estate in Mississippi, Tennessee and Utah since 2002.   At Buckeye Technologies Inc., Mr. Bryan served as Chair of the Nominating and Corporate Governance Committee and as a member of the Compensation Committee. He earned a degree in business administration from Mississippi State University. As President of Bryan Foods, Senior Vice President of Sara Lee Corporation and Chief Executive Officer of Sara Lee Foods, Mr. Bryan was responsible for key managerial, strategic, financial and operational decisions, providing significant experience for service as a Director of Regions, and, together with his other experience, make him well qualified to be a member of Regions’ Board.

 

 

 

Carolyn H. Byrd Independent Director Since:  2010 Age:  66		Regions Committees:   •    Audit Committee (Chair) (Audit Committee Financial Expert) •    Risk Committee   Public Directorships:   •    Popeyes Louisiana Kitchen, Inc. (formerly known as AFC Enterprises, Inc.) •    Federal Home Loan Mortgage Corporation (“Freddie Mac”)   Ms. Byrd is the Chairman and Chief Executive Officer of GlobalTech Financial, LLC (“GlobalTech”), in Atlanta, Georgia, which she founded in 2000. GlobalTech specializes in loan and lease servicing, as well as information technology professional services and consulting.   Skills and Qualifications:   Prior to forming GlobalTech in 2000, Ms. Byrd had a long career with The Coca-Cola Company, where she was ultimately appointed Vice President, Chief of Internal Audits and Director of the Corporate Auditing Department. In this position, she provided leadership for the worldwide audits of The Coca-Cola Company. Before joining The Coca-Cola Company, Ms. Byrd was employed with Citibank, N.A. in New York where she served as a Senior Account Officer.   At Popeyes Louisiana Kitchen, Inc., Ms. Byrd serves on the Audit Committee and is Chair of the Corporate Governance and Nominating Committee. At Freddie Mac, she serves as Chair of the Audit Committee and serves as a member of the Nominating and Governance Committee and Executive Committee. She previously served on the Audit Committee of Circuit City Stores, Inc., RARE Hospitality International, Inc. and The St. Paul Travelers Companies. Ms. Byrd earned her Bachelor of Science degree from Fisk University and a Masters in Finance and Business Administration from the University of Chicago Graduate School of Business. Ms. Byrd has held many positions in which she was responsible for key managerial, strategic, financial and operational decisions, and such positions provide significant experience to draw upon in her capacity as a Director of Regions. Her service on the boards of directors of a variety of large public companies, including Freddie Mac, further augments her experience. All of these qualifications make her well qualified to be a member of Regions’ Board.

 

 

 

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PROPOSAL 1 — ELECTION OF DIRECTORS

 

David J. Cooper, Sr. Independent Director Since:  2006 Age:  69		Regions Committees:   •    Compensation Committee •    Nominating and Corporate Governance Committee   Mr. Cooper served on the board of directors of AmSouth Bancorporation from 2005 to 2006. He is currently the Vice Chairman and was previously the President of Cooper/T. Smith Corporation, a privately held corporation that is one of the largest stevedoring and maritime-related firms in the United States. He also serves as a director of Alabama Power Company, a wholly-owned subsidiary of The Southern Company. Alabama Power Company has no publicly traded common stock.   Skills and Qualifications:   After graduating from the University of Alabama School of Commerce and Business Administration, Mr. Cooper joined his family’s stevedoring company, Cooper/T. Smith Corporation. Under the direction of Mr. Cooper and his brother, the company expanded its activities to over 37 ports on the East, West and Gulf Coasts of the United States, with additional operations in South America. The company has diversified its business interests, including warehousing, terminal operations, tugboats, push boats, barging and restaurants. Mr. Cooper is also active in civic and educational organizations.   Mr. Cooper served on the board of directors of SouthTrust Corporation and SouthTrust Bank prior to joining the board of AmSouth Bancorporation, which merged with Regions in 2006. Mr. Cooper’s service on the board of Alabama Power Company provides him with insight in an industry that, similar to banking, is highly regulated. He also brings to our Board extensive knowledge of how to effectively run a large business with international operations as evidenced by the diversification and growth of Cooper/T. Smith Corporation under his direction. Mr. Cooper’s experience makes him well qualified to be a member of Regions’ Board.

 

 

 

Don DeFosset Independent Director Since:   2006 Age:   66		Regions Committees:   •    Compensation Committee (Chair) •    Risk Committee   Public Directorships:   •    Terex Corporation •    National Retail Properties •    ITT Corporation   Former Public Directorships within the Past Five Years:   •    EnPro Industries, Inc.   Mr. DeFosset served on the board of directors of AmSouth Bancorporation from 2005 to 2006. He is the former Chairman, President and Chief Executive Officer of Walter Industries, Inc. (now Walter Energy, Inc.) (“Walter”). During the time of his service, Walter was a diversified public company with businesses in water infrastructure products, metallurgical coal and natural gas, home building and mortgage financing.   Skills and Qualifications:   Throughout his career, Mr. DeFosset held significant leadership positions in major multinational corporations, including Dura Automotive Systems, Inc., Navistar International Corporation and AlliedSignal, Inc. Mr. DeFosset is also active in civic and charitable organizations. He formerly served on Regions’ Audit Committee and was, during his tenure, determined to be an Audit Committee Financial Expert.   At Terex Corporation, Mr. DeFosset chairs the Governance and Nominating Committee and serves on the Audit Committee. At National Retail Properties, he serves on the Compensation Committee and chairs the Governance and Nominating Committee. At ITT Corporation, Mr. DeFosset serves on the Compensation and Personnel Committee and the Nominating and Governance Committee. In addition, he also served on the Audit and Risk Management, Compensation and Human Resources, and Nominating and Corporate Governance Committees of EnPro Industries, Inc. Mr. DeFosset has an Industrial Engineering degree from Purdue University and a Master of Business Administration degree from Harvard University. Having served as Chairman, Chief Executive Officer and President of Walter, Mr. DeFosset brings extensive management and business experience to Regions’ Board as well as a deep understanding of complex issues concerning public companies. Mr. DeFosset is also able to draw upon his knowledge of the mortgage industry acquired during his tenure at Walter. His service on the boards of directors of a variety of large public companies further augments his experience. All of these credentials make Mr. DeFosset well qualified to be a member of Regions’ Board.

 

 

 

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Eric C. Fast Independent Director Since:  2010 Age:  65		Regions Committees:   •    Audit Committee (Audit Committee Financial Expert) •    Risk Committee   Public Directorships:   •    Automatic Data Processing, Inc. •    Lord Abbett Family of Funds   Former Public Directorships Held During the Past Five Years:   •    Crane Co.   From 2001 through January 2014, Mr. Fast served as the Chief Executive Officer for Crane Co., a diversified manufacturer of engineered industrial products. He also served as President of Crane Co. from 1999 through January 2013. Mr. Fast serves on the board of directors of the privately held National Integrity Life Insurance Company. Additionally, he serves as a director/trustee of the twelve investment companies in the Lord Abbett Family of Funds.   Skills and Qualifications:   Prior to joining Crane Co., Mr. Fast worked for Salomon Brothers and later Salomon Smith Barney, where he ultimately was co-head of Global Investment Banking and a member of the firm’s Management Committee. He previously served as Treasurer of MacMillan Inc. and began his career as a commercial lending officer at Bank of New York.   Mr. Fast earned a political science degree from the University of North Carolina, Chapel Hill and received a Master of Business Administration in Finance degree from New York University Graduate School of Business. He currently serves as Chair of the Audit Committee and serves on the Corporate Development Advisory Committee of Automatic Data Processing, Inc., is a member of the Audit Committee at the privately held National Integrity Life Insurance Company, and is a member of the Proxy Committee at Lord Abbett Family of Funds. Mr. Fast brings extensive management and business experience to our Board as well as a deep understanding of complex issues concerning public companies. His service as President and Chief Executive Officer of a large public company further augments his experience. All of these qualifications make him well qualified to be a member of Regions’ Board.

 

 

 

O. B. Grayson Hall, Jr. Management Director Since:  2008 Age:  57		Public Directorships:   •    Zep, Inc. •    Vulcan Materials Company   Mr. Hall has been the Chairman, President and Chief Executive Officer of Regions and Regions Bank since May 2013. He served as President and Chief Executive Officer of Regions and Regions Bank from April 2010 to May 15, 2013. From October 2009 through March 2010 he served as President and Chief Operating Officer of Regions and Regions Bank.   Skills and Qualifications:   Mr. Hall’s banking career started in 1980 as a participant in the management trainee program at AmSouth, which merged with Regions in 2006. He has served in roles of increased responsibility, including head of the Operations and Technology Group from 1993 to 2004 and manager of all lines of business from 2005 to 2006. Mr. Hall was named Head of the General Banking Group in 2006 and, in 2008, was elected Vice Chairman and a member of the Board of Regions. The General Banking Group included all banking offices across Regions’ 16-state footprint. His responsibilities also included oversight of several key divisions of Regions. In October 2009, the Board named him President. Thereafter, the Board named Mr. Hall Chief Executive Officer effective April 1, 2010. Mr. Hall assumed the additional role of Chairman of the Board in May 2013. Mr. Hall is also active in several civic and leadership organizations.   At Zep, Inc., Mr. Hall serves on the Compensation Committee and the Nominating and Corporate Governance Committee. At Vulcan Materials Company he serves on the Finance Committee and the Governance Committee. In addition to a Bachelor’s degree in Economics from The University of the South and a Master of Business Administration degree from the University of Alabama, Mr. Hall is a graduate of the Stonier School of Banking. Mr. Hall’s knowledge of all areas of the Company, together with his years of experience in banking, make him well qualified to be a member of Regions’ Board.

 

 

 

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John D. Johns Independent Director Since:  2011 Age:  63		Regions Committees:   •    Nominating and Corporate Governance Committee •    Risk Committee (Risk Management Expert)   Public Directorships:   •    The Southern Company •    Genuine Parts Company   Former Public Directorships Held During the Past Five Years:   •    Protective Life Corporation   Since 2003, Mr. Johns has served as the Chairman, President and Chief Executive Officer of Protective Life Corporation (“Protective”). On February 1, 2015, Protective became a wholly-owned subsidiary of Dai-ichi Life Insurance Company, Limited, a kabushiki kaisha organized under the laws of Japan, a holding company with subsidiaries that provide insurance and other financial services. Mr. Johns continues to serve on the board at Protective, which is no longer a publicly traded company.   Skills and Qualifications:   Prior to joining Protective in 1993, Mr. Johns was Executive Vice President and General Counsel at Sonat, Inc. and was a founding partner of the Birmingham-based law firm of Maynard, Cooper & Gale, P.C.   At Genuine Parts Company, Mr. Johns serves on the Compensation, Nominating and Governance Committee. Mr. Johns graduated from the University of Alabama and received his Masters of Business Administration and Juris Doctorate degrees from Harvard University. Mr. Johns’ background and considerable experience as a senior executive of a large insurance corporation, his extensive exposure to complex financial issues at large public companies, leadership in other business, economic development, civic, educational, and not-for-profit organizations, and seasoned business judgment are valuable and make him well qualified to be a member of Regions’ Board.

 

 

 

Ruth Ann Marshall Independent Director Since:  2011 Age:  60		Regions Committees:   •    Compensation Committee •    Nominating and Corporate Governance Committee   Public Directorships:   •    ConAgra Foods, Inc. •    Global Payments, Inc.   Ms. Marshall is retired from MasterCard where she served as President of The Americas, MasterCard International, Inc. from 2004 to 2006.   Skills and Qualifications:   At MasterCard, Ms. Marshall was responsible for building all aspects of MasterCard’s issuance and acceptance business in the United States, Canada, Latin America and the Caribbean. Prior to joining MasterCard International, Inc. in 1999, Ms. Marshall served as Group Executive President of two electronic payment service companies, MAC Regional Network and Buypass Corporation. Upon acquisition of these companies by Concord EFS, Ms. Marshall became Senior Executive Vice President of the combined companies, where she oversaw marketing, account management, customer service and product development. Ms. Marshall started her career at IBM, where, for more than 18 years, she served in managerial and executive positions. In 2004 and 2005, Ms. Marshall was selected by Forbes.com as one of the “World’s 100 Most Powerful Women.”   At ConAgra Foods, Inc., Ms. Marshall serves on the Human Resources Committee and the Nominating, Governance and Public Affairs Committee. At Global Payments, Inc., she serves on the Compensation Committee and the Governance and Risk Oversight Committee. Additionally, she is a former director of the privately held companies, Pella Corporation and Trustwave Holdings, Inc. Ms. Marshall earned her bachelor and master degrees from Southern Methodist University. Ms. Marshall’s background and broad marketing, account management, customer service and product development experience as well as significant domestic and international experience in growing business at MasterCard and her service as a director for other publicly traded companies all make Ms. Marshall well qualified to be a member of Regions’ Board.

 

 

 

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Susan W. Matlock Independent Director Since:  2004 Age:  68		Regions Committees:   •    Compensation Committee •    Risk Committee   Ms. Matlock served on the board of directors of the former Regions Financial Corporation from 2002 to 2004. She retired in March 2014 as President and Chief Executive Officer of Innovation Depot, Inc., an emerging business incubation center in Birmingham, Alabama.   Skills and Qualifications:   Ms. Matlock served for 9 years on the board of managers of Ascension Health Ventures, a fund that invests in innovative healthcare businesses. She currently serves on the board of directors of Blue Cross/Blue Shield of Alabama where she is a member of the Executive Committee and Chair of the Compensation Committee. In addition, Ms. Matlock serves on the boards of, and is active in, various civic, educational and leadership organizations. She is also past Chair of the National Business Incubation Association and founding Chair of the Alabama Business Incubation Network.   Ms. Matlock began her career as a banker, lending to small businesses and consumers. She has been recognized by the U.S. Small Business Administration as the Financial Services Advocate of the Year for the State of Alabama. She was named as one of the “Top 25 Most Influential People in the Southeast Technology Community” by TechJournal South in 2007. Ms. Matlock earned a Masters in Public Administration degree from the University of Alabama at Birmingham and completed an Executive in Residence Program at Harvard Business School. Ms. Matlock’s expertise in technology and healthcare entrepreneurship and innovation, combined with her other experience, make her well qualified to be a member of Regions’ Board.

 

 

 

John E. Maupin, Jr. Independent Director Since:  2007 Age:  68		Regions Committees:   •    Audit Committee (Audit Committee Financial Expert) •    Nominating and Corporate Governance Committee   Public Directorships:   •    LifePoint Hospitals, Inc. •    VALIC Company I and II •    HealthSouth Corporation   Dr. Maupin served as the President of Morehouse School of Medicine from 2006 through June 2014. He also serves as Chair of Regions Community Development Corporation, the Company’s non-profit corporation dedicated to providing technical assistance for affordable housing, small business, and community development initiatives.   Skills and Qualifications:   Dr. Maupin retired from the U.S. Army Reserves Dental Corps in 1997 with over 28 years of service with the rank of lieutenant colonel. Dr. Maupin has more than 30 years of experience in healthcare administration, public health and academic medicine. Prior to becoming the President of Morehouse School of Medicine in 2006, he was the President of Meharry Medical College. His career includes over 16 years serving as a Chief Executive Officer and five years as a Chief Operating Officer. Dr. Maupin is a former director of Pinnacle Financial Partners, Inc., a bank holding company, and Monarch Dental Corporation, a dental care management company. He is past president of the National Dental Association and has participated as a member of numerous state and national healthcare task forces, scientific panels and advisory councils. Dr. Maupin is actively engaged in community service and has received numerous honors and awards.   At HealthSouth Corporation, Dr. Maupin serves as Chair of the Nominating/Corporate Governance Committee and as a member of the Corporate Compliance and Quality of Care Committee. At LifePoint Hospitals, Inc., he serves on the Audit and Compliance Committee, Compensation Committee, Quality Committee and as Chair of the Corporate Governance and Nominating Committee. At VALIC Company I and II, Dr. Maupin serves on the Audit Committee and Governance Committee. Dr. Maupin attended San Jose State College and received his Doctor of Dental Surgery degree from the School of Dentistry, Meharry Medical College, and a Master of Business Administration degree from Loyola College. Dr. Maupin’s extensive managerial responsibilities and insight gained from his broad range of experience make him well qualified to be a member of Regions’ Board.

 

 

 

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Charles D. McCrary Independent Director Since:  2006 Age:  63		Lead Independent Director   Regions Committees:   •    Nominating and Corporate Governance Committee (Chair)   Former Public Directorships Held During the Past Five Years:   •    Protective Life Corporation   Mr. McCrary served on the board of directors of AmSouth Bancorporation from 2001 to 2006. From 2001 through February 2014, Mr. McCrary served as the President and Chief Executive Officer of Alabama Power Company, a public utility company, which is a wholly-owned subsidiary of The Southern Company, and served as Chairman of Alabama Power Company until May 2014.   Skills and Qualifications:   Mr. McCrary’s career at Alabama Power spanned over 30 years, where he held various positions of increased responsibility within The Southern Company, the parent company of Alabama Power. Mr. McCrary is active in civic, educational and charitable organizations and formerly served as Chairman of the Economic Development Partnership of Alabama.   Mr. McCrary previously served on Regions’ Audit Committee and, during such service, was determined to be an Audit Committee Financial Expert. Since May 2013, Mr. McCrary has served as Regions’ Nominating and Corporate Governance Committee Chair and Lead Independent Director. Mr. McCrary served on the Corporate Governance & Nominating Committee and Risk, Finance and Investments Committee at Protective Life Corporation prior to its acquisition by Dai-ichi Life Insurance Company, Limited in February 2015. Mr. McCrary previously served on the board of the privately held Mercedes-Benz U.S. International, Inc.   Mr. McCrary holds an engineering degree from Auburn University and a law degree from Birmingham School of Law. As the former President and Chief Executive Officer of Alabama Power Company and his service as a director of Protective Life Corporation, Mr. McCrary brings a valuable understanding of issues that are unique to a company in a regulated industry. Mr. McCrary’s depth of knowledge and experience running a regulated company as well as his other experience make him well qualified to be a member of Regions’ Board.

 

 

 

Lee J. Styslinger III Independent Director Since:  2004 Age:  54		Regions Committees:   •    Audit Committee (Audit Committee Financial Expert) •    Compensation Committee   Public Directorships:   •    Vulcan Materials Company   Mr. Styslinger served on the board of directors of the former Regions Financial Corporation from 2003 to 2004. He currently serves as the Chairman and Chief Executive Officer of the privately held Altec, Inc., a leading equipment and service provider for the electric utility, telecommunications and contractor markets. Altec provides products and services in over 100 countries.   Skills and Qualifications:   Mr. Styslinger actively serves on the boards of many educational, civic and leadership organizations, including Harvard Business School, National Association of Manufacturers, and Northwestern University College of Arts and Sciences. He was appointed to the President’s Export Council advising the President of the United States on international trade policy from 2006-2008.   At Vulcan Materials Company, he serves on the Compensation Committee and the Safety, Health & Environmental Affairs Committee. Mr. Styslinger received his Bachelor of Arts degree from Northwestern University and earned a Master of Business Administration degree from Harvard University. As Chairman and Chief Executive Officer of Altec, Inc., Mr. Styslinger brings a wealth of management and business experience running a large company in today’s global market. All of these qualifications make him well qualified to be a member of Regions’ Board.

 

 

 

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How much stock are Directors expected to own?

 

The Board believes that Directors should have a financial stake in Regions so their interests are aligned with those of the stockholders. This ensures more effective representation of Regions stockholders. Under Regions’ Director Stock Ownership Guidelines, which were revised in April 2014, non-management Directors are expected to own shares of Regions common stock with a value equal to or greater than five times the value of the cash portion of the annual retainer paid to Directors.

Until such time as the minimum level of stock ownership is achieved, a Director is required to retain 50 percent of the after-tax net shares acquired as a part of any compensatory arrangement, unless granted an exception by the NCG Committee upon showing a hardship or other special circumstances. The following are taken into consideration in determining share ownership:

 

•

Shares purchased on the open market.

 

•

Shares obtained through option exercises.

 

•

Share equivalents held under any Director’s deferred stock plan.

 

•

Restricted shares awarded.

 

•

Shares obtained through any other sources.

Each Director currently meets the Director Stock Ownership Guidelines. Future pledges of Company equity securities are prohibited. No nominee for Director has pledged Regions equity securities.

How are Directors compensated?

 

The Compensation Committee, along with the NCG Committee, periodically review the compensation of the non-management Directors and recommend changes to the Board. The following table describes the components of the Director compensation program for 2014:

 

Compensation Element		Director Compensation Program
Annual Cash Retainer		$60,000, which may be deferred, at the Director’s option
Annual Equity Retainer		$95,000 in restricted stock granted three business days following the annual stockholder meeting that vests at the next annual stockholder meeting
Board and Committee Meeting Fees		$1,500 per meeting
Additional Annual Fee for Lead Independent Director		$50,000
Additional Annual Fee for Committee Chairs		$20,000 — Audit Committee $20,000 — Compensation Committee $15,000 — NCG Committee $20,000 — Risk Committee $10,000 — Special Committees, as applicable
Additional Annual Fee for Special Committee Members, as applicable		$10,000

 

 

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The following table contains information about the compensation paid to the non-employee Directors who served during 2014:

 

Name		Fees Earned or Paid in Cash ($)				Stock Awards ($) (1)				All Other Compensation ($)				Total ($)
George W. Bryan			113,500				95,000				—				208,500
Carolyn H. Byrd			119,750				95,000				—				214,750
David J. Cooper, Sr.			103,750				95,000				—				198,750
Don DeFosset			111,250				95,000				—				206,250
Eric C. Fast			95,750				95,000				—				190,750
John D. Johns			102,250				95,000				—				197,250
James R. Malone			109,250				95,000				—				204,250
Ruth Ann Marshall			102,250				95,000				—				197,250
Susan W. Matlock			96,250				95,000				—				191,250
John E. Maupin, Jr.			108,250				95,000				—				203,250
Charles D. McCrary			176,250				95,000				—				271,250
John R. Roberts			46,000				—				—				46,000
Lee J. Styslinger III			96,250				95,000				—				191,250

 

(1)

The amounts presented in this column represent the grant date fair values of the 2014 restricted stock award made to all non-employee Directors in service on April 29, 2014. The grant date fair value of the restricted stock granted April 29, 2014 was $10.09 per share, for a total grant date fair value of $95,000. The shares awarded on April 29, 2014 are scheduled to vest in one lump sum on the date of the 2015 annual meeting of stockholders.

The following table sets forth those non-employee Directors who served during 2014 and who had stock options or restricted stock outstanding as of December 31, 2014, and the number outstanding as of that date:

 

Name		Outstanding Stock Options (#)				Outstanding Restricted Stock (#)
George W. Bryan			14,000				9,415
Carolyn H. Byrd			—				9,415
David J. Cooper, Sr.			21,177				9,415
Don DeFosset			21,177				9,415
Eric C. Fast			—				9,415
John D. Johns			—				9,415
James R. Malone			27,237				9,415
Ruth Ann Marshall			—				9,415
Susan W. Matlock			14,000				9,415
John E. Maupin, Jr.			14,000				9,415
Charles D. McCrary			27,237				9,415
John R. Roberts			14,000				—
Lee J. Styslinger III			14,000				9,415

 

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CORPORATE GOVERNANCE

 

 

 

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Our Board Leadership Structure

 

 

 

 

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Board, Committee and Individual Director Evaluation Program

 

 

 

Director Independence

 

 

 

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Family Relationships

 

No immediate family relationship exists between any of our Directors or Executive Officers and any of our other Directors or Executive Officers.

Transactions with Directors

 

This chart reflects transactions, as applicable, between Regions and (i) our non-management Directors or their immediate family members; (ii) a company or charitable organization of which the non-management Director or the Director’s immediate family member is, or was during 2014, a partner, officer, employee; or (iii) a company in which the non-management Director or the Director’s immediate family member holds a significant ownership position. All of these transactions were considered by our Board in making the determination with respect to independence.

 

“Ordinary Course” Customer Relationships (1)

Loans or Extensions of Credit (2)

Charitable Contributions (3)

Nonmaterial Relationships (4)

Family Relationships (5)

George W. Bryan

—

—

—

None

None

Carolyn H. Byrd

—

—

—

—

None

David J. Cooper, Sr.

—

—

—

—

None

Don DeFosset

None

None

—

None

None

Eric C. Fast

None

None

None

None

None

John D. Johns

—

—

—

—

None

James R. Malone

—

—

—

None

None

Ruth Ann Marshall

—

None

None

None

None

Susan W. Matlock

—

—

—

None

None

John E. Maupin, Jr.

—

—

—

—

None

Charles D. McCrary

—

—

—

—

None

Lee J. Styslinger III

—

—

—

None

None

(1)	“Ordinary Course” customer relationships are transactions or relationships that Regions would enter into on the same terms and conditions with any similarly situated customer.

 

(2)

A loan or extension of credit that was made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with unaffiliated persons, and involve no more than the normal risk of collectability and present no other unfavorable features.

 

(3)	Directors serve solely as a member of the board of directors of a charitable organization to which Regions or its subsidiaries made charitable contributions of less than the greater of $1,000,000 or 2 percent of such organization’s consolidated gross revenues.

 

(4)

Nonmaterial relationships include Director Byrd’s service as a director of Freddie Mac, arm’s-length business relationships with Protective Life Corporation, Director Maupin’s service as Chairman of Regions’ non-profit corporation, Regions Community Development Corporation, and outside Directors’ service on a board of directors where a Regions Director serves or recently served as President and Chief Executive Officer and/or where C. Dowd Ritter, the father of Regions Executive Officer William D. Ritter, serves on the board of directors, or common service on a board.

 

(5)	No immediate family relationship exists between any of our Directors or Executive Officers and any of our other Directors or Executive Officers.

 

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Other Business Relationships and Transactions

 

 

 

Policies Relating to Transactions with Related Persons and Code of Conduct

 

 

 

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Director Attendance

 

 

 

Director Attendance at the Annual Meeting

 

 

 

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Meetings of Independent Directors

 

 

 

Communications between Stockholders and Other Interested Parties and the Board of Directors

 

 

 

Board’s Role in the Risk Management Process

 

 

 

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Relationship of Compensation Policies and Practices to Risk Management

 

 

 

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Compensation Consultant Disclosure

 

 

 

Compensation Committee Interlocks and Insider Participation

 

Directors who served on Regions’ Compensation Committee at any time during 2014 were:

 

		David J. Cooper, Sr.		Ruth Ann Marshall
		Don DeFosset		Susan W. Matlock
		Eric C. Fast		Lee J. Styslinger III
		James R. Malone

During 2014, there were no relationships that would create a Compensation Committee interlock as defined under applicable SEC regulations.

Committees of the Board of Directors

 

 

 

 

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Board and Committee Meetings in 2014

 

 

 

Committee Composition

 

The table below indicates the current members and Chairs of each standing Committee. Each Director serving on one of Regions’ standing four Board Committees has been determined to be independent. Also identified are the Directors who have been determined by our Board to be an Audit Committee Financial Expert, as defined under SEC regulations, and the Risk Committee Risk Management Expert, as defined under Regulation YY.

Cross-Committee membership is a consideration when the NCG Committee recommends Committee member assignments to the Board. For example, the Chairs of the Audit Committee and the Risk Committee each serve on both Committees. In addition, the Chair of the Compensation Committee serves on the Risk Committee, as well as attends the majority of the Audit Committee meetings. The Chair of the NCG Committee, who also serves as the Lead Independent Director, attends the majority of all other Committee meetings as well. The majority of the Directors serve on at least two Committees, providing further opportunities for cross-Committee membership.

 

Audit Committee

Compensation Committee

NCG Committee

Risk Committee

George W. Bryan

—

C

Carolyn H. Byrd

C

—

David J. Cooper, Sr.

—

—

Don DeFosset

C

—

Eric C. Fast

—

—

John D. Johns þ

—

—

James R. Malone

—

Ruth Ann Marshall

—

—

Susan W. Matlock

—

—

John E. Maupin, Jr.

—

—

Charles D. McCrary *

C

Lee J. Styslinger III

—

—

—

Member

 

C

Chair

 

Audit Committee Financial Expert

 

þ	Risk Committee Risk Management Expert

 

*	Lead Independent Director

 

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PROPOSAL 2 — RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

PROPOSAL 2 — RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

What am I voting on?

 

You are voting on a proposal to ratify the selection of Ernst & Young LLP as our independent registered public accounting firm for the year 2015.

The Audit Committee is responsible for selecting the independent auditor engaged by Regions. The Audit Committee has selected Ernst & Young LLP as Regions’ independent registered public accounting firm (that is, the independent auditor) for the 2015 fiscal year. The Board recommends that the stockholders ratify the selection of Ernst & Young LLP. In the event the selection is not ratified by our stockholders, it is anticipated that no change in auditors would be made for the current year because of the difficulty and expense of making any change during the current year. However, the vote results would be considered in connection with the engagement of independent auditors for 2016.

What vote is required to approve this proposal?

 

Approval of this proposal requires the affirmative “FOR” vote of a majority of the votes cast for or against the proposal. Abstentions and broker non-votes have no effect on the vote results.

What does the Board recommend?

 

The Board unanimously recommends that you vote “FOR” this proposal.

What services are provided by Ernst & Young LLP?

 

Ernst & Young LLP has been engaged to provide audit, tax and regulatory compliance advisory services. The Audit Committee considered and determined that the engagement by Regions of Ernst & Young LLP for tax and regulatory compliance advisory services, does not impair Ernst & Young LLP’s independence.

How much was Ernst & Young LLP paid for 2014 and 2013?

 

The aggregate fees paid to Ernst & Young LLP by Regions for 2014 and 2013 are set forth in the following table:

 

		2014				2013
Audit fees (1)		$	6,181,738			$	5,780,074
Audit related fees (2)			485,650				744,900
Tax fees (3)			218,062				372,016
All other fees (4)			1,738,909				319,065
Total fees		$	8,624,359			$	7,216,055

(1)

Audit fees include fees associated with the annual audit of Regions’ consolidated financial statements and internal control over financial reporting, reviews of Regions’ quarterly reports on Form 10-Q, SEC regulatory filings, statutory audits, and audits of subsidiaries.

 

(2)

Audit related fees include fees associated with audits of employee benefit plans and certain non-registered funds, as well as service organizations controls reports.

 

(3)

Tax fees include fees associated with tax compliance services, including the preparation, review and filing of tax returns, tax advice, and tax planning.

 

(4)

All other fees principally include fees associated with advisory services related to regulatory compliance reporting.

In accordance with the Audit Committee Charter, the Audit Committee must pre-approve any engagement of Ernst & Young LLP for audit or non-audit services on a case by case basis. The Audit Committee has delegated to its Chair the authority to pre-approve permissible non-audit services. Any such approval of non-audit services pursuant to this delegation of the full Audit Committee’s authority must be presented to the Audit Committee at its next regular meeting for ratification.

 

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PROPOSAL 2 — RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Will a representative of Ernst & Young LLP be present at the meeting?

 

Ernst & Young LLP served as Regions’ independent auditors for the year ended December 31, 2014, and a representative of the firm will be present at the annual meeting to make a statement if he or she so desires and to respond to appropriate questions from stockholders.

How long has Ernst & Young LLP been Regions’ independent auditor?

 

Ernst & Young LLP (or its predecessors) has served as Regions’ independent auditors since 1971.

A new lead audit partner is designated at least every five years to provide a fresh perspective. Consistent with this practice, a new lead audit partner was designated for 2013.

In determining whether to reappoint the independent auditor, the Audit Committee considers the independent auditor’s qualifications, its independence and the length of time the firm has been engaged, in addition to considering the quality of the work performed by the independent auditor and an assessment of the past performance of both the lead audit partner and Ernst & Young LLP.

The Audit Committee and the Board believe that the continued retention of Ernst & Young LLP to serve as Regions’ independent auditors is in the best interest of Regions and its stockholders.

 

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AUDIT COMMITTEE REPORT

 

AUDIT COMMITTEE REPORT

 

 

Submitted by the Audit Committee:

Carolyn H. Byrd, Chair

George W. Bryan

Eric C. Fast

John E. Maupin, Jr.

Lee J. Styslinger III

 

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PROPOSAL 3 — NONBINDING STOCKHOLDER APPROVAL OF EXECUTIVE COMPENSATION (“SAY-ON-PAY”)

PROPOSAL 3 — NONBINDING STOCKHOLDER APPROVAL OF EXECUTIVE COMPENSATION (“SAY-ON-PAY”)

What am I voting on?

 

The Board is providing stockholders with the opportunity at the 2015 annual meeting to cast an advisory vote on the Company’s executive compensation paid to named executives officers (“NEOs”) described in the Compensation Discussion and Analysis, the compensation tables, and related disclosures, as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) and Section 14A of the Exchange Act. This proposal is known as a “Say-on-Pay” proposal.

At the 2012 annual meeting, the Company asked stockholders to recommend how often they should be given the opportunity to cast this “Say-on-Pay” advisory vote on executive compensation. The stockholders overwhelmingly voted in favor of an annual advisory vote, and the Board affirmed the recommendation and has currently elected to hold future “Say-on-Pay” advisory votes on an annual basis.

This proposal gives you as a stockholder the opportunity to vote for or against the following resolution:

“RESOLVED, that the stockholders of Regions Financial Corporation (the ‘Company’) approve the compensation of the Company’s named executive officers, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the compensation tables and narrative discussion described in the Company’s 2015 Proxy Statement.”

Because your vote is advisory, it will not be binding upon the Company, the Board or the Compensation Committee and may not be construed as overruling any decision by the Board or the Compensation Committee. However, the Board and the Compensation Committee values our stockholders’ views on executive compensation matters and will take the outcome of the vote into account when considering future executive compensation arrangements for NEOs.

Stockholders are encouraged to carefully review the Compensation Discussion and Analysis (“CD&A”) and Compensation of Executive Officers sections of this proxy statement for a detailed discussion of the Company’s executive compensation program.

Our overall executive compensation policies and procedures are described in the CD&A and the tabular disclosure regarding NEO compensation (together with the accompanying narrative disclosure) in this proxy statement. Our compensation policies and procedures are centered on a “pay-for-performance” culture and are strongly aligned with the short- and long-term interests of our stockholders, as described in the CD&A.

The Compensation Committee, which is comprised entirely of independent Directors, in consultation with Cook & Co., oversees the Company’s executive compensation program and continuously monitors the Company’s policies to ensure they emphasize programs that reward executives for results that are consistent with stockholder interests.

The Board and the Compensation Committee believe that Regions’ commitment to these reasonable and responsible compensation practices warrants a vote by stockholders FOR the resolution approving the compensation of our NEOs as disclosed in this 2015 proxy statement.

What vote is required to approve this proposal?

 

Approval of this proposal requires the affirmative “FOR” vote of a majority of the votes cast for or against the proposal. Abstentions and broker non-votes have no effect on the vote results.

What does the Board recommend?

 

The Board unanimously recommends that you vote “FOR” the advisory approval of the compensation of the Company’s NEOs.

What is the effect of this resolution?

 

Because your vote is advisory, it will not be binding upon the Company, the Compensation Committee or the Board. However, the Board and Compensation Committee values our stockholders’ views on executive compensation matters and will take the outcome of the vote into account when considering future executive compensation arrangements for NEOs.

 

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COMPENSATION DISCUSSION AND ANALYSIS

COMPENSATION DISCUSSION AND ANALYSIS

How Pay is Tied to Company Performance

 

 

 

 

1	See reconciliation in Regions’ Annual Report on Form 10-K for the year ended December 31, 2014 on page 42.

 

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COMPENSATION DISCUSSION AND ANALYSIS

Summary of our Pay for Performance Decisions for 2014

 

As discussed in more detail on pages 55 and 56, the Committee made some changes to the target compensation levels and structure for our NEOs. NEOs each received an increase in the target value of their long-term incentive grants in addition to modest increases in base pay. Despite that corporate earnings in 2014 were better than 2013, actual short-term incentive payments from our annual incentive plans were lower year-over-year due to the Company’s performance against the targets we set at the beginning of the year. After taking into account both corporate and individual performance, the annual incentive payment for our Chief Executive Officer (“CEO”) for 2014 was earned at 117 percent of target as compared to 131 percent for 2013, while the incentives for other NEOs ranged from 115 percent to 117 percent of target compared to 128 percent to 131 percent last year.

The following illustrates a high level review of the compensation program in place for 2014:

 

Overall, our 2014 performance reflected continued progress in a challenging operating environment. With rigorous focus on the fundamentals of expense management, prudent loan growth, business development, and selective investments in people, processes and technology, we believe we are well positioned to create long-term growth and continue to build stockholder value in 2015 and beyond.

 

 

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Compensation Philosophy and Objectives

 

 

 

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The following sets forth some practices we have adopted that we believe are consistent with our compensation principles and some practices we do not engage in because they may be inconsistent with our goals.

What We Do

 

ü		Pay for Performance (pages 55-61)		The majority of executive pay is not guaranteed. For example, more than 87 percent of our CEO’s target compensation is performance-based with 77 percent of that pay subject to deferral and future performance conditions.
ü		Evaluate Performance using a Combination of Balanced Performance Metrics (pages 56-58)		We evaluate corporate performance in our annual incentive plans using a number of diverse performance metrics. Using a variety of metrics helps ensure that no single measure can inappropriately impact the level of compensation we pay. We evaluate our performance compared to internal expectations, budgets and plans, but we also balance that evaluation with the results of our performance on a relative basis as compared to other similar financial institutions. Plans also include a degree of discretion allowing for the exercise of sound business judgment by the Committee when assessing performance and corresponding pay decisions.
ü		Mitigate Undue Risk in Compensation Programs (pages 62-65)		Protecting against undue risk is a central pillar of our compensation philosophy and is demonstrated in numerous ways, including our balanced design, the use of multiple and competing performance measures, the adoption of a clawback and other risk-related policies, as well as robust governance and oversight processes to identify and manage risk. We do not believe that any of our compensation programs create risks that are reasonably likely to have a material adverse impact on the Company, as validated through our comprehensive risk assessment of incentive-based compensation plans.
ü		Require Strong Stock Ownership and Retention of Equity (page 66)		Our stock ownership guidelines are robust, and each of our NEOs either meets the ownership requirement or has a strong ownership stake in the Company and is in compliance with the required retention provisions of our guidelines.
ü		Provide for a Strong Clawback Policy (pages 64-65)		In the event previously paid compensation is determined to be based on materially inaccurate performance metrics, or it is determined an executive has engaged in excessively risky or other detrimental conduct, the Committee has wide latitude to cancel or otherwise reduce any current or future compensation as well as potentially recapture compensation that has already been paid if determined to be in the best interests of the Company and our stockholders.
ü		Ensure Perquisites are Reasonable (page 62)		The Committee has eliminated most perquisites and those we continue to provide are monitored to ensure they continue to be based on sound business rationale.
ü		Require Double Trigger Change-in-Control Provisions (page 67)		Our change-in-control agreements as well as our long-term incentive awards require both a change-in-control and termination of employment to trigger vesting and/or payment.
ü		Utilize an Independent Compensation Consultant (page 63)		Our compensation consultant has been determined to be independent under the SEC and NYSE guidelines.
ü		Listen to and Engage with Our Stockholders (page 64)		We include an annual advisory Say-on-Pay vote as recommended by stockholders and actively consider any stockholder feedback we receive. In 2014, stockholders voiced substantial support for our executive compensation plans and programs, with more than 96 percent of votes cast approving such plans and programs.
What We Don’t Do
X		No Tax Gross-Ups on Perquisites		We do not provide tax gross-ups to our NEOs for any taxable perquisites provided to them. In addition since 2011, we have not entered into any new agreements that permit excise tax gross-ups on change-in-control.
X		No Repricing of Underwater Options		We do not reprice stock options that are out-of-the-money.
X		No Hedging, Pledging or Short Sales		We do not permit our associates or Directors to hedge Regions securities or sell them short. Additionally, our Directors and executive officers are prohibited from pledging Regions securities.
X		No Dividends or Dividend Equivalents on Unearned Grants		We do not pay dividends or dividend equivalents on shares or units that are not earned. We issue dividend and dividend equivalent payments at the end of a performance period only on shares and units that ultimately vest.

2014 Compensation Decisions — What We Paid and Why

 

The Committee has designed a balanced compensation program that provides competitive fixed base compensation, as well as incentive compensation opportunities for performance over the short- and long-term. The incentive program rewards achievement against measurable goals and qualitative objectives as compared to expectations for our own performance and also on a relative basis as measured against the performance of other similar financial institutions. In making our decisions each year, we consider market competitive pay and practices in establishing our target pay levels, and we make use of formulaic determinations, as well as discretionary decisions in determining the actual compensation paid for the year.

Establishment of Compensation Targets. The first step in our process each year is the determination of compensation targets for our Executive Officers including our NEOs. With the assistance of its independent compensation consultant, the Committee regularly reviews compensation targets against those of the Company’s compensation peer group, and the financial services industry in general. In making its determinations, the Committee evaluates the total direct compensation of executives, as well as each component of pay.

At the beginning of 2014, after reviewing the compensation of our NEOs against competitive peer information, the Committee determined that some adjustment to compensation targets was in order for each NEO based on the levels of our executives’ pay compared to comparable positions in the market. As the Committee considered each aspect of fixed and target compensation, focus

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

was on our core compensation principles that compensation be: (i) performance-based, (ii) aligned with the long-term interests of stockholders, and (iii) consistent with the safety and soundness of the Company. Therefore, in making decisions, the primary change to compensation was in the form of an increase to the long-term incentive opportunity for each NEO. Long-term incentive compensation opportunity is the most compatible with the principles noted above as it is at risk and subject to deferral and sustained performance requirements over a multi-year period; therefore, the Committee chose to approve increases in target compensation primarily in this component of pay. In addition to the changes to long-term incentives, the Committee determined to grant modest increases to base pay for NEOs that followed the policies and practices in place for Regions’ associates in general.

The changes made at the beginning of 2014 are highlighted in the following table:

 

Name

Base Salary

Annual Incentive Opportunity as a Percentage of Pay

Long-Term Incentive Target

O. B. Grayson Hall, Jr.

2.56% Increase

No Change

11% Increase

David J. Turner, Jr.

3.10% Increase

No Change

20% Increase

John B. Owen

3.52% Increase

No Change

20% Increase

Fournier J. Gale, III

3.70% Increase

No Change

20% Increase

C. Matthew Lusco

3.74% Increase

No Change

20% Increase

The resulting 2014 compensation targets are summarized below:

 

Name		Annualized Base Salary				Annualized Incentive Target as a Percentage of Base Pay				Long-Term Incentive Target				Total Target Compensation
O. B. Grayson Hall, Jr.		$	1,000,000			150% of Base Pay – $	1,500,000			$	5,000,000			$	7,500,000
David J. Turner, Jr.		$	632,000			110% of Base Pay – $	695,200			$	1,200,000			$	2,527,200
John B. Owen		$	647,000			110% of Base Pay – $	711,700			$	1,200,000			$	2,558,700
Fournier J. Gale, III		$	560,000			100% of Base Pay – $	560,000			$	900,000			$	2,020,000
C. Matthew Lusco		$	555,000			100% of Base Pay – $	555,000			$	900,000			$	2,010,000

 

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

The following table outlines the performance metrics and goals, as well as the results achieved as the Committee certified corporate performance for 2014 at 112 percent of target:

 

Performance Metrics and Weightings								Absolute Performance Scores																						Relative Performance Scores
								Weighted 75% (Customer Service—100%)																						Weighted 25% (Customer Service - 0%)
		Performance Metric		Sub - Metric Weight				2014 Goal Achievements												2014 Performance Achieved										2014 Performance Achieved
								Threshold				Target				Superior				Attainment				% of Goal						Peer Banks				% of Goal
50%		Profitability Metrics (1)
		Return on Average Assets (2)			25%				0.83%				0.91%				1.06%				0.93%				114.4%						10/15
		Return on Average Tangible Common Equity (2)			25%				9.28%				10.13%				11.83%				9.97%				90.9%						12/15
		PPI/Risk Weighted Assets (2)			16.67%				1.74%				1.82%				1.98%				1.74%				50.0%			}90.6%			9/15			}  68.8%
		Net Income ($ millions) (2)			16.67%				$  984.2				$  1,074.4				$  1,254.9				$  1,103				115.9%
		Efficiency Ratio (3)			16.67%				65.9%				64.9%				62.9%				65.5%				69.5%						11/15
25%		Credit Metrics
		Criticized Loans/Loans (4)			37.50%				4.60%				4.29%				3.67%				4.50%				66.2%						8/15
		Net Charge Offs/Average Loans (5)			25%				0.67%				0.59%				0.42%				0.40%				200.0%			}124.8%			12/15			}  70.8%
		NPAs/Loans + OREO + NPLs Held For Sale (6)			37.50%				1.47%				1.35%				1.12%				1.28%				133.2%						11/15
25%		Customer Service Metrics
		Gallup KDS Score (50% Score)							62nd Percentile				75th Percentile				100th Percentile				85.8th Percentile							}165.07%			N/A
		Gallup Loyalty Score (50% Weight)							62nd Percentile				75th Percentile				100th Percentile				87.6th Percentile										N/A

Absolute Performance (Performance vs. Plan)

Relative Performance (Performance vs. Peers)

Total Calculated Performance

Metric

Metric Weighting

Results

Weighting

Results

Weighting

Absolute         Performance         Results

Relative         Performance         Results

(W)

(APR)

(APW)

(RPR)

(RPW)

(W)x(APR)x(APW)

(W)x(RPR)x(RPW)

Profitability

50%

90.6%

75%

68.8%

25%

34.0%

8.6%

Credit

25%

124.8%

75%

70.8%

25%

23.4%

4.4%

Customer Service

25%

165.1%

100%

—

—

41.3%

—

Sum of Results

112%

Potential Negative Modifiers

Goal

Result

Negative modifier indicated?

Primary Liquidity Risk Factor

Low Risk or Better

Low Risk

No

Capital Action Status

Monitoring or Deploy

Deploy

No

(1)	From continuing operations on an adjusted basis. For Non-GAAP measures see the reconciliation in Appendix A unless otherwise indicated.

 

(2)	Non-GAAP measure—see reconciliation in Appendix A.

 

(3)	Non-GAAP measure—see reconciliation in Regions’ Annual Report on Form 10-K for the year ended December 31, 2014 on page 42.

 

(4)	See reconciliation in Appendix A.

 

(5)	See Regions’ Annual Report on Form 10-K for the year ended December 31, 2014 on page 63 for detail.

 

(6)	See Regions’ Annual Report on Form 10-K for the year ended December 31, 2014 on page 67 for detail.

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

 

 

With respect to other NEOs, the Committee conferred with the CEO regarding his assessment of performance and determined that the individual level of achievement for each was as follows:

 

Name		Individual Performance Rating		Comments
David J. Turner, Jr.		125%		•    Led the Company’s efforts in securing ratings or outlook upgrades from the four major rating agencies.   •    Led the Company in its fourth consecutive year of reducing adjusted non-interest expense.2   •    Led the team in successfully executing $256 million in share repurchases.   •    Successfully executed capital planning and liquidity management goals and efforts exceeding requirements and goals in each case.
John B. Owen		135%		•    Led the business group teams in the growth of average low cost deposits by approximately $3 billion in 2014 while reducing deposit cost to 11 basis points in the fourth quarter.   •    Led the business group teams to successfully grow loan balances by $2.7 billion or 3.6 percent.   •    Partnered with the Risk Management division to improve the effectiveness of our sales and credit processes.   •    Successfully led the organization in meeting customer needs through Regions360 growing our customer base in Wealth Management by 19 percent, checking account customers by 1.5 percent, Now Banking customers by 9 percent, credit card customers by 12 percent and Business Banking customers by 1.1 percent.
Fournier J. Gale, III		135%		•    Led the internal legal team in substantially reducing outside legal fees through continued enhancement of a preferred provider program.   •    Oversaw a significant de-risking of litigation case load and related exposure:   ¡     substantial progress in reduction of the litigation case load by more than 25 percent; and   ¡      substantial progress in reduction of highest risk rated cases by more than 44 percent and next highest risk cases by 38 percent.   •    Increased the breadth and depth of internal legal talent to strengthen our risk management efforts and help us continue to reduce reliance on outside counsel.   •    Assumed additional responsibility for managing the Corporate Security and External Affairs functions after the retirement announcement of our Chief Administrative Officer.
C. Matthew Lusco		135%		•    Led enhancements to the CCAR process, significantly enhancing loss forecasting capabilities in retail, wholesale and operational loss models.   •    Led efforts to reduce future reliance on outside consultants by hiring key talent in critical risk management functions such as the Anti-money Laundering and Model Development and Validation groups.   •    Continued strengthening a proactive risk culture by implementing Regions’ Risk Ownership & Awareness program, a company-wide initiative designed to support Regions’ strategic priority to enhance risk management by promoting and instilling heightened awareness, enhancing ownership, and ultimately driving accountability for the risks taken by the Company.   •    Implemented a program to establish Business Execution Risk Teams across the franchise, and established a global process structure for the Risk Control Self-Assessment Process, each of which will enhance our risk management culture and efforts across the enterprise.

 

 

2	See reconciliation in Regions’ Annual Report on Form 10-K for the year ended December 31, 2014 on page 42.

 

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COMPENSATION DISCUSSION AND ANALYSIS

As a result of the decisions discussed above, the following cash bonuses for our CEO and each of our other NEOs were certified by the Committee and paid in early 2015:

 

Name		2014 Target Incentive3				Total Incentive Received
O. B. Grayson Hall, Jr.		$	1,490,625			$	1,738,069
David J. Turner, Jr.		$	689,975			$	790,711
John B. Owen		$	705,650			$	822,788
Fournier J. Gale, III		$	555,000			$	647,130
C. Matthew Lusco		$	550,000			$	641,300

 

 

Name		Total Target LTIP Economic Value				Value of PSUs				Value of Performance-Based Cash				Value of Time-vested RSUs
O. B. Grayson Hall, Jr.		$	5,000,000			$	1,666,666			$	1,666,667			$	1,666,666
David J. Turner, Jr.		$	1,200,000			$	400,000			$	400,000			$	400,000
John B. Owen		$	1,200,000			$	400,000			$	400,000			$	400,000
Fournier J. Gale, III		$	900,000			$	300,000			$	300,000			$	300,000
C. Matthew Lusco		$	900,000			$	300,000			$	300,000			$	300,000

 

 

 

3

The target incentive in this table differs from the annualized target incentive on page 56 because actual bonuses are calculated based on year-to-date earnings as reported in the Summary Compensation Table on page 69, while the annualized target on page 56 is based on the annualized rate of pay for the executive.

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

The following chart sets forth the matrices used for measuring performance and the ultimate payout level of the PSUs and performance-based cash awards granted in 2014:

 

Earnings Per Share Growth Metric — 50% Weight																						Return on Average Tangible Common Equity Metric — 50% Weight
				Payout Opportunity for EPS Goal																						Payout Opportunity for ROATCE Goal
Relative Diluted EPS Growth (percentile)		Top 3rd of Peer Group			75%				100%				125%				150%					Relative ROATCE Growth (percentile)		Top 3rd of Peer Group			75%				100%				125%				150%
		Middle 3rd of Peer Group			50%				75%				100%				125%							Middle 3rd of Peer Group			50%				75%				100%				125%
		Bottom 3rd of Peer Group			0 -25%*				50%				75%				100%							Bottom 3rd of Peer Group			0 - 25%*				50%				75%				100%
					0%				0% Up to Target Range				Regions’ Target Range				Above Target Range										Below Target minus 1%				Target minus 1% to Target				Regions’ Target Range				Above Target Range
					Regions’ Absolute Diluted EPS Growth (3 year cumulative compounded growth rate)																						Regions’ Absolute ROATCE (3 year average)

 

*	Award will be zero in the event a minimum level of net income is not earned over the performance period.

 

 

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Other Benefits and Perquisites

 

 

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

 

Compensation Framework, Policies, Processes and Risk Considerations

 

 

 

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Other Policies and Practices Impacting Compensation Decisions

 

 

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

 

The equity stake of our NEOs and Directors is reflected in the beneficial ownership information contained in this proxy statement on pages 19 and 20. The table below summarizes the stock ownership guidelines for our CEO and each of the NEOs (including their compliance with the guidelines):

 

Name		Ownership Requirement				Approximate Stock Value Required to be held				Holds Required Amount				Percent of Guideline Owned
O. B. Grayson Hall, Jr.			5 X Base Pay			$	5,000,000				Yes				216%
David J. Turner, Jr.			3 X Base Pay			$	1,896,000				Yes				159%
John B. Owen			3 X Base Pay			$	1,941,000				Yes				191%
Fournier J. Gale, III			3 X Base Pay			$	1,680,000				No*				86%
C. Matthew Lusco			3 X Base Pay			$	1,665,000				No*				96%

*	Mr. Gale and Mr. Lusco currently do not hold the required amount of shares in full but still maintain a significant equity stake in the Company and are adhering to the strict retention requirements in place with respect to equity received under compensatory plans of the Company.

 

 

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COMPENSATION DISCUSSION AND ANALYSIS

Change-in-Control, Post-Termination and Other Employment Arrangements

 

 

 

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COMPENSATION COMMITTEE REPORT

 

COMPENSATION COMMITTEE REPORT

Compensation Discussion and Analysis

 

 

 

THE COMPENSATION COMMITTEE

Don DeFosset — Chair

David J. Cooper, Sr.

Ruth Ann Marshall

Susan W. Matlock

Lee J. Styslinger III

 

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COMPENSATION OF EXECUTIVE OFFICERS

COMPENSATION OF EXECUTIVE OFFICERS

The following tables, narratives and footnotes contain compensation information about our Chairman, President and Chief Executive Officer, our Chief Financial Officer and our three other most highly paid executive officers for the year ended December 31, 2014.

Summary Compensation Table

 

 

 

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COMPENSATION OF EXECUTIVE OFFICERS

 

 

Name & Principal Position		Year				Salary ($)				Bonus ($)				Stock Awards ($) (2)				Option Awards ($)				Non-Equity Incentive Plan Compensation ($) (3)				Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) (4)				All Other Compensation ($) (5)				Total ($)
O. B. Grayson Hall, Jr.			2014				993,750				—				3,443,535				—				3,708,902				6,056,343				218,717				14,421,247
Chief Executive Officer			2013				975,000				—				2,930,572				—				1,918,800				4,328,165				161,888				10,314,425
			2012				922,917				—				4,726,367				—				1,437,750				4,714,352				95,698				11,897,084
David J. Turner, Jr.			2014				627,250				—				826,448				—				1,249,044				1,079,650				106,704				3,889,096
Chief Financial Officer			2013				607,250				—				651,240				—				863,024				261,825				85,515				2,468,854
			2012				583,750				—				1,253,688				—				640,705				522,080				53,620				3,053,843
John B. Owen			2014				641,500				—				826,448				—				1,281,121				1,847,754				95,254				4,692,077
Head of Regional Banking Group			2013				618,750				—				651,240				—				879,368				1,142,999				87,144				3,379,501
			2012				581,250				—				1,090,553				—				666,586				787,391				58,888				3,184,668
Fournier J. Gale, III			2014				555,000				—				619,830				—				990,880				N/A				117,695				2,283,405
General Counsel			2013				533,750				—				488,434				—				700,280				N/A				92,866				1,815,330
			2012				508,750				—				600,933				—				515,342				N/A				67,826				1,692,851
C. Matthew Lusco			2014				550,000				—				619,830				—				985,050				1,102,519				98,570				3,355,969
Chief Risk Officer			2013	(1)			—				—				—				—				—				—				—				—
			2012	(1)			—				—				—				—				—				—				—				—

(1)	Mr. Lusco was not an NEO in 2012 or 2013.

 

(2)

As reflected in the following table, amounts in this column are the grant date fair value of awards computed in accordance with FASB ASC Topic 718. The value of stock awards made as PSUs is at target and can range from 0% to 150% of target based on performance metrics of absolute and relative Diluted EPS growth and ROATCE established at grant. These amounts also include the grant date fair value RSUs that cliff vest at the end of the three-year vesting period ending April 2017.

 

		2014 Annual Equity Grant (PSUs & RSUs)																Total Stock Awards Value ($)
		PSUs ($/units) (a)								RSUs ($/units) (b)
Name		Performance Stock ($)				Performance Stock (#)				Restricted Stock ($)				Restricted Stock (#)
O. B. Grayson Hall, Jr.			1,721,768				153,046				1,721,768				153,046				3,443,535
David J. Turner, Jr.			413,224				36,731				413,224				36,731				826,448
John B. Owen			413,224				36,731				413,224				36,731				826,448
Fournier J. Gale, III			309,915				27,548				309,915				27,548				619,830
C. Matthew Lusco			309,915				27,548				309,915				27,548				619,830

 

(3)	This amount represents annual cash incentives for 2014 performance as approved by the Compensation Committee plus the value of the 2012 Performance Cash Grant that vested at December 31, 2014 and will be released effective June 1, 2015 as detailed in the following table:

 

		Nonequity Incentive Plan Compensation
Name		2014 Annual Cash Incentive ($)				Value of 2012 Performance Cash Grant at 12/31/14 ($) (a)				Total ($)
O. B. Grayson Hall, Jr.			1,738,069				1,970,833				3,708,902
David J. Turner, Jr.			790,711				458,333				1,249,044
John B. Owen			822,788				458,333				1,281,121
Fournier J. Gale, III			647,130				343,750				990,880
C. Matthew Lusco			641,300				343,750				985,050

(a)

The value of 2012 Performance Cash Grant at 12/31/14 column reflects 137.5% of target earned at December 31, 2014. Mr. Turner, Mr. Owen and Mr. Lusco remain subject to forfeiture of this amount until June 1, 2015 (the 3rd anniversary of the date of grant) should they separate from the Company.

 

(4)

This amount includes benefits for Mr. Hall, Mr. Owen and Mr. Lusco described on pages 61, 62 and 73 through 75, which are subject to significant vesting requirements not yet met. Therefore, while accrued, neither part of the change in benefit for Mr. Hall nor all of the change in benefit for Mr. Owen and Mr. Lusco has been earned and would not be payable at the present time if they left the Company.

 

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(5)	All other compensation consists of the following:

 

Name		Life Insurance, Perquisites, and Other Personal Benefits (a) ($)				Matching Contributions under Qualified Savings Plans (b) ($)				Matching Contributions under Nonqualified Savings Plans (b) ($)				Non-Elective Contributions (b) ($)				Total All Other Compensation ($)
O. B. Grayson Hall, Jr.			70,163				10,400				138,154				—				218,717
David J. Turner, Jr.			36,642				10,400				59,662				—				106,704
John B. Owen			17,719				10,400				61,935				5,200				95,254
Fournier J. Gale, III			30,242				10,400				47,902				29,151				117,695
C. Matthew Lusco			27,388				10,400				55,582				5,200				98,570

(a)

The 2014 amount includes the value of items such as group term life insurance premiums, excess group liability coverage, financial planning services, personal use of the corporate aircraft, an enhanced executive physical, home security, matching charitable gift contributions, and Healthmiles Reward. The total value for personal use of the corporate aircraft by Mr. Hall in 2014 was $28,000.

 

(b)

These amounts include the value of Company contributions to the 401(k) Plan and the Supplemental 401(k) Plan as follows: Mr. Hall—$148,554, Mr. Turner—$70,062, Mr. Owen—$77,535, Mr. Gale—$87,453, and Mr. Lusco—$71,182.

Grants of Plan-Based Awards

 

 

 

The following table sets forth equity awards in the Summary Compensation Table and non-equity plan based awards granted to each of the NEOs in 2014:

 

Name						Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1)														Estimated Future Payouts Under Equity Incentive Plan Awards (1)												All Other Stock Awards: Number of Shares of Stock or Units (#) (2)				All Other Option Awards: Number of Securities Underlying Options (#)				Exercise or Base Price of Option Awards ($/sh)				Grant Date Fair Value of Stock and Option Awards ($)
		Grant Date				Threshold ($)				Target ($)				Maximum ($)						Threshold (#)				Target (#)				Maximum (#)
O. B. Grayson Hall, Jr.			04/01/14				—				1,666,667				2,500,001						—				153,046				229,569				153,046				—				—				3,443,535
David J. Turner, Jr.			04/01/14				—				400,000				600,000						—				36,731				55,097				36,731				—				—				826,448
John B. Owen			04/01/14				—				400,000				600,000						—				36,731				55,097				36,731				—				—				826,448
Fournier J. Gale, III			04/01/14				—				300,000				450,000						—				27,548				41,322				27,548				—				—				619,830
C. Matthew Lusco			04/01/14				—				300,000				450,000						—				27,548				41,322				27,548				—				—				619,830

(1)

The performance cash awards and PSUs included in this column have equally weighted performance requirements based on absolute and relative Diluted EPS growth and ROATCE. In addition, in the event the achievement of the performance criteria for Diluted EPS growth is less than 0 percent on an absolute basis and is in the bottom one-third of the peer group on a relative basis, or the achievement of the performance criteria for ROATCE is less than 8 percent on an absolute basis and is in the bottom one-third of the peer group on a relative basis, the payout will be zero if cumulative net income from continuing operations is less than a number that is one-half of the projection for the three-year performance period. The performance period for these awards is January 1, 2014, through December 31, 2016, with a vest date of April 1, 2017.

 

Notwithstanding the achievement of the performance requirements, in order to be eligible to receive any cash payout or shares of stock under this award, employment must continue through the third anniversary of the grant date, which is April 1, 2017.

 

(2)

In addition to service vesting requirements, the RSUs included in this column have performance-vesting requirements based on satisfying the Company’s achievement of certain capital and liquidity performance thresholds during each of the periods from January 1, 2014, to December 31, 2014; January 1, 2015, to December 31, 2015; and January 1, 2016, to December 31, 2016. To the extent that the capital performance threshold

 

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and/or the liquidity performance threshold has not been satisfied for each performance threshold period, 20 percent for each requirement (up to a maximum of 40 percent total) of the RSUs awarded will be forfeited. For purposes of this award, the Company’s performance will be measured relative to the following capital and liquidity performance thresholds as certified by the Committee:

 

(i)

“Capital Performance Threshold”: Capital Action Decision Tree Status as defined in the Capital Policy must remain in either “Monitor Capital” or “Capital Deployment” status; and

 

(ii)

“Liquidity Performance Threshold”: Risk for Primary Liquidity Level must remain at “Moderate” or better as established in the Market & Liquidity Risk Framework document.

 

Notwithstanding the achievement of the Capital and Liquidity Performance Thresholds, in order to be eligible to receive any shares of stock under this award, employment must continue through the third anniversary of the grant date, which is April 1, 2017.

Outstanding Equity Awards at December 31, 2014

 

 

 

The following table sets forth outstanding equity-based awards held by each of the NEOs as of December 31, 2014:

 

						Option Awards (1)																						Stock Awards (2)
Name		Grant Date				Number of Securities Underlying Unexercised Options Exercisable (#)				Number of Securities Underlying Unexercised Options Unexercisable (#)				Equity Incentive Plan Awards: # of Securities Underlying Unearned Options (#)				Option Exercise Price ($)				Option Expiration Date						Number of Shares or Units of Stock That Have Not Vested (a) (#)				Market Value of Shares or Units of Stock That Have Not Vested (a) (#)				Equity Incentive Plan Awards: # of Unearned Shares, Units or Other Rights That Have Not Vested (b) (#)				Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested (b) ($)
O. B. Grayson Hall, Jr.			02/08/05				115,065				—				—				32.02				02/08/15						—				—				—				—
			04/03/06				83,966				—				—				34.46				04/03/16						—				—				—				—
			04/24/07				85,715				—				—				35.07				04/23/17						—				—				—				—
			02/28/08				282,019				—				—				21.94				02/27/18						—				—				—				—
			02/22/12				—				—				—				—				—						241,810				2,553,514				—				—
			06/01/12				—				—				—				—				—						221,878				2,343,032				305,082				3,221,669
			04/01/13				—				—				—				—				—						182,704				1,929,354				182,704				1,929,354
			04/01/14				—				—				—				—				—						153,046				1,616,166				153,046				1,616,166
David J. Turner, Jr.			05/02/05				27,590				—				—				33.21				05/02/15						—				—				—				—
			04/03/06				33,810				—				—				34.46				04/03/16						—				—				—				—
			04/24/07				20,000				—				—				35.07				04/23/17						—				—				—				—
			02/28/08				59,822				—				—				21.94				02/27/18						—				—				—				—
			02/22/12				—				—				—				—				—						78,845				832,603				—				—
			06/01/12				—				—				—				—				—						51,599				544,885				70,949				749,217
			04/01/13				—				—				—				—				—						40,601				428,747				40,601				428,747
			04/01/14				—				—				—				—				—						36,731				387,879				36,731				387,879
John B. Owen			02/28/08				128,191				—				—				21.94				02/27/18						—				—				—				—
			02/22/12				—				—				—				—				—						51,724				546,205				—				—
			06/01/12				—				—				—				—				—						51,599				544,885				70,949				749,217
			04/01/13				—				—				—				—				—						40,601				428,747				40,601				428,747
			04/01/14				—				—				—				—				—						36,731				387,879				36,731				387,879
Fournier J. Gale, III			03/01/11				114,065				—				—				7.43				02/28/21						—				—				—				—
			06/01/12				—				—				—				—				—						38,699				408,661				53,211				561,909
			04/01/13				—				—				—				—				—						30,451				321,563				30,451				321,563
			04/01/14				—				—				—				—				—						27,548				290,907				27,548				290,907
C. Matthew Lusco			06/01/12				—				—				—				—				—						38,699				408,661				53,211				561,909
			04/01/13				—				—				—				—				—						30,451				321,563				30,451				321,563
			04/01/14				—				—				—				—				—						27,548				290,907				27,548				290,907

(1)	All outstanding stock options were granted to vest in equal annual installments on each of the first three anniversaries of the date of grant and, as of December 31, 2014, are all fully vested.

 

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(2)	The vesting of unvested restricted stock and RSUs is as follows:

 

Grant Date		Vesting Schedule		Restrictions
February 22, 2012		3rd anniversary of grant date		(a)   Time vested restricted stock
June 1, 2012		3rd anniversary of grant date		(a)   Time vested RSUs (b)   Performance vested RSUs set to be earned between 0 percent and 200 percent subject to absolute and relative equally weighted Diluted EPS growth and ROATCE for the period January 1, 2012, through December 31, 2014 that have been earned at 137.5 percent and continue to be subject to release on June 1, 2015, the third anniversary of the grant date.
April 1, 2013   April 1, 2014		3rd anniversary of grant date		(a)   Time vested RSUs, vesting of which is also subject to meeting capital and liquidity thresholds. (b)   PSUs may be earned between 0 percent and 150 percent subject to achieving required performance levels of equally weighted absolute and relative Diluted EPS growth and ROATCE for the period January 1, 2013, through December 31, 2015 for the grant made April 1, 2013 and the period January 1, 2014, through December 31, 2016 for the grant made April 1, 2014.

Option Exercises and Stock Vested

 

The following table sets forth the amounts realized by each of the NEOs in the Summary Compensation Table as a result of the exercise of options and vesting of stock awards in 2014:

 

		Option Awards								Stock Awards
Name		Number of Shares Acquired on Exercise (#)				Value Realized on Exercise ($)(1)				Number of Shares Acquired on Vesting (#)				Value Realized on Vesting ($)
O. B. Grayson Hall, Jr.			363,278				2,499,134				156,504				1,602,601
David J. Turner, Jr.			—				—				51,030				522,547
John B. Owen			171,598				1,186,703				56,152				574,996
Fournier J. Gale, III			—				—				38,021				404,543
C. Matthew Lusco			—				—				80,370				818,970

(1)

The value realized on exercise is based on the difference between the fair value of a share of stock on the date of exercise and the fair value of a share of stock on the date of grant, and is not consistent with the amount required to be expensed by the Company under FASB ASC Topic 718. These amounts are not reported in the Summary Compensation Table.

Pension Benefits

 

 

 

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The following Pension Benefits table reflects the actuarial present value benefit from the Retirement Plan and the SERP:

 

Pension Benefits

Name

Plan Name

Number of Years Credited Service (#) (1)

Present Value of Accumulated Benefit ($) (2)

Payments During Last Fiscal Year ($)

O. B. Grayson Hall, Jr.

Retirement Plan

30

1,497,196

—

SERP

33

24,566,471

—

David J. Turner, Jr.

Retirement Plan

9

336,676

—

SERP

9

2,065,206

—

John B. Owen

NA

NA

NA

NA

SERP

7

4,826,233

—

Fournier J. Gale, III

NA

NA

NA

NA

NA

NA

NA

NA

C. Matthew Lusco

NA

NA

NA

NA

SERP

4

1,102,519

—

(1)

The Retirement Plan (a tax-qualified pension plan) caps the number of years of participant service for purposes of benefit accrual at 30 years. The SERP (a nonqualified plan) caps participant service at 35 years. Mr. Owen and Mr. Lusco do not participate in the qualified pension plan and Mr. Gale does not participate in the qualified or nonqualified pension plans of the Company.

 

(2)

In 2009, future benefit accruals under the Retirement Plan and SERP were suspended for all participants. Even during the suspension, participants continued to earn service toward vesting and eligibility for early retirement benefits. Effective January 1, 2010, benefit accruals were restarted for Retirement Plan and SERP participants.

 

The present value of the accumulated Retirement Plan benefits reflects the present value as of December 31, 2014, and was determined using a 4.2 percent discount rate for the qualified plan and the MRP-2007 employee and retiree mortality tables for males and females, no collar with generational projection based on scale MSS-2007. The present value of the accumulated SERP benefits reflects the present value as of December 31, 2014, and was determined using a 3.75 percent discount rate, (4.00 percent to calculate expected lump sum distribution) and the 2015 Pension Protection Act lump sum mortality table. For purposes of the present value calculation, no pre-retirement mortality was assumed and the payment date was assumed to be the earliest unreduced retirement date under the Plan. The payment age of 62 (life only) was assumed for the Retirement Plan and the payment age was assumed to be age 60 for the SERP for Mr. Hall and Mr. Owen and age 62 for Mr. Turner and Mr. Lusco.

 

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Nonqualified Deferred Compensation

 

 

 

The following table sets forth the NEOs’ contributions, Regions’ contributions and the aggregate earnings, withdrawals and balances during 2014 under the nonqualified deferred compensation plans maintained by Regions:

 

				Nonqualified Deferred Compensation
Name				Executive Contributions in 2014 ($) (1)				Company Contributions in 2014 ($) (2)				Aggregate Earnings in 2014 ($) (3)				Aggregate Withdrawals / Distributions				Aggregate Balance at December 31, 2014 ($) (4)
O. B. Grayson Hall, Jr.		Supplemental 401(k)			150,003				138,154				104,610				—				2,461,283
David J. Turner, Jr.		Supplemental 401(k)			73,806				59,662				37,580				—				662,546
John B. Owen		Supplemental 401(k)			133,007				61,935				41,211				—				788,906
Fournier J. Gale, III		Supplemental 401(k)			47,511				71,853				3,658				—				214,384
C. Matthew Lusco		Supplemental 401(k)			46,927				55,582				9,611				—				209,888

(1)	This column represents amounts deferred from the applicable NEO’s base salary and annual bonus (if applicable) and are reported in the “Salary” and “Non-Equity Incentive Plan Compensation” (if applicable) columns of the Summary Compensation Table.

 

(2)	This column includes Company contributions under the Supplemental 401(k) Plan plus the 2 percent non-elective contribution for Mr. Gale. These amounts are also reflected in the “All Other Compensation” column of the Summary Compensation Table.

 

(3)	This column includes earnings/losses from the Supplemental 401(k) Plan.

 

(4)

The December 31, 2014, balances do not include true-up Company contributions that were made in early 2015 based on executive deferral elections from 2014 pay. These contributions are included, however, in the column “Company Contributions in 2014.” The aggregate balance at December 31, 2014, includes the balance in the Supplemental 401(k) Plan.

 

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Potential Payments by Regions Upon Termination or Change-in-Control

 

 

 

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The following table quantifies certain amounts that would be payable to NEOs upon various types of separation circumstances and that are described previously. The table also quantifies certain additional payments and benefits not described previously that are payable on certain terminations of employment. The amounts reflected in the table assume a December 31, 2014 termination of employment:

 

Name		Voluntary ($)				Involuntary Without Cause ($)				Early Retirement ($)				For Cause ($)				Following a Change-in- Control (without Cause or for Good Reason) ($) (8)				Death ($) (9)				Disability ($)
O. B. Grayson Hall, Jr. (1)
Compensation:
Cash Severance			—				—				—				—				7,500,000				—				—
Long Term Incentive
Restricted Stock/Units (2)			4,470,344				4,470,344				4,470,344				—				8,442,065				8,442,065				7,023,857
Performance Stock Units (2)			—				—				—				—				6,767,189				6,767,189				—
Performance Cash			—				—				—				—				5,137,500				5,137,500				—
Perquisites:
Financial Planning (3)			29,310				29,310				29,310				—				29,310				29,310				29,310
Outplacement (4)			—				—				—				—				60,000				—				—
280G Tax Gross-up (5)			—				—				—				—				13,016,844				—				—
Benefits:
Value of Continued Welfare Benefits (6)			—				—				—				—				27,308				—				—
Value of Additional Retirement Benefits (7)			—				—				—				—				7,508,312				—				—
Total:			4,499,654				4,499,654				4,499,654				—				48,488,528				20,376,064				7,053,167
David J. Turner, Jr.
Compensation:
Cash Severance			—				—				—				—				2,654,400				—				—
Long Term Incentive
Restricted Stock/Units (2)			—				677,450				—				—				2,194,115				2,194,115				1,867,464
Performance Stock Units (2)			—				—				—				—				1,565,843				1,565,843				—
Performance Cash			—				—				—				—				1,191,666				1,191,666				—
Perquisites:
Financial Planning (3)			—				29,310				NA				—				29,310				29,310				29,310
Outplacement (4)			—				—				—				—				60,000				—				—
280G Tax Gross-up (5)			—				—				—				—				3,159,776				—				—
Benefits:
Value of Continued Welfare Benefits (6)			—				—				—				—				18,096				—				—
Value of Additional Retirement Benefits (7)			—				—				—				—				832,557				—				—
Total:			—				706,760				NA				—				11,705,763				4,980,934				1,896,774
John B. Owen
Compensation:
Cash Severance			—				—				—				—				4,076,100				—				—
Long Term Incentive
Restricted Stock/Units (2)			—				677,450				—				—				1,907,717				1,907,717				1,581,066
Performance Stock Units (2)			—				—				—				—				1,565,843				1,565,843				—
Performance Cash			—				—				—				—				1,191,666				1,191,666				—
Perquisites:
Financial Planning (3)			—				29,310				NA				—				29,310				29,310				29,310
Outplacement (4)			—				—				—				—				60,000				—				—
280G Tax Gross-up (5)			—				—				—				—				7,822,886				—				—
Benefits:
Value of Continued Welfare Benefits (6)			—				—				—				—				27,308				—				—
Value of Additional Retirement Benefits (7)			—				—				—				—				7,386,302				—				—
Total:			—				706,760				NA				—				24,067,132				4,694,536				1,610,376

 

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COMPENSATION OF EXECUTIVE OFFICERS

Name		Voluntary ($)				Involuntary Without Cause ($)				Early Retirement ($)				For Cause ($)				Following a Change-in- Control (without Cause or for Good Reason) ($) (8)				Death ($) (9)				Disability ($)
Fournier J. Gale, III (1)
Compensation:
Cash Severance			—				—				—				—				3,395,622				—				—
Long Term Incentive
Restricted Stock/Units (2)			776,143				776,143				776,143				—				1,021,131				1,021,131				776,143
Performance Stock Units (2)			—				—				—				—				1,174,379				1,174,379				—
Performance Cash			—				—				—				—				893,750				893,750				—
Perquisites:
Financial Planning (3)			29,310				29,310				29,310				—				29,310				29,310				29,310
Outplacement (4)			—				—				—				—				60,000				—				—
Benefits:
Value of Continued Welfare Benefits (6)			—				—				—				—				20,601				—				—
Value of Additional Retirement Benefits (7)			—				—				—				—				—				—				—
Total:			805,453				805,453				805,453				—				6,594,793				3,118,570				805,453
C. Matthew Lusco
Compensation:
Cash Severance			—				—				—				—				2,225,429				—				—
Long Term Incentive
Restricted Stock/Units (2)			—				508,086				—				—				1,021,131				1,021,131				776,143
Performance Stock Units (2)			—				—				—				—				1,174,379				1,174,379				—
Performance Cash			—				—				—				—				893,750				893,750				—
Perquisites:
Financial Planning (3)			—				29,310				NA				—				29,310				29,310				29,310
Outplacement (4)																			60,000
Benefits:																			—				—
Value of Continued Welfare Benefits (6)			—				—				—				—				18,079				—
Value of Additional Retirement Benefits (7)			—				—				—				—				1,932,966				—				—
Total:			—				537,396				—				—				7,355,044				3,118,570				805,453

(1)

Mr. Hall is eligible for early retirement and Mr. Gale is eligible for normal retirement. For purposes of the various termination columns in the table, with the exception of the “For Cause” column, they were assumed to have taken early/normal retirement and therefore are entitled to receive the benefits shown.

 

(2)	Based on a fair market value of Regions common stock of $10.56 per share on December 31, 2014.

 

(3)	The service agreement with Regions’ financial planning provider allows for continuation of service for two years following termination due to retirement, death, disability, change-in-control and involuntary termination without cause.

 

(4)	The change-in-control agreement provides for reasonable outplacement services for up to two years based on a termination date of December 31, 2014.

 

(5)	280G tax gross-up represents the amount of the excise tax and related gross-up for excise taxes levied under Section 4999 of the IRC on payment and benefits following a change-in-control (otherwise referred to as “excess parachute payments” under Section 280G of the IRC).

 

(6)	The change-in-control agreement provides for continuation of medical and dental coverage equal to what is provided in accordance with Regions’ employee benefit plans for a period of three years for Mr. Hall, Mr. Owen and Mr. Gale and for a period of two years for Mr. Turner and Mr. Lusco.

 

(7)

Mr. Hall, Mr. Turner, Mr. Owen and Mr. Lusco participate in the Retirement Plan and/or the SERP. The change-in-control agreement provides for additional years credit for age and service under the Retirement Plan and the SERP that the NEO would have accrued had they remained employed through the second anniversary of the change-in-control. In addition, Mr. Hall and Mr. Owen are each eligible for the alternative target benefit under the SERP, which would normally require the executive to reach age 60 and have a minimum of 10 years of service. Mr. Lusco is eligible for the regular SERP, which would normally require service to age 62. Under the SERP, in the event of an involuntary termination of employment without cause (or termination for good reason) within 24-months following a change-in-control, unvested benefits become fully vested. Because these benefits are already accrued, they are reflected in the Pension Benefits table on page 74 and do not represent additional expense to the Company. The following chart details the value of the benefit attributable to the additional years of age and service as well as the amounts already accrued that will vest upon involuntary termination of employment without cause (or termination with good reason) within 24-months of a change-in-control:

 

		Value for Targeted/Regular Years of Age and Service Credit				Value for Vesting in Targeted/Regular Benefit				Total Additional Value
		($)				($)				($)
O. B. Grayson Hall, Jr.			2,949,429				4,558,883				7,508,312
David J. Turner, Jr.			832,557				NA				832,557
John B. Owen			2,096,892				5,289,410				7,386,302
Fournier J. Gale, III			NA				NA				NA
C. Matthew Lusco			744,917				1,188,049				1,932,966

 

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COMPENSATION OF EXECUTIVE OFFICERS

 

 

(8)	The following chart summarizes the meaning of “cause,” “good reason/without cause” and “change-in-control” under the change-in-control agreements of the NEOs:

 

“cause”		(i) willful and continued failure to substantially perform reasonably assigned duties, (ii) breach of fiduciary duty involving personal profit or commission of a felony or a crime involving fraud or moral turpitude, material breach of the agreement, (iii) engaging in illegal conduct or gross misconduct that materially injures Regions, (iv) failure to materially cooperate with an investigation authorized by the Board, a regulatory body, or a governmental department or agency, or (v) disqualification or bar by any governmental or regulatory authority from carrying out duties and responsibilities, or loss of any required licenses.
“good reason” and “without cause”		(i) an adverse change in responsibilities as in effect immediately before the change-in-control, (ii) a material diminution in the budget over which the executive has control, (iii) a material breach of the compensation provisions of the agreement or (iv) requiring the executive to move his principal place of work by more than 50 miles.
“change-in-control”		(i) an acquisition of 20 percent or more of the combined voting power of Regions voting securities, (ii) a change in a majority of the members of the Board, (iii) the consummation of a merger (unless voting securities of Regions outstanding immediately prior to the merger continued to represent at least 55 percent of the combined voting power of the voting securities of the surviving company outstanding immediately after such merger), or (iv) stockholder approval of a complete liquidation or dissolution of Regions.

 

(9)	Death would result in vesting in the enhanced portion of the benefit for Mr. Hall, Mr. Owen and Mr. Lusco as is displayed in the chart in footnote (7) above.

 

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PROPOSAL 4 — APPROVAL OF THE REGIONS FINANCIAL CORPORATION 2015 LONG TERM INCENTIVE PLAN

PROPOSAL 4 — APPROVAL OF THE REGIONS FINANCIAL CORPORATION 2015 LONG TERM INCENTIVE PLAN

What am I voting on?

 

You are voting on a proposal to approve the new Regions Financial Corporation 2015 Long Term Incentive Plan (the “2015 Plan”). In order to provide a sufficient pool of shares of common stock for Regions to continue using equity awards in its compensation program, Regions proposes the adoption of the 2015 Plan, subject to the approval of our stockholders. The 2015 Plan will be effective on April 23, 2015, if it is approved by the stockholders of the Company at the 2015 annual meeting (the “Effective Date”). If the 2015 Plan is not approved by our stockholders, the Effective Date will not occur and no awards will be made under the 2015 Plan.

This proposal gives you as a stockholder the opportunity to vote for or against the following resolution:

“RESOLVED, that the stockholders of Regions Financial Corporation (the ‘Company’) approve the Regions Financial Corporation 2015 Long Term Incentive Plan, as disclosed in Appendix B to the Company’s 2015 Proxy Statement.”

The 2015 Plan will apply only to awards granted on or after the Effective Date and will replace the Regions Financial Corporation 2010 Long Term Incentive Plan (the “2010 Plan”) for all awards granted on or after the Effective Date. The terms and conditions of awards granted under the 2010 Plan prior to the Effective Date will not be affected by the adoption or approval of the 2015 Plan, and the 2010 Plan will remain effective with respect to such awards. No new grants will be made under the 2010 Plan after the Effective Date and the remaining shares of common stock authorized for grant under the 2010 Plan but not yet granted will be cancelled effective as of stockholder approval of the 2015 Plan. If stockholders do not approve the 2015 Plan, it will not be implemented and any future awards will be made from the 2010 Plan. However, Regions’ ability to grant awards under the 2010 Plan will be limited and could interfere with the Company’s ability to attract, motivate or retain associates and Directors.

What vote is required to approve this proposal?

 

Approval of this proposal requires the affirmative “FOR” vote of a majority of the votes cast. Abstentions have the same effect as a vote cast “Against” this proposal. Broker non-votes have no effect on the voting results for this proposal.

What does the Board recommend?

 

The Board unanimously recommends that you vote “FOR” approval of the 2015 Plan.

What is the purpose of the 2015 Plan?

 

The purpose of the 2015 Plan is to align associates’ and Directors’ interests with the long-term interests of stockholders through the grant of equity-based awards and to grant awards designed to comply with Section 162(m) of the Internal Revenue Code. Regions recognizes that its ultimate success is measured by the financial well-being of its stockholders. Accordingly, one of the central principles of Regions’ executive compensation program is tying compensation to Company performance. The Company believes that granting awards in the form of stock-based incentives and incentives that are related to the achievement of performance goals motivates associates and Directors to achieve certain strategic objectives that increase stockholder value.

Does the 2015 Plan reflect best practices?

 

The 2015 Plan includes several features designed to protect stockholder interests and appropriately reflect our compensation philosophy and developments in our compensation practices in recent years, including: no stock option or stock appreciation right grants with an exercise or reference price below 100 percent of fair market value; no “evergreen” provision; double trigger change-in-control provisions; no repricing of underwater stock options or stock appreciation rights; no dividends or dividend equivalents paid on performance awards unless goals are satisfied; annual limit on awards to Directors; and clawback of certain awards in accordance with Regions’ clawback policy.

What are the features of the 2015 Plan?

 

The 2015 Plan was designed after taking into consideration Regions’ regulatory environment, competitive pay practices, investor perspectives toward equity compensation and plan cost.

 

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PROPOSAL 4 — APPROVAL OF THE REGIONS FINANCIAL CORPORATION 2015 LONG TERM INCENTIVE PLAN

 

The following is a summary of the material terms of the 2015 Plan. It is qualified in its entirety by reference to the terms of the 2015 Plan, a copy of which is attached to this proxy statement as Appendix B.

Number of Shares Available for Awards

If stockholders approve the 2015 Plan, the number of shares of Regions common stock available for issuance under the 2015 Plan will be 60 million shares, minus one share for every share subject to awards granted after December 31, 2014 under the 2010 Plan, plus shares subject to an outstanding award under the 2010 Plan that for any reason are cancelled, terminate, lapse, expire, are forfeited, become unexercisable for any other reason or are settled for cash (in whole or in part), plus any shares with respect to which the Company becomes obligated to make awards through the assumption of, or in substitution for, outstanding awards previously granted by an acquired entity. The closing market price of the common stock of the Company as reported by the NYSE was $9.70 per share on March 5, 2015. Shares of Regions common stock that may be awarded may consist, in whole or in part, of authorized and unissued shares or treasury shares.

In determining the number of shares available for issuance under the 2015 Plan, the Compensation Committee worked closely with its independent compensation consultant and considered the number of shares that remain available for issuance under the 2010 Plan, historical equity grant practices and expected dilution to stockholders. If stockholders approve the 2015 Plan, any shares that remain available for grant under the 2010 Plan will be cancelled and no longer available for issuance. However, awards that are outstanding under the 2010 Plan will continue to be governed by the terms of the 2010 Plan and the applicable award agreements.

The Compensation Committee also sought to strike a balance between limiting dilution to stockholders and sufficiently aligning associates’ and Directors’ interests with the long-term interests of stockholders. Accordingly, the Compensation Committee reviewed historic share usage, also known as the “burn rate,” as well as “overhang” as compared to our competitors.

“Burn rate” reflects the percentage of common stock outstanding that is granted in the form of equity-based compensation in a given year. On a quarterly basis, the Compensation Committee reviews the rate at which Regions uses shares available under its equity compensation plans to ensure its burn rate is in line with our competitors. Regions’ average burn rate under the 2010 Plan for the past three years was 0.48 percent, which is considered favorably as a low burn rate.

 

Year		Rate
2012			0.61%
2013			0.46%
2014			0.39%
Average			0.48%

“Overhang” measures the total shares allocated for compensatory purposes as a percentage of total common stock outstanding. Again, on a quarterly basis, the Compensation Committee reviews overhang to assess the potential dilution to stockholders as a result of Regions use of equity to compensate associates and Directors. If the 2015 Plan is approved by stockholders, the potential “overhang” is estimated to be approximately 7 percent, which is considered reasonable in the financial services industry.

Plan Features that Promote Sound Corporate Governance

The 2015 Plan includes many features that are consistent with sound corporate governance practices.

 

•

No Discounted Stock Options or Stock Appreciation Rights (“SARs”): The 2015 Plan prohibits the grant of a stock option or SAR with an exercise price less than the fair market value of Regions common stock on the date of grant.

 

•

No Re-Pricing of Stock Options or SARs: The 2015 Plan prohibits the re-pricing of stock options or SARs either by reducing the exercise or reference price or by substituting or exchanging a new option or SAR at a lower price. The only exception is for exercise price adjustments to reflect mergers, changes in control, stock splits or other changes in capitalization.

 

•

Vesting: Under the 2015 Plan, options and SARs that are conditioned only on future employment (rather than the attainment of performance goals) must be subject to at least a one-year vesting period after the date of grant. The only exception applies in cases of death, disability and certain terminations of employment within 24 months following a change-in-control.

 

•

Shares Not Available for Reissuance: The 2015 Plan limits the circumstances under which a share that is subject to an award but not ultimately delivered to the award recipient may become available for reissuance under a new award. The following shares of common stock will not become available for reissuance under the 2015 Plan: (1) stock withheld or tendered as full or partial payment upon exercise of a stock option; (2) stock reserved for issuance upon grant of SARs, to the extent the number of reserved shares exceeds the number of shares issued upon exercise of the SARs; and (3) stock withheld or remitted to satisfy withholding obligations upon exercise of a stock option or SAR or any other payment or issuance of shares.

 

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PROPOSAL 4 — APPROVAL OF THE REGIONS FINANCIAL CORPORATION 2015 LONG TERM INCENTIVE PLAN

 

•

Dividends and Dividend Equivalent Rights on Restricted Stock, Restricted Stock Units (“RSUs”) and Performance Awards: The 2015 Plan provides that to the extent an award of restricted stock or RSUs or an award that is subject to attainment of performance goals entitles the award recipient to dividends or dividend equivalent rights, those dividends or dividend equivalents, as applicable, only become payable if the award vests and is paid. If the restricted stock, RSU or performance award is forfeited without vesting, the applicable dividends or dividend equivalent rights also are forfeited. Dividend equivalents are not granted in conjunction with the grant of stock options or SARs.

 

•

Clawback Policy: Certain awards granted under the 2015 Plan may be forfeited, reduced or repaid to the Company upon the occurrence of specified events after the awards have been deemed earned, distributed or paid to the award recipient, in accordance with Regions’ clawback policy.

 

•

Annual Limit on Awards to Non-Employee Directors: The 2015 Plan establishes a $500,000 annual limit on the amount of awards that may be granted to a non-employee Director in a calendar year, which is based on the aggregate fair market value of stock-based awards, determined as of the date of grant.

 

•

Double Trigger Vesting Following a Change-in-Control: Awards under the 2015 Plan generally become fully vested if there is a “change-in-control” of Regions (as defined in the 2015 Plan) and the award recipient terminates for “good reason” (as defined in the 2015 Plan) or is terminated by Regions without “cause” (as defined in the 2015 Plan) within 24 months following the change-in-control. To the extent an award is subject to performance-based vesting, the performance goals will be deemed to have been earned based on the greater of targeted performance and actual performance attained as of the effective date of the change-in-control and the awards will remain subject to time-based vesting for the remainder of the applicable performance period (subject to accelerated vesting as described above). The Compensation Committee also may determine that all outstanding awards will be cancelled upon a change-in-control, and the value of those awards, as determined by the Compensation Committee in accordance with the terms of the 2015 Plan and the applicable award agreement, will be paid in cash, shares of common stock or other property within a reasonable time subsequent to the change-in-control. Further, in the event of a change-in-control of Regions, the Compensation Committee may, in its sole discretion, terminate stock options and SARs for which the exercise price or reference price is equal to or exceeds the per share value of the consideration to be paid in the change-in-control transaction without payment of consideration.

Eligibility

Associates and non-employee Directors of Regions and its subsidiaries and affiliates are eligible to receive awards under the 2015 Plan. As of December 31, 2014, there were approximately 23,723 associates and 12 non-employee Directors of the Company and its subsidiaries and affiliates. The Compensation Committee selects individuals to whom awards are granted and determines the type and number of awards. Certain consultants also are eligible to receive awards under the 2015 Plan; however, the Compensation Committee does not typically grant awards to consultants.

Types of Awards

The 2015 Plan provides that awards may be granted in any one or a combination of the following forms:

 

•

Stock Options: The 2015 Plan authorizes the granting of two types of stock options to purchase Regions common stock: incentive stock options (“ISOs”) and non-qualified stock options (“NQSOs”). ISOs may be granted only to associates and provide for special tax treatment (as described below) in accordance with Section 422 of the Internal Revenue Code.

No stock options may be granted under the 2015 Plan after the tenth anniversary of the Effective Date, expected to be April 23, 2025. The option price per share of an ISO or an NQSO will not be less than 100 percent of the fair market value of the common stock on the date of grant. Options may be exercised by payment in cash, or in the discretion of the Compensation Committee, by delivery of shares having a market value equal to the option price, or in any combination of cash and shares. An option may be exercised only subject to such terms as the Compensation Committee may impose at the time the option is granted. In general, an option will be subject to a minimum vesting period of one year and will terminate not later than ten years after the date of grant.

 

•

SARs: SARs may be granted under the 2015 Plan in connection with all or any part of NQSOs or independent of stock options. SARs permit the recipient to receive from the Company an amount determinable in relation to any increase in fair market value of the Company’s common stock over the SAR’s reference price. The reference price per share of SARs will not be less than 100 percent of the fair market value of the common stock on the date of grant. The amount payable upon exercise of a SAR for each share covered by the exercise is equal to the difference between the exercise price and the fair market value of the share on the date of exercise. The Compensation Committee has the discretion to establish the terms of a SAR at the time of grant, including the method of exercise, method of settlement, form of consideration payable in settlement and any other terms and conditions of the award. Any SAR and its terms and conditions must be evidenced by an award agreement between Regions and the recipient. The aggregate amount due on exercise of a SAR may be paid wholly or partly in cash or in common stock, at the discretion of the

 

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Compensation Committee. In general, a SAR will be subject to a minimum vesting period of one year and will terminate not later than ten years after the date of the grant.

 

•

Restricted Stock: A restricted stock award under the 2015 Plan consists generally of a grant of the Company’s common stock to the recipient subject to conditions determined by the Compensation Committee. The terms determinable by the Compensation Committee in each restricted stock award include the number of shares, the price, if any, to be paid by the recipient, the time within which the award may be subject to forfeiture, the nature of the restrictions, including performance criteria, if any, and the circumstances upon which restrictions will lapse. The recipient of restricted stock may not sell or transfer such shares during the restriction period, and the certificates representing such shares remain in the custody of the Company until the conditions of restriction are satisfied. Upon lapse or removal of the restrictions, the recipient will have unrestricted ownership of the covered shares.

 

•

RSUs: An RSU is a right to receive a share of Regions common stock, or cash equal to the fair market value of a share, at a designated date or in defined circumstances, which may be the date when the RSU becomes vested or a later date, or the occurrence of a specified event such as termination of employment. The right to receive the share under an RSU is typically conditioned on continued employment or achievement of performance goals.

 

•

Performance Shares, Performance Share Units and Performance Units: The 2015 Plan provides for the grant of awards in the form of performance shares or performance share units and performance units. The Compensation Committee selects recipients of performance share and performance unit awards and establishes performance objectives, the performance period and the amount and form of the award, which may consist of stock or cash. A performance goal may be established as it relates to the individual recipient, for the Company alone or on a consolidated basis, and/or for specified subsidiaries or affiliates or other business units of the Company. Performance awards may also be payable when performance is measured on an absolute or relative basis, as compared to one or more peer companies, or one or more market, sector or business indices, or when the recipient meets or exceeds an objective criterion established by the Committee. At the end of the performance period, the Compensation Committee certifies the extent to which the performance objectives have been satisfied and determines the level of payout of each award. See the section that follows entitled Description of Section 162(m) of the Internal Revenue Code Performance Criteria for a list of the performance criteria applicable to performance awards that are intended to qualify as “performance-based compensation” under Section 162(m) of the Internal Revenue Code.

 

•

Other Stock-Based Awards: The 2015 Plan also grants discretion to the Compensation Committee to make stock-based awards in other forms and to establish the terms and conditions of the award at the time of grant. In general, any other form of stock-based award under the 2015 Plan will be payable in, valued in whole or in part by reference to, or be otherwise based on or related to common stock of the Company. Any such award must be determined by the Compensation Committee to be consistent with the purposes of the 2015 Plan.

Award Limits

The following limits apply to grants of awards under the 2015 Plan:

 

•

Limit on Grants of Options and SARs: The maximum number of shares of common stock with respect to which stock options and SARs may be granted to any associate during any one calendar year is 950,000 shares. The maximum number of shares of common stock with respect to which ISOs may be granted under the 2015 Plan is 30 million. These limits are subject to adjustment for stock splits and other capital changes.

 

•

Limit on Grants of Stock-Based Performance Awards: The maximum number of shares of common stock with respect to which any stock-based awards that are intended to qualify as “performance-based compensation” within the meaning of Section 162(m) of the Internal Revenue Code (other than stock options, SARs and cash-based performance units) that may be granted in any one calendar year to any associate is 950,000 shares. This limit is subject to adjustment for stock splits and other capital changes.

 

•

Limit on Grants of Cash-Based Performance Awards: The maximum payment under any performance award denominated in cash that is intended to qualify as “performance-based compensation” within the meaning of Section 162(m) of the Internal Revenue Code that may be granted during any 12-month period to any recipient is $4,000,000 for each calendar year period contained in the performance period for that award.

 

•

Limit on Grants to Non-Employee Directors: A non-employee Director may not be granted awards under the 2015 Plan in one calendar year valued at more than $500,000 determined as of the date of grant based on the aggregate fair market value of stock-based awards.

Administration

The 2015 Plan is administered by the Compensation Committee, which is composed of non-employee Directors who are independent within the meaning of the NYSE listing standards and who are “outside directors” within the meaning of Section 162(m) of the Internal Revenue Code. The Board may, without further approval of the stockholders, suspend, terminate, or amend the 2015 Plan. However, no such action may be taken without stockholder approval if it would (a) increase the total number of shares of common stock that may be issued under the 2015 Plan, (b) increase the benefits accruing to a recipient under an outstanding award, (c) change the

 

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requirements for eligibility to receive awards under the 2015 Plan, (d) amend the 2015 Plan to allow for repricing of stock options or SARs, or (e) make any other change for which stockholder approval is required under any applicable law, regulation or exchange requirement. Also, no action may generally be taken without a recipient’s consent, if it would materially impair any then outstanding award.

Description of Section 162(m) of the Internal Revenue Code Performance Criteria

Awards under the 2015 Plan may be granted subject to the satisfaction or performance objectives, and, if designated by the Compensation Committee at the time of grant, as awards intended to comply with the requirements of Section 162(m) of Internal Revenue Code applicable to “performance-based compensation.” See the section that follows entitled Limitation on Corporate Tax Deductions for Covered Employees’ Compensation for a general summary of the key provisions of Section 162(m) of the Internal Revenue Code. For performance-based awards intended to satisfy the performance-based compensation requirements, the performance goal or goals must be based on one or more of the following performance criteria: earnings per share, net earnings, operating earnings, unit volume, market share, balance sheet measurements, revenue, economic profit, cash flow, cash return on assets, stockholder return, return on equity and return on capital. A performance goal may be established as it relates to the individual recipient, for the Company alone or on a consolidated basis, and/or for specified subsidiaries or affiliates or other business units of the Company. Performance awards also may be payable when performance, as measured by one or more of the above performance criteria, is measured on an absolute or relative basis, as compared to one or more peer companies, or one or more market, sector or business indices, or when the recipient meets or exceeds an objective criterion established by the Committee. Performance awards that are intended to satisfy the requirements for deductibility under Section 162(m) of the Internal Revenue Code may not be adjusted upward. The Compensation Committee has the discretion to adjust such performance awards downward, on either a formula or discretionary basis or both a formula and discretionary basis.

Dividend Equivalent Rights

As described above, the 2015 Plan permits the grant of dividend equivalents on awards, other than awards of stock options and SARs. Generally, a dividend equivalent entitles the recipient to receive an amount equal to the cash dividends declared on Regions common stock over a specified period. The Compensation Committee has the discretion to set the terms and conditions of a dividend equivalent award at the time of grant, including the number of shares referable to the award, the time period, the form of consideration in which an award is to be settled and the method of settlement.

What are the federal income tax consequences of participating in the 2015 Plan?

 

The following description of the tax consequences of awards under the 2015 Plan is based on federal income tax laws currently in effect and does not purport to be a complete description of the federal income tax consequences, nor does it address foreign, state, or local tax consequences. Tax laws governing awards are complex and subject to frequent changes, and award recipients are strongly encouraged to consult with a tax advisor regarding the taxation of awards granted under the 2015 Plan.

Stock Options. There are no federal income tax consequences either to the option holder or Regions upon the grant of an ISO or a NQSO. If shares are purchased under an ISO (an ISO is exercised) during employment or within three months thereafter, the option holder will not recognize any income and Regions will not be entitled to a deduction in respect of the option exercise. However, the excess of the fair market value of the shares on the date of exercise over the purchase price of the shares under the option will be includible in the option holder’s alternative minimum taxable income if the option holder does not dispose of the shares in the same calendar year in which the option holder acquired the shares under the ISO, which may give rise to alternative minimum tax liability for the option holder. Generally, if the option holder disposes of shares purchased under an ISO within two years of the date of grant or one year of the date of exercise, the option holder will recognize ordinary income, and Regions will be entitled to a deduction, equal to the excess of the fair market value of the shares on the date of exercise over the purchase price of such shares (but not more than the actual gain realized by the option holder on the disposition of the shares). The current position of the Internal Revenue Service is that income tax withholding and FICA and FUTA taxes do not apply upon the exercise of an ISO or upon any subsequent disposition, including a disqualifying disposition, of shares acquired pursuant to the exercise of the ISO. Any gain after the date on which the option holder purchased the shares will be treated as capital gain to the option holder and will not be deductible by Regions. If the shares are disposed of after the two year and one year periods mentioned above, Regions will not be entitled to any deduction, and the entire gain or loss realized by the option holder will be treated as capital gain or loss.

When shares are purchased under a NQSO, the excess of the fair market value of the shares on the date of purchase over the purchase price of such shares under the option will generally be taxable to the option holder as ordinary income and deductible by Regions. The disposition of shares purchased under a NQSO generally will result in a capital gain or loss for the option holder but will have no tax consequences for Regions.

SARs, Performance Share, Performance Unit, RSU and Other Awards. There are no federal income tax consequences either to the recipient or Regions upon the grant of SARs, performance share units, performance units, RSUs and other awards. If and when money is paid or shares of stock are issued pursuant to the exercise of a SAR or pursuant to a performance share unit, performance unit, RSU

 

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PROPOSAL 4 — APPROVAL OF THE REGIONS FINANCIAL CORPORATION 2015 LONG TERM INCENTIVE PLAN

 

or other award, the recipient generally will recognize ordinary income, and Regions generally will be entitled to a tax deduction equal to the fair market value of the shares on the date on which the shares are issued (or the amount of cash received if the award is settled in cash) less any amount paid for them by the recipient or netted out to reflect the reference price for SARs.

Restricted Stock and Performance Share Awards. The recipient of a restricted stock or performance share award will not recognize taxable income at the time the restricted stock or performance shares are issued unless the recipient makes a special election in accordance with Section 83(b) of the Internal Revenue Code to be taxed (at ordinary income rates) on the fair market value of the shares at that time, in which case Regions would be entitled to a deduction at the same time equal to the amount of income recognized by the recipient but would not be entitled to deduct any dividends thereafter paid on the shares. Absent such an election, the recipient of a restricted stock or performance share award will not recognize taxable income until the shares become transferable or cease to be subject to a substantial risk of forfeiture, at which time the recipient will recognize ordinary income, and Regions generally will be entitled to a corresponding deduction equal to the excess of the fair market value of the shares at that time over the amount (if any) paid by the recipient for the shares. Dividends paid to the recipient on the restricted shares prior to that time will be ordinary compensation income to the recipient and deductible by Regions.

Limitation on Corporate Tax Deductions for Covered Employees’ Compensation. Under Section 162(m) of the Internal Revenue Code, the amount that Regions may deduct on its federal income tax returns for compensation paid to the chief executive officer and its three other highest paid executive officers other than the chief executive officer and the chief financial officer (“covered employees”) in any taxable year is limited to $1,000,000 per individual. However, compensation that qualifies as “performance-based compensation” is not subject to the $1,000,000 deduction limit. “Performance-based compensation” is defined as (i) compensation that is payable on account of the attainment of one or more pre-established, objective performance goals, (ii) the performance goals are determined by a compensation committee of the board of directors, which consists of two or more outside directors, (iii) the material terms of the plan under which the compensation is to be paid are disclosed to stockholders and approved by a majority vote in a separate stockholder vote and (iv) before any payment of compensation, the compensation committee certifies that the performance goals have been satisfied.

The 2015 Plan authorizes the Compensation Committee to grant awards that qualify as “performance-based compensation” as well as awards that do not. As a result, Regions may not be entitled to any deduction if the individual in question is the chief executive officer or another covered employee, the compensation does not qualify as “performance-based compensation,” and the compensation, when added to the covered employee’s other taxable compensation that is not “performance-based” in the same taxable year, exceeds $1,000,000. Regions reserves the right to grant compensation that is not deductible.

Section 409A of the Internal Revenue Code. Certain types of awards under the 2015 Plan may constitute, or provide for, a deferral of compensation subject to Section 409A of the Internal Revenue Code. If an award constitutes deferred compensation and certain requirements set forth in Section 409A of the Internal Revenue Code are not satisfied, the recipient may have to include in income an amount determined in accordance with Section 409A of the Internal Revenue Code and pay an additional 20 percent tax on the amount and possibly interest penalties.

What are the 2015 Plan benefits?

 

The type and number of awards that may be granted under the 2015 Plan are subject to the Compensation Committee’s discretion, and accordingly, it is not possible to determine at this time the amount of the awards that may be granted under the 2015 Plan, assuming stockholder approval is obtained. However, for illustrative purposes, the following table sets forth amounts granted to each of our NEOs, all Executive Officers, all non-employee Directors, and all other associates in 2014 from the 2010 Plan. The Company expects to make future grants under the 2015 Plan in a manner consistent with its past practices.

 

		Stock-Based Awards
Participant		Dollar Value ($)				Number of Shares/Units (#)				Cash-Based Awards ($)				Total Awards ($)
O. B. Grayson Hall, Jr., Chief Executive Officer			3,333,333				306,092				1,666,667				5,000,000
David J. Turner, Jr., Chief Financial Officer			800,000				73,462				400,000				1,200,000
John B. Owen, Head of Regional Banking Group			800,000				73,462				400,000				1,200,000
Fournier J. Gale, III, General Counsel			600,000				55,096				300,000				900,000
C. Matthew Lusco, Chief Risk Officer			600,000				55,096				300,000				900,000
All Executive Officers as a group			5,000,000				459,126				2,500,000				7,500,000
All non-employee Directors as a group			1,140,000				112,980				—				1,140,000
All other associates as a group			45,412,500				4,169,879				1,705,000				47,117,500

 

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PROPOSAL 4 — APPROVAL OF THE REGIONS FINANCIAL CORPORATION 2015 LONG TERM INCENTIVE PLAN

Equity Compensation Plan Information

 

The following table sets forth information about the common stock that may be issued upon the exercise of options, warrants and rights under all of Regions’ existing equity compensation plans as of December 31, 2014, exclusive of shares that may be authorized for issuance under the proposed 2015 Plan.

 

Plan Category		Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (a)				Weighted Average Exercise Price of Outstanding Options, Warrants and Rights				Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in First Column)
Equity Compensation Plans Approved by Stockholders			9,412,113			$	12.96				41,909,410	(b)
Equity Compensation Plans Not Approved by Stockholders			15,904,563	(c)		$	29.05				—
Total			25,316,676	(d)		$	23.07				41,909,410

(a)	Does not include outstanding restricted stock awards. As of December 31, 2014, the number of shares to be issued under outstanding restricted stock awards and performance stock awards was 18,427,409 shares.

(b)	Consists of shares available for future issuance under the Regions Financial Corporation 2010 Long Term Incentive Plan. In 2010, all prior long-term incentive plans were closed to new grants.

(c)

Consists of outstanding stock options issued under plans assumed in connection with the Regions-AmSouth merger, which were previously approved by AmSouth stockholders but not pre-merger Regions stockholders. In each instance, the number of shares subject to option and the exercise price of outstanding options have been adjusted to reflect the applicable exchange ratio. See Note 16 “Share-Based Payments” to the consolidated financial statements included in Regions’ Annual Report on Form 10-K for the year ended December 31, 2014. Does not include 91,388 shares issuable pursuant to outstanding rights under AmSouth deferred compensation plans assumed by Regions.

(d)	As of December 31, 2014, the weighted average remaining contractual term of the outstanding stock options was 2.83 years.

 

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OTHER MATTERS

 

OTHER MATTERS

Important Notice Regarding Delivery of Security Holder Documents

 

 

 

Cost of Proxy Solicitation

 

 

 

Submission of Stockholder Proposals or Nominations for 2016 Annual Meeting of Stockholders

 

 

 

 

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OTHER MATTERS

 

Other Business

 

Regions does not know of any business to be presented for action at the annual meeting other than those items listed in the Notice of 2015 Annual Meeting of Stockholders on page 1 and referred to herein. If any other matters properly come before the annual meeting or any adjournment or postponement thereof, it is intended that the proxies will be voted in respect thereof by and at the discretion of the persons named as proxies on the electronic proxy or proxy card.

March 10, 2015

By Order of the Board of Directors

 

Fournier J. Gale, III

Corporate Secretary

 

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APPENDIX A

 

APPENDIX A

GAAP TO NON-GAAP AND OTHER RECONCILIATIONS

Adjusted Returns on Average Assets and Tangible Common Equity (Non-GAAP)

 

The table that follows presents a reconciliation of net income from continuing operations available to common stockholders (GAAP) to adjusted income from continuing operations available to common stockholders for incentive purposes (non-GAAP). Adjusted income from continuing operations available to common stockholders for incentive purposes excludes the items listed in the table. Regions believes that their exclusion from income from continuing operations available to common stockholders provides a meaningful base for period-to-period comparisons, which management believes will assist stakeholders in analyzing the operating results of the Company and predicting future performance. These non-GAAP financial measures are also used by management to assess the performance of Regions’ business. It is possible that the activities related to the adjustments may recur; however, management does not consider the activities related to the adjustments to be indications of ongoing operations. Management and the Compensation Committee utilize these non-GAAP financial measures for the evaluation of performance. Regions believes that presenting these non-GAAP financial measures will permit stakeholders to assess the performance of the Company on the same basis as that applied by management and the Board. Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied and are not audited. Although these non-GAAP financial measures are frequently used by stakeholders in the evaluation of a company, they have limitations as analytical tools, and should not be considered in isolation, or as a substitute for analyses of results as reported under GAAP. In particular, a measure of earnings that excludes these selected items does not represent the amount that effectively accrues directly to stockholders.

 

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The following table also provides a calculation of “Adjusted return on average assets (non-GAAP)” and “Adjusted return on average tangible common equity (non-GAAP)”, as well as a reconciliation of average stockholders’ equity (GAAP) to average tangible common stockholders’ equity (non-GAAP). Tangible common stockholders’ equity ratios have become a focus of some investors and management believes they may assist investors in analyzing the capital position of the Company absent the effects of intangible assets and preferred stock. Because tangible common stockholders’ common equity and the related ratio are not formally defined by GAAP, these measures are considered to be non-GAAP financial measures and other entities may calculate them differently than Regions’ disclosed calculations. Because analysts, banking regulators and the Compensation Committee may assess Regions’ capital adequacy using tangible common stockholders’ equity, management believes that it is useful to provide investors the ability to assess Regions’ capital adequacy on these same bases.

 

(Unaudited) ($ amounts in millions)				Year Ended December 31, 2014
Net income from continuing operations available to common stockholders (GAAP)		A		$	1,090
Adjustments:
Gain on sale of TDRs held for sale, net of tax					(21	)
Branch consolidation and property and equipment charges, net of tax (1)					6
Professional, legal and regulatory expenses, net of tax (2)					58
Securities gains, net of tax					(17	)
Loss on early extinguishment of long-term debt, net of tax (3)					(13	)
Adjusted income from continuing operations available to common stockholders for incentive purposes (non-GAAP)		B		$	1,103
Average assets		C		$	118,468
Adjusted return on average assets (non-GAAP)		B/C			0.93%
Average stockholders’ equity (GAAP)				$	16,735
Adjustments:
Average intangible assets (GAAP)					(5,103	)
Average deferred tax liability related to intangibles (GAAP)					182
Average preferred equity (GAAP)					(754	)
Average tangible common stockholders’ equity (non-GAAP)		D		$	11,060
Adjusted return on average tangible common stockholders’ equity (non-GAAP)		B/D			9.97%

 

(1)	Certain branch consolidation and property and equipment charges were included in the 2014 target. This adjustment reflects the portion of the charges recorded in actual, but not included in the target.

 

(2)

Regions recorded $100 million of contingent legal and regulatory accruals during the fourth quarter of 2014 related to previously disclosed matters. In the fourth quarter of 2013, Regions recorded a non-tax deductible charge of $58 million related to previously disclosed inquiries from government authorities. The 2013 matters were settled in the second quarter of 2014 for $7 million less than originally estimated and a corresponding recovery was recognized.

 

(3)	Loss on early extinguishment of long-term debt that was included in the 2014 target but not recorded in actual. Adjustment has been made to the actual amounts as if this transaction occurred in 2014 in order to neutralize the impact.

 

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APPENDIX A

 

Adjusted Pre-Tax Pre-Provision Income From Continuing Operations to Risk-Weighted Assets (Non-GAAP)

 

The Adjusted Pre-Tax Pre-Provision Income from Continuing Operations to Risk-Weighted Assets table below presents computations of pre-tax pre-provision income (PPI) from continuing operations excluding certain adjustments (non-GAAP). Regions believes that the presentation of PPI and the exclusion of certain items from PPI provides a meaningful base for period-to-period comparisons, which management believes will assist stakeholders and the Compensation Committee in analyzing the operating results of the Company and predicting future performance. These non-GAAP financial measures are also used by management to assess the performance of Regions’ business. It is possible that the activities related to the adjustments may recur; however, management does not consider the activities related to the adjustments to be indications of ongoing operations. Regions believes that presentation of these non-GAAP financial measures will permit stakeholders and the Compensation Committee to assess the performance of the Company on the same basis as that applied by management. Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied and are not audited. Although these non-GAAP financial measures are frequently used by stakeholders in the evaluation of a company, they have limitations as analytical tools, and should not be considered in isolation, or as a substitute for analyses of results as reported under GAAP. In particular, a measure of income that excludes certain adjustments does not represent the amount that effectively accrues directly to stockholders.

Under the risk-based capital framework, a company’s balance sheet assets and credit equivalent amounts of off-balance sheet items are assigned to one of four broad risk categories. The aggregated dollar amount in each category is then multiplied by the risk-weighted category. The resulting weighted values from each of the four categories are added together and this sum is the risk-weighted assets total that, as adjusted, comprises the denominator of certain risk-based capital ratios. The amount disclosed as risk-weighted assets was calculated consistent with banking regulatory requirements.

 

(Unaudited) ($ amounts in millions)				Year Ended December 31, 2014
Net income from continuing operations available to common stockholders (GAAP)				$	1,090
Preferred dividends (GAAP)					52
Income tax expense (GAAP)					457
Income from continuing operations before income taxes (GAAP)					1,599
Provision for loan losses (GAAP)					69
Pre-tax pre-provision income from continuing operations (non-GAAP)					1,668
Other adjustments:
Gain on sale of TDRs held for sale, net					(35)
Branch consolidation and property and equipment charges					16
Professional, legal and regulatory expenses (1)					93
Securities gains, net					(27	)
Leveraged lease termination gains, net					(10	)
Adjusted pre-tax pre-provision income from continuing operations (non-GAAP)		A		$	1,705
Risk weighted assets—average of the four quarters in 2014 (regulatory) (2)		B		$	98,171
Adjusted pre-tax pre-provision income as a percentage of risk weighted assets (non-GAAP)		A/B			1.74%
(1)    Regions recorded $100 million of contingent legal and regulatory accruals during the fourth quarter of 2014 related to previously disclosed matters. In the fourth quarter of 2013, Regions recorded a non-tax deductible charge of $58 million related to previously disclosed inquiries from government authorities. The 2013 matters were settled in the second quarter of 2014 for $7 million less than originally estimated and a corresponding recovery was recognized.   (2)    Based on average of quarter-end risk-weighted assets determined as follows:
March 31				$	97,418
June 30					98,098
September 30					98,381
December 31 (estimated)					98,787
Average				$	98,171

 

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APPENDIX A

Criticized and Classified Loans

 

 

($ amounts in millions)					Year Ended December 31, 2014
Total commercial (1)					$    2,098
Total investor real estate (1)					601
Total consumer (2)					778
Total criticized and classified loans		A			$    3,477
Total loans, net of unearned income		B			77,307
Criticized loans/loans		A/B			4.50%

(1)	Amount can be obtained from page 122 of Regions’ Annual Report on Form 10-K for the year ended December 31, 2014 as the sum of the applicable subtotals of the special mention, substandard accrual and non-accrual columns.

 

(2)	Amount is from internal management reports.

 

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APPENDIX B

 

APPENDIX B

REGIONS FINANCIAL CORPORATION

2015 LONG TERM INCENTIVE PLAN

 

1.

GENERAL PURPOSE

The purpose of the Regions Financial Corporation 2015 Long Term Incentive Plan (the “Plan”) is to promote the success, and enhance the value, of Regions Financial Corporation and its Subsidiaries, by linking the personal interests of their employees, officers and directors to those of Company stockholders and by providing such persons with an incentive for outstanding performance. The Plan is further intended to provide flexibility to the Company by increasing its ability to motivate, attract, and retain the services of employees, officers and directors upon whose judgment, interest, and special effort the successful conduct of the Company’s operation is largely dependent. Accordingly, the Plan permits the grant of incentive awards from time to time to selected employees, officers and directors. If approved by stockholders of Regions Financial Corporation, the Plan will replace the Regions Financial Corporation 2010 Long Term Incentive Plan (“2010 Plan”) for Awards granted after the Effective Date. Beginning on the Effective Date, no further awards will be made under the 2010 Plan, but this Plan will not affect the terms or conditions of any awards made under the 2010 Plan before the Effective Date.

 

2.

DEFINITIONS & INTERPRETATION

(a)    For purposes of the Plan, the following terms have the meanings assigned below:

“Acquisition Awards” has the meaning assigned in Section 4(c).

“Affiliate” means any entity other than the Company and its Subsidiaries that is designated by the Board as a participating employer under the Plan, provided that the Company directly or indirectly owns at least 20% of the combined voting power of all classes of shares of such entity or at least 20% of the ownership interests in such entity.

“Award” means an award of Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Awards or Other Awards under the Plan, which Awards may be issued in consideration of service rendered to the Company, its Subsidiaries and or its Affiliates.

“Award Agreement” means any written or electronic agreement, contract or other instrument or document evidencing any Award, and which may, but need not be (as determined by the Committee) executed or acknowledged by a Grantee as a condition to receiving an Award or the benefits under an Award, and which sets forth the terms and provisions applicable to Awards granted under the Plan to such Grantee.

“Beneficial Owner” (and all variations thereof) will have the meaning set forth in Rule 13d-3 under the Exchange Act.

“Board” means the Board of Directors of the Company.

“Cause” means (i) termination of the Grantee’s employment by the Company or a Subsidiary due to a material violation of (A) the Company’s Code of Business Conduct and Ethics, (B) the Grantee’s fiduciary duties to the Company, or (C) any law, provided such violation has materially harmed the Company, (ii) the willful and continued failure of the Grantee to perform substantially the Grantee’s duties with the Company or a Subsidiary (other than any such failure resulting from the Grantee’s incapacity due to physical or mental illness), or (iii) the occurrence of any event constituting “cause” within the meaning of a Grantee’s then-applicable employment agreement with the Company or one of its Subsidiaries.

“Change in Control” with respect to any Award has the meaning assigned to the term in the change in control agreement, if any, between the Grantee and the Company, provided, however that if there is no such change in control agreement, it shall mean any of the following events:

(i)    the acquisition by any “Person” (as the term “person” is used for the purposes of Section 13(d) or 14(d) of the Exchange Act) of direct or indirect beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% of the combined voting power of the then-outstanding securities of the Company entitled to vote in the election of directors (the “Voting Securities”); or

(ii)    individuals who, as of the date hereof, constitute the Board (the “Incumbent Directors”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election, was approved by a vote of at least a majority of the Incumbent Directors then on the Board, or the Nominating and Corporate Governance Committee of the Board, shall be an Incumbent Director, unless such individual is initially elected or nominated as a director of the Company as a result of an actual or threatened election contest with respect to the election or removal of directors (“Election Contest”) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board (“Proxy Contest”), including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest; or

 

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APPENDIX B

(iii)    the consummation of a merger, consolidation, reorganization, statutory share exchange, or similar form of corporate transaction involving the Company, the sale or other disposition of all or substantially all of the Company’s assets, or the acquisition of assets or stock of another entity by the Company (each a “Business Combination”), unless such Business Combination is a “Non-Control Transaction.” A “Non-Control Transaction” is a Business Combination immediately following which the following conditions are met:

(A)    the stockholders of the Company immediately before such Business Combination own, directly or indirectly, more than fifty percent (50%) of the combined voting power of the then-outstanding voting securities entitled to vote in the election of directors of the corporation resulting from such Business Combination (including, without limitation, a corporation that as a result of such Business Combination owns the Company or substantially all of the Company’s assets or stock either directly or through one or more subsidiaries) (the “Surviving Corporation”) in substantially the same proportion as their ownership of the Company Voting Securities immediately before such Business Combination;

(B)    at least a majority of the members of the board of directors of the Surviving Corporation were Incumbent Directors at the time of the Board’s approval of the execution of the initial Business Combination agreement; and

(C)    no person other than (1) the Company or any of its subsidiaries, (2) the Surviving Corporation or its ultimate parent corporation, or (3) any employee benefit plan (or related trust) sponsored or maintained by the Company immediately prior to such Business Combination beneficially owns, directly or indirectly, fifty percent (50%) or more of the combined voting power of the Surviving Corporation’s then-outstanding voting securities entitled to vote in the election of directors; or

(iv)    approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.

Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely because any Person (the “Subject Person”) acquired Beneficial Ownership of more than the permitted amount of the outstanding Voting Securities as a result of the acquisition of Voting Securities by the Company which, by reducing the number of Voting Securities outstanding, increases the proportional number of shares Beneficially Owned by the Subject Person, provided that if a Change in Control would occur (but for the operation of this sentence) and after such acquisition of Voting Securities by the Company, the Subject Person becomes the Beneficial Owner of any additional Voting Securities, then a Change in Control shall occur.

Notwithstanding the foregoing provisions of this definition, with respect to any Award (or portion of an Award) that provides for a deferral of compensation that is subject to Code Section 409A, to the extent necessary to prevent such compensation from being includible in gross income pursuant to subparagraph (a)(1)(A) of that Code Section (and only to that extent), a “Change in Control” shall be deemed to have occurred only if and when (i) any one or more of the conditions set forth in paragraph (i), (ii), (iii) or (iv) above of this definition shall have been satisfied, and (ii) as to the Grantee to whom the Award was granted, the event in question also constitutes a “change in the ownership or effective control of the corporation, or in the ownership of a substantial portion of the assets of the corporation” within the meaning of subparagraph (a)(2)(A) of Code Section 409A.

“Code” means the Internal Revenue Code of 1986, as amended.

“Committee” means the Compensation Committee of the Board, as constituted at any time, or any successor to such committee, or any other committee of the Board appointed or designated by the Board, as described in Section 3 or as otherwise provided in Section 3.

“Company” means Regions Financial Corporation, a Delaware corporation, or any successor corporation.

“Disability” means, unless the applicable Award Agreement provides otherwise, a physical or mental condition which is expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months and which renders the Grantee incapable of performing the work for which he is employed or similar work, as evidenced, if applicable, by eligibility for and actual receipt of benefits payable under a group long-term disability plan or policy maintained by the Company or any of its Subsidiaries that is by its terms applicable to the Grantee. Notwithstanding the foregoing, with respect to any Award (or portion of an Award) that provides for a deferral of compensation that is subject to Code Section 409A, to the extent necessary to prevent such compensation from being includible in gross income pursuant to subparagraph (a)(1)(A) of that Code Section (and only to that extent), “Disability” means a disability as defined above that also qualifies the Grantee as “Disabled” within the meaning of subparagraph (a)(2)(C) of Code Section 409A.

“Effective Date” has the meaning assigned in Section 17.

“Eligible Recipient” means any full time or part time employee (including an officer or director who is also an employee) of the Company or any Subsidiary or Affiliate, any individual to whom an offer of employment has been extended, a member of the Board or a member of the board of directors of a Subsidiary, or a consultant or other individual providing services to the Company or any Subsidiary or Affiliate as selected by the Committee. References to “employment” and related terms in the Plan will include the provision of services in any capacity.

“Exchange Act” means the U.S. Securities Exchange Act of 1934.

“Fair Market Value” means, as of any given date, the closing sale price of a share of Stock on the date in question as reported by the principal consolidated transactions reporting system for securities listed on the principal securities exchange on which the Stock is traded or, if there is no such sale on the relevant date, then on the last previous day on which a sale was reported.

 

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APPENDIX B

 

“Good Reason” means the occurrence of one or more of the following after a Change in Control:

(i)    a material reduction in the Grantee’s base salary and annual bonus opportunity, in each case, as in effect immediately before the Change in Control; or

(ii)    the Company requiring the Grantee to be based at any location that is more than 50 miles from his or her regular place of employment immediately before the Change in Control, except to the extent that such change in work location results in a commute from the Grantee’s primary residence that is the same or reduced as compared to the Grantee’s commute prior to such change.

Notwithstanding the foregoing, no termination of the Grantee’s employment shall be for Good Reason unless (i) termination of the Grantee’s employment (or notice of the Grantee’s intent to terminate employment) occurs during the 24 month period following the Change in Control, and (ii) the Grantee gives the Company written notice within 90 days of the Grantee obtaining knowledge of circumstances giving rise to Good Reason (describing in reasonable detail the circumstances and the Good Reason event that has occurred) and the Company does not remedy these circumstances within 30 days of receipt of such notice. In addition, an event will not give rise to Good Reason if it is made with the Grantee’s express written consent. Further, if a Grantee is a party to an employment agreement or change in control severance agreement or plan that includes a definition of “good reason”, then Good Reason for purposes of Awards granted to such Grantee shall have the same meaning as set forth in such employment agreement or change in control severance agreement or plan.

“Grantee” means a person who has been granted an Award under the Plan that remains outstanding, even if such person is no longer an Eligible Recipient.

“Immediate Family” means any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law, and will include adoptive relationships of the Grantee and family limited partnerships, trusts or similar entities which are primarily for the benefit of the Grantee and his or her Immediate Family.

“Incentive Stock Option” means any Stock Option that is intended to be designated as an “incentive stock option” within the meaning of Sections 421 and 422 of the Code and that is designated as an “Incentive Stock Option” in the applicable Award Agreement. Unless a Stock Option is specifically designated as an Incentive Stock Option, it will not be considered an Incentive Stock Option.

“Non-Qualified Stock Option” means any Stock Option that is not an Incentive Stock Option, including any Stock Option that provides (as of the time such Stock Option is granted) that it will not be treated as an Incentive Stock Option.

“Other Awards” means an award granted pursuant to Section 12.

“Parent” means any corporation (other than the Company) in an unbroken chain of corporations ending with the Company, if each of the corporations in the chain (other than the Company) owns shares possessing a majority of the combined voting power of all classes of shares in one of the other corporations in the chain.

“Performance Award” means an Award granted under Section 11.

“Performance Criteria” has the meaning assigned in Section 11.

“Plan” has the meaning assigned in Section 1.

“Restricted Period” has the meaning assigned in Section 9.

“Restricted Stock” means shares of Stock subject to restrictions granted pursuant to Section 9.

“Restricted Stock Units” means the right pursuant to an Award granted under Section 10.

“Retirement” means, except as otherwise provided in an Award Agreement, that a Grantee experiences a separation from service (other than for Cause) at a time when the Grantee is (i) at least sixty five (65) years old or (ii) at least fifty five (55) years old and has at least 10 years of service with the Company or any of its Subsidiaries.

“Securities Act” means the U.S. Securities Act of 1933.

“Stock” means a share of Common Stock of the Company, par value $.01 per share.

“Stock Appreciation Right” or “SAR” means the right pursuant to an Award granted under Section 8.

“Stock Option” or “Option” means an option to purchase Stock granted pursuant to Section 7.

“Subsidiary” means a corporation or other entity in which the Company has a direct or indirect ownership or other equity interest.

(b)    References in this Plan (i) to Sections are to sections of this Plan unless otherwise stated; (ii) to any contract (including any Award) are to the contract as amended, modified, supplemented or replaced from time to time; (iii) to any statute, rule or regulation are to the statute, rule or regulation as amended, modified, supplemented or replaced from time to time (and, in the case of statutes,

 

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include any rules and regulations promulgated under the statute) and to any section of any statute, rule or regulation include any successor to the section; and (iv) to any governmental authority include any successor to the governmental authority. The various headings in this Plan are for convenience of reference only and in no way define, limit or describe the scope or intent of any provisions or Sections of this Plan. Unless the context requires otherwise, words describing the singular number include the plural and vice versa, words denoting any gender include all genders and the words “include”, “includes” and “including” will be deemed to be followed by the words “without limitation.”

 

3.

ADMINISTRATION

(a)    The Plan will be administered by the Committee, which will consist of at least three members of the Board who will be appointed by, and will serve at the pleasure of, the Board. Except as otherwise determined by the Board, the members of the Committee will be “non-employee directors” to the extent required by Rule 16b-3 of the Exchange Act, “independent directors” within the meaning of Section 303A.02 of the New York Stock Exchange Listed Company Manual, and “outside directors” to the extent required by Section 162(m) of the Code (however, the failure of the Committee to be so comprised will not cause any Award to be invalid). The Committee may delegate any of its powers under the Plan to a subcommittee of the Committee (which hereinafter will also be referred to as the Committee). The Committee may also delegate to any person who is not a member of the Committee or to any administrative group within the Company, any of its powers, responsibilities or duties. In delegating its authority, the Committee will consider the extent to which any delegation may cause Awards to fail to be deductible under Section 162(m) of the Code or to fail to meet the requirements of Rule 16(b)-3(d)(1) or Rule 16(b)-3(e) under the Exchange Act. Notwithstanding anything to the contrary contained herein, the Board may, in its sole discretion, at any time and from time to time, grant Awards (including grants to directors) or administer the Plan, in which case the Board will have all of the authority and responsibility granted to the Committee herein. If so determined by the Committee, any Award made to any Grantee who is an “officer” within the meaning of Rule 16a-1(f) under the Exchange Act or member of the Board will be made by the full Board or a committee or subcommittee of the Board composed of at least two “non-employee” directors within the meaning of Rule 16b-3 under the Exchange Act.

(b)    The Committee will have the power and authority to grant Awards under the Plan to Eligible Recipients pursuant to the terms of the Plan and to exercise all other powers granted to it under the Plan, subject to the terms of the Plan. In particular, but without limitation, the Committee will have the authority:

(i)        to select those Eligible Recipients who will be Grantees;

(ii)       to determine whether, to what extent, and which Awards are to be granted to Grantees under the Plan;

(iii)      to determine the number of shares of Stock to be covered by each Award granted under the Plan;

(iv)      to determine the terms and conditions, not inconsistent with the terms of the Plan, of each Award granted under the Plan, including the waiver or modification of any such terms or conditions;

(v)       to determine the terms and conditions, not inconsistent with the terms of the Plan, which will govern all written instruments evidencing Awards granted under the Plan, including Award Agreements relating hereto, as well as the waiver or modification of any such terms or conditions;

(vi)      to adopt, alter and repeal such administrative rules, guidelines and practices governing the Plan as it will from time to time deem advisable;

(vii)     to construe, interpret and implement the terms and provisions of the Plan and any Award issued under the Plan (and any Award Agreements relating thereto) and to otherwise supervise the administration of the Plan;

(viii)    to determine the dates on which Awards may be exercised and on which the risk of forfeiture or deferral period relating to Awards will lapse or terminate, and the acceleration of any such dates;

(ix)      to determine the expiration date of any Award;

(x)       to determine, at any time, whether, to what extent, and under what circumstances an Award may be settled, or the option or reference price of an Award may be paid, in cash, shares of Stock, other Awards, or other property or canceled, forfeited or suspended and the method or methods by which an Award may be settled, canceled, forfeited or suspended;

(xi)      to determine whether a termination of employment has occurred with respect to any Grantee for purposes of the Plan and any Awards;

(xii)     to establish any “blackout” period that it deems necessary or advisable;

(xiii)    to prescribe Award Agreements (such Award Agreements need not be identical for each Grantee) and amendments thereto;

(xiv)    to correct any defect, supply any omission and reconcile any inconsistency in the Plan; and

(xv)     to make all other determinations necessary or advisable for administering the Plan.

(c)    Without limiting the foregoing, the Committee may, in its absolute discretion, without amendment to the Plan, extend the period to exercise an Award (but not beyond its original term) or waive any condition imposed under the Plan, with respect to any

 

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Award, and/or waive or amend the operation of Plan provisions respecting exercise after termination of employment or otherwise adjust any of the terms of any Award.

(d)    All decisions made in good faith by the Committee pursuant to the provisions of the Plan will be final, conclusive and binding on all persons, including the Company and the Grantees.

(e)    No member of the Board or the Committee or any employee of the Company or any of its Affiliates (each such person a “Covered Person”) will have any liability to any person (including, without limitation, any Grantee) for any action taken or omitted to be taken or any determination made in good faith with respect to the Plan or any Award. Each Covered Person will be indemnified and held harmless by the Company against and from any loss, cost, liability or expense (including attorneys’ fees) that may be imposed upon or incurred by such Covered Person in connection with or resulting from any action, suit or proceeding to which such Covered Person may be a party or in which such Covered Person may be involved by reason of any action taken or omitted to be taken under the Plan and against and from any and all amounts paid by such Covered Person, with the Company’s approval, in settlement thereof, or paid by such Covered Person in satisfaction of any judgment in any such action, suit or proceeding against such Covered Person; provided that, the Company will have the right, at its own expense, to assume and defend any such action, suit or proceeding and, once the Company gives notice of its intent to assume the defense, the Company will have sole control over such defense with counsel of the Company’s choice. The foregoing right of indemnification will not be available to a Covered Person to the extent that a court of competent jurisdiction in a final judgment or other final adjudication, in either case, not subject to further appeal, determines that the acts or omissions of such Covered Person giving rise to the indemnification claim resulted from such Covered Person’s bad faith, fraud or dishonesty or willful criminal act or omission. The foregoing right of indemnification will not be exclusive of any other rights of indemnification to which Covered Persons may be entitled under the Company’s Certificate of Incorporation, Memorandum of Association (or other foundational document) or By-Laws, as a matter of law, or otherwise, or any other power that the Company may have to indemnify such persons or hold them harmless.

 

4.

SHARES OF STOCK AVAILABLE UNDER THE PLAN; SHARE COUNTING

(a)    The Committee may make Awards under this Plan for up to a total of: (1) sixty (60) million shares of Stock (reduced by one share for every share subject to awards granted after December 31, 2014 under the 2010 Plan, provided that no awards may be granted under the 2010 Plan after the Effective Date of this Plan), plus (2) any shares of Stock subject to an outstanding award under the 2010 Plan that for any reason is cancelled, terminate, lapse, expire, are forfeited, become unexercisable for any other reason or are settled for cash (in whole or in part) to the extent of such cancellation, termination, lapse, expiration, forfeiture, unexercisability or cash settlement, plus (3) any additional shares that become available for issuance under this Plan in accordance with Section 4(c), which may be either treasury shares, authorized but unissued shares or shares purchased by the Company in the open market or otherwise. Effective as of the Effective Date of this Plan, the portion of the share authorization under the 2010 Plan for any shares of Stock thereunder that are not issuable under an outstanding award under the 2010 Plan shall be cancelled and no longer available for grant. The number of shares of Stock that may be issued under this Plan shall be adjusted by the Committee as appropriate to account for the events provided for in Section 5. Awards payable only in cash or property other than shares of Stock will not reduce the total remaining number of shares of Stock available under the Plan, and shares of Stock relating to any other Awards that are settled in cash or property other than shares, when settled, will be added back to the number of shares of Stock available under the Plan. To the extent that (i) an Award under this Plan will be exchanged or will expire, lapse, terminate or be cancelled for any reason without the issuance of shares of Stock, or (ii) Restricted Stock under this Plan will revert back to the Company prior to the lapse of the applicable restrictions, then the Committee may also grant Awards with respect to such shares of Stock or Restricted Stock.

(b)    Each share of Stock underlying an Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Unit, Performance Award or Other Award will count as one share of Stock.

(c) Any shares of Stock with respect to which the Company becomes obligated to make Awards through the assumption of, or in substitution for, outstanding awards previously granted by an acquired entity (“Acquisition Awards”), will not count against the shares of Stock available to be delivered pursuant to Awards under this Plan.

(d)    The total number of shares of Stock as to which Awards of Stock Options and Stock Appreciation Rights may be granted to any individual Grantee who is an employee during any calendar year may not, subject to adjustment as provided in Section 5, exceed Nine Hundred and Fifty Thousand (950,000) shares in the aggregate. The total number of shares of Stock as to which Awards of Incentive Stock Options may be granted under this Plan may not, subject to adjustment as provided in Section 5, exceed Thirty Million (30,000,000) shares in the aggregate.

(e)    The total number of shares of Stock subject to Awards (other than Stock Options and Stock Appreciation Rights) granted to any Grantee during any calendar year may not, subject to adjustment as provided in Section 5, exceed Nine Hundred and Fifty Thousand (950,000) shares. The maximum payment under any Award denominated in cash under the Plan that may be granted during any 12-month period to any Grantee shall be $4,000,000 for each calendar year period contained in the performance period for such Award. The foregoing grant limits will (i) apply to an Award other than a Stock Option or Stock Appreciation Right only if the Award is intended to be “performance-based compensation” as that term is used in Section 162(m) of the Code and (ii) be adjusted upward or downward, as applicable, on a pro rata basis for each full or partial fiscal year of the Company in the applicable performance period.

(f)    In order to retain and compensate non-employee directors for their services, and to strengthen the alignment of their interests with those of the stockholders of the Company, the Plan permits the grant of cash-based and stock-based awards to non-employee

 

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directors. The aggregate value of Awards that may be granted to any one non-employee director during any calendar year, solely with respect to his or her service as a non-employee director, may not exceed $500,000, based on the aggregate Fair Market Value of stock-based Awards, determined as of the date of grant.

(g)    From and after the Effective Date, the following shall not reduce the number of authorized shares of Stock available for issuance under this Plan:

(1)    Stock reserved for issuance upon exercise or settlement, as applicable, of Awards granted under the Plan to the extent the Awards expire or are canceled or surrendered;

(2)    Restricted Stock granted under the Plan, to the extent such Restricted Stock is forfeited or is otherwise surrendered to the Company before the restricted period expires; and

(3)    Awards, to the extent the payment is actually made in cash.

(h)    From and after the Effective Date, the following shares of Stock shall not become available for issuance under the Plan:

(1)    Stock withheld or tendered by Participants as full or partial payment to the Company upon exercise of a Stock Option granted under this Plan;

(2)    Stock reserved for issuance upon grant of stock-settled SARs, to the extent the number of reserved shares exceeds the number of shares actually issued upon exercise of the SARs; and

(3)    Stock withheld by, or otherwise remitted to, the Company to satisfy a Participant’s tax withholding obligations upon the exercise of Stock Options or SARs granted under the Plan or upon any other payment or issuance of shares under the Plan.

 

5.

EQUITABLE ADJUSTMENTS

In the event of any change in the number of issued shares of Stock (or issuance of shares other than shares of Stock) by reason of any forward or reverse stock split, subdivision or consolidation, or share dividend or bonus issue, recapitalization, reclassification, merger, amalgamation, consolidation, split-up, spin-off, reorganization, combination, exchange of shares of Stock, the issuance of warrants or other rights to purchase shares of Stock or other securities, or any other change in corporate structure or in the event of any extraordinary distribution (whether in the form of cash, shares of Stock, other securities or other property) (each, an “Adjustment Event”), then the Committee shall equitably adjust the number or kind of shares that may be issued under the Plan, and any or all of the terms of an outstanding Award (including the number of shares of Stock covered by such outstanding Award, the type of property to which the Award is subject and the exercise or reference price of such Award), and such adjustments will be final, conclusive and binding for all purposes of the Plan. In determining adjustments to be made under this Section 5, the Committee may take into account such factors as it determines to be appropriate, including (i) the provisions of applicable law, (ii) the potential tax or accounting consequences of an adjustment (including, as applicable, under Section 162(m) of the Code and/or Section 409A of the Code) and (iii) the preservation of the benefits or potential benefits intended to be made pursuant to Awards and, in light of such factors or others, may make adjustments that are not uniform or proportionate among outstanding Awards; provided that no such adjustment shall be made if or to the extent that it would cause any outstanding Award to fail to comply with Section 409A of the Code. In connection with any adjustment pursuant to this Section 5, the Committee may provide, in its sole discretion, for the cancellation of any outstanding Awards in exchange for payment in cash or other property equal to the Fair Market Value of the shares of Stock covered by such Awards, reduced by the option or reference price, if any. After any adjustment made pursuant to this Section 5, the number of shares subject to each outstanding Award will be rounded down to the nearest whole number.

 

6.

ELIGIBILITY

Eligible Recipients will be eligible to be granted any Award or any combination of Awards under the Plan at the same or different times, except that Incentive Stock Options will only be granted to Eligible Recipients who are employees of the Company or one of its Subsidiaries.

 

7.

STOCK OPTIONS

Stock Options may be granted alone or in addition to other Awards granted under the Plan. Any Stock Option granted under the Plan will be in such form as the Committee may from time to time approve, and the provisions of Stock Option awards need not be the same with respect to each Grantee. If requested by the Committee, Grantees who are granted Stock Options will enter into an Award Agreement with the Company, in such form as the Committee will determine. The Stock Options granted under the Plan may be of two types: (i) Incentive Stock Options and (ii) Non-Qualified Stock Options. To the extent that any Stock Option that is intended to be an Incentive Stock Option does not qualify as an Incentive Stock Option, it will constitute a Non-Qualified Stock Option. Stock Options granted under the Plan will be subject to the following terms and conditions and to the relevant Award Agreement:

(a)    Option Price. The option price per share of Stock purchasable under a Stock Option will be determined by the Committee in its sole discretion at the time of grant but, except as otherwise permitted by Section 5 or in the case of an Acquisition Award, will not be less than 100% of the Fair Market Value of a share of Stock on such date (or in the case of Incentive Stock Options, 110% of the Fair Market Value per share on such date if, on such date, the Eligible Recipient owns, or is deemed to own under the Code, shares possessing more than ten percent of the total combined voting power of all classes of Company Voting Securities (a “Ten Percent Owner”)).

 

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(b)    Option Term. The term of each Stock Option will be fixed by the Committee, but no Stock Option will be exercisable more than ten years (or in the case of Incentive Stock Options granted to a Ten Percent Owner (as determined on the date of grant), five years) after the date such Stock Option is granted.

(c)    Minimum Vesting; Other Terms and Conditions. Stock Options granted under the Plan shall be subject to a minimum of one year of vesting, except in the event of death, Disability or Change in Control (in each such case, the minimum vesting requirement may not apply). The form, terms and conditions of each Stock Option will be determined by the Committee and will be set forth in the Award Agreement. Such additional terms and conditions may include provisions relating to the vesting and exercisability of such Stock Options as well as the conditions or circumstances upon which such Stock Options may be accelerated, extended, forfeited or otherwise modified. The Committee will specify in the applicable Award Agreement the circumstances in which Stock Options will vest, remain exercisable or be forfeited in the event of a Grantee’s termination of employment; provided that with respect to Incentive Stock Options, a Grantee will not be deemed to have terminated employment if the Grantee is on a bona fide leave of absence for not longer than three months or has a right to re-employment that is guaranteed by statute or contract.

(d)    Method of Exercise. Subject to any vesting conditions established under Section 7(c), Stock Options may be exercised in whole or in part at any time during the option term, by giving written notice of exercise to the Company specifying the number of shares of Stock to be purchased, accompanied by payment in full of the option price in cash (by certified check or as otherwise permitted by the Committee). As determined by the Committee, in its sole discretion, payment in whole or in part may also be made (i) in the form of unrestricted shares of Stock already owned by the Grantee that have a Fair Market Value on the date of tender equal to the aggregate option price of the shares of Stock as to which such Stock Option will be exercised (in the case of an Incentive Stock Option, the right to make payment in shares of Stock must be authorized only at the time of grant); (ii) any other form of consideration approved by the Committee and permitted by applicable law; or (iii) any combination of the foregoing.

(e)    Annual Limit on Incentive Stock Options; Time Limit to Exercise. In addition to the limitation applicable to Incentive Stock Options in Section 4(c), to the extent that the aggregate Fair Market Value (determined as of the date the Incentive Stock Option is granted) of shares of Stock with respect to which Incentive Stock Options granted to a Grantee under this Plan and all other option plans of the Company or of any Parent or Subsidiary become exercisable for the first time by the Grantee during any calendar year exceeds $100,000 (or, if different, the maximum limitation in effect at the time of grant under Section 422 of the Code, or any successor provision), the portion of such Incentive Stock Options in excess of $100,000 (or, if different, such maximum limitation) will be treated as Non-Qualified Stock Options. The portion of any Incentive Stock Option not exercised within 90 days after termination of employment will be treated as a Non-Qualified Stock Option.

(f)    Settlement of an Option. When a Stock Option is exercised pursuant to paragraph (d), the Committee, in its sole discretion, may elect, in lieu of issuing shares of Stock pursuant to the terms of the Stock Option, to settle the Stock Option by paying the Grantee an amount equal to the product obtained by multiplying (i) the excess of the Fair Market Value of one share of Stock on the date the Stock Option is exercised over the option price of the Stock Option (the “Option Spread”) by (ii) the number of shares of Stock with respect to which the Stock Option is exercised. The amount payable to the Grantee in these circumstances will be paid by the Company either in cash or a combination of cash and Stock, as the Committee will determine at the time the Stock Option is exercised and/or at the time the Stock Option is granted.

(g)    No Repricing. Except as otherwise permitted by Section 5, the Committee shall not, without the approval of the Company’s stockholders (a) lower the exercise price per share of an Option after it is granted, (b) cancel an Option when the exercise price per share of Stock exceeds the Fair Market Value of one Share in exchange for cash or another Award (other than in connection with a Change in Control), or (c) take any other action with respect to an Option that would be treated as a repricing under the rules and regulations of the New York Stock Exchange.

 

8.

STOCK APPRECIATION RIGHTS

Stock Appreciation Rights may be granted alone or in addition to other Awards granted under the Plan. Any SAR granted under the Plan will be in such form as the Committee may from time to time approve, and the provisions of SAR Awards need not be the same with respect to each Grantee. If requested by the Committee, Grantees who are granted SARs will enter into an Award Agreement with the Company, in such form as the Committee will determine. Stock Appreciation Rights granted under the Plan will be subject to the following terms and conditions and to the relevant Award Agreement:

(a)    Reference Price. The reference price per share of Stock underlying each SAR will be determined by the Committee in its sole discretion at the time of grant but, except as otherwise permitted by Section 5 or in the case of an Acquisition Award, will not be less than 100% of the Fair Market Value of a share of Stock on such date.

(b)    SAR Term. The term of each SAR will be fixed by the Committee, but no SAR will be exercisable more than ten years after the date such SAR is granted.

(c)    Minimum Vesting; Terms and Conditions. Stock Appreciation Rights granted under the Plan shall be subject to a minimum of one year of vesting, except in the event of death, Disability or Change in Control (in each such case, the minimum vesting requirement may not apply). The form, terms and conditions of each SAR will be determined by the Committee and will be set forth in an Award Agreement. Such additional terms and conditions may include, without limitation, provisions relating to the vesting and exercisability of such Stock Appreciation Rights as well as the conditions or circumstances upon which such

 

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Stock Appreciation Rights may be accelerated, extended, forfeited or otherwise modified. Settlement of each Stock Appreciation Right will be in cash, shares of Stock, other Awards or other property, or any combination of the foregoing, in the sole discretion of the Committee. The Committee will specify in the applicable Award Agreement the circumstances in which Stock Appreciation Rights will vest, remain exercisable or be forfeited in the event of a Grantee’s termination of employment.

(d)    Method of Exercise. Upon the exercise of a SAR, the Grantee will be entitled to receive up to, but not more than, an amount in cash or that number of shares of Stock (or any combination of cash and shares of Stock, as determined by the Committee) equal in value to the excess of the Fair Market Value of one share of Stock as of the date of exercise over the reference price per share of Stock specified in the SAR Award Agreement, with the Committee having the right to determine the form of payment.

(e)    No Repricing. Except as otherwise permitted by Section 5, the Committee shall not without the approval of the Company’s stockholders (a) lower the reference price per share of Stock underlying a SAR after it is granted, (b) cancel a SAR when the reference price per share of Stock exceeds the Fair Market Value of one share of Stock in exchange for cash or another Award (other than in connection with a Change in Control), or (c) take any other action with respect to a SAR that would be treated as a repricing under the rules and regulations of the New York Stock Exchange.

 

9.

RESTRICTED STOCK

Restricted Stock may be granted alone or in addition to other Awards granted under the Plan. Any Award of Restricted Stock granted under the Plan will be in such form as the Committee may from time to time approve, and the provisions of Restricted Stock Awards need not be the same with respect to each Grantee. If requested by the Committee, Grantees who are granted Restricted Stock will enter into an Award Agreement with the Company, in such form as the Committee will determine. Restricted Stock granted under the Plan will be subject to the following terms and conditions and to the relevant Award Agreement:

(a)    Purchase Price. The price per share of Restricted Stock, if any, that a Grantee must pay for Restricted Stock purchasable under an Award will be determined by the Committee in its sole discretion at the time of grant.

(b)    Terms and Conditions. The form, terms and conditions applicable to each share of Restricted Stock will be determined by the Committee and will be set forth in an Award Agreement. Such terms and conditions may include the restrictions upon such Restricted Stock, the dates as of which restrictions upon such Restricted Stock will lapse (any period prior to such lapse with respect to a share of Restricted Stock, the “Restricted Period”), and the conditions or circumstances upon which such Restricted Stock will be forfeited or the otherwise modified with respect to the applicable terms. The Committee will specify in the applicable Award Agreement the circumstances in which Restricted Stock will vest or be forfeited in the event of a Grantee’s termination of employment.

(c)    Awards and Certificates. In the event that a stock certificate is issued in respect of Restricted Stock, such certificate will be registered in the name of the Grantee and will bear an appropriate legend referring to the terms, conditions, and restrictions applicable to any such Award; provided that, unless the Committee will determine otherwise, the stock certificates evidencing Restricted Stock granted under the Plan will be held in the custody of the Company until the restrictions thereon will have lapsed, and, as a condition of any Restricted Stock Award, the Grantee will be required to deliver a stock power or stock transfer form, endorsed in blank, relating to the Restricted Stock covered by such Award.

(d)    Forfeiture of Restricted Stock. In the event that any Restricted Stock should be forfeited by the Grantee, any stock certificate or certificates representing such Restricted Stock will be cancelled and the shares of Restricted Stock will either be cancelled or returned to the Company and belong thereafter to the Company. Upon the reversion of such shares of Restricted Stock to the Company, the Company will repay to the employee or (in the case of death) to the representative of the employee’s estate, the full cash amount paid, if any, to the Company by the employee for such Restricted Stock pursuant to Section 9(a).

(e)    Right to Vote and Receive Dividends on Restricted Stock. Each Grantee will, during the Restricted Period, be the beneficial and record owner of such shares of Restricted Stock and will have full voting rights with respect thereto. Unless the Committee determines otherwise in an Award Agreement, during the Restricted Period, all ordinary cash dividends (as determined by the Committee in its sole discretion) paid upon any share of Restricted Stock will be retained by the Company for the account of the relevant Grantee. Such dividends will revert back to the Company if for any reason the Restricted Stock upon which such dividends were paid reverts back to the Company. Upon the expiration of the Restricted Period, all such dividends paid on such Restricted Stock and retained by the Company will be paid to the relevant Grantee. Unless the applicable Award Agreement provides otherwise, additional shares of Stock or other property distributed to the Grantee in respect of Restricted Stock, as dividends or otherwise, will be subject to the same restrictions applicable to such Restricted Stock. Notwithstanding anything herein or in an Award Agreement to the contrary, dividends on Restricted Stock awards that vest based on the achievement of performance goals shall only be paid at the time and only to the extent that the underlying Restricted Stock is earned.

 

10.

RESTRICTED STOCK UNITS

Restricted Stock Units may be granted alone or in addition to other Awards granted under the Plan. Any Restricted Stock Units granted under the Plan will be in such form as the Committee may from time to time approve, and the provisions of Restricted Stock Unit Awards need not be the same with respect to each Grantee. If requested by the Committee, Grantees who are granted Restricted

 

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Stock Units will enter into an Award Agreement with the Company, in such form as the Committee will determine. Restricted Stock Units granted under the Plan will be subject to the following terms and conditions and to the relevant Award Agreement:

(a)    Terms and Conditions. The form, terms and conditions of each Restricted Stock Unit will be determined by the Committee and will be set forth in an Award Agreement. Such terms and conditions may include, the conditions or circumstances upon which such Restricted Stock Unit will vest, be forfeited or otherwise modified, and the date or dates upon which any shares of Stock, cash or other property will be delivered to the Grantee in respect of the Restricted Stock Units. The Committee will specify in the applicable Award Agreement the circumstances in which Restricted Stock Units will be paid or forfeited in the event of a Grantee’s termination of employment.

(b)    Settlement of Restricted Stock Units. The Committee, in its sole discretion, may instruct the Company to pay on the date when shares of Stock would otherwise be issued pursuant to a Restricted Stock Unit, in lieu of such shares of Stock, a cash amount equal to the number of such shares multiplied by the Fair Market Value of a share of Stock on the date when shares would otherwise have been issued. If a Grantee is entitled to receive other shares, securities or other property as a result of an adjustment, pursuant to Section 5, the Committee, in its sole discretion, may instruct the Company to pay, in lieu of such other shares, securities or other property, cash equal to the fair market value thereof as determined in good faith by the Committee. Until the delivery of such shares of Stock, cash, securities or other property, the rights of a Grantee with respect to a Restricted Stock Unit will be only those of a general unsecured creditor of the Company.

(c)    Right to Receive Dividend Equivalents on Restricted Stock Units. If provided for in the applicable Award Agreement, during the period prior to payment of the Restricted Stock Unit, all ordinary cash dividends (as determined by the Committee in its sole discretion) that would have been paid upon any share of Stock underlying a Restricted Stock Unit had such shares of Stock been issued will be paid only at the time and to the extent such Restricted Stock Unit is vested. Notwithstanding anything herein or in an Award Agreement to the contrary, dividend equivalents on Restricted Stock Unit awards that vest based on the achievement of performance goals shall only be paid at the time and only to the extent that the underlying Restricted Stock Unit is earned.

 

11.

PERFORMANCE AWARDS

Performance Awards may be granted alone or in addition to other Awards granted under the Plan. Any Performance Award granted under the Plan will be in such form as the Committee may from time to time approve, and the provisions of Performance Awards need not be the same with respect to each Grantee. If requested by the Committee, Grantees who are granted Performance Awards will enter into an Award Agreement with the Company, in such form as the Committee will determine. Performance Awards granted under the Plan will be subject to the following terms and conditions and to the relevant Award Agreement:

(a)    General. Performance Awards may be denominated as a cash amount, a number of shares of Restricted Stock, a number of Restricted Stock Units, Other Awards or a combination thereof and are awards which may be earned upon achievement or satisfaction of performance conditions specified by the Committee. In addition, the Committee may specify that any other Award, will constitute a Performance Award by conditioning the right of a Grantee to exercise the Award or have it settled, and the timing thereof, upon achievement or satisfaction of such performance conditions as may be specified by the Committee. Except as described in Section 11(b) below, the Committee may use such business criteria and other measures of performance as it may deem appropriate in establishing any performance conditions. In the event that a stock certificate is issued in respect of Performance Awards, such certificates will be registered in the name of the Grantee but will be held by the Company until the time such Performance Awards are earned. The performance conditions and the performance period applicable to each Performance Award will be determined by the Committee and set forth in an Award Agreement.

(b)    Certain Performance Awards. To the extent a Performance Award is intended to satisfy the requirements for deductibility under Section 162(m) of the Code, the Committee will establish written performance goals (i) while the outcome for that performance period is substantially uncertain and (ii) no more than 90 days after the commencement of the performance period to which the performance goal relates or, if less, the number of days which is equal to 25% of the relevant performance period. At the same time as the performance goals are established, the Committee will prescribe a formula to determine the amount of the Qualified Performance-Based Award that may be payable based upon the level of attainment of the performance goals during the performance period. A performance goal may be established as it relates to the individual Grantee, for the Company alone or on a consolidated basis, and/or for specified Subsidiaries or Affiliates or other business units of the Company and will be comprised of specified levels of one or more of the following performance criteria as the Committee may deem appropriate: earnings per share, net earnings, operating earnings, unit volume, market share, balance sheet measurements, revenue, economic profit, cash flow, cash return on assets, stockholder return, return on equity and return on capital (“Performance Criteria”). Performance Awards may also be payable when performance, as measured by one or more of the above Performance Criteria, is measured on an absolute or relative basis, as compared to one or more peer companies, or one or more market, sector or business indices, meets or exceeds an objective criterion established by the Committee. Performance Awards that are intended to satisfy the requirements for deductibility under Section 162(m) of the Code may not be adjusted upward. The Committee has the discretion to adjust such Performance Awards downward, either on a formula or discretionary basis or any combination, as the Committee determines.

(c)    Adjustment. The Committee may disregard or offset the effect of any special charges or gains or cumulative effect of a change in accounting in determining the attainment of Performance Criteria. In addition, the Committee is authorized to make

 

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adjustments in the terms and conditions of Performance Awards, including to any applicable Performance Criteria, in recognition of unusual or nonrecurring events (including Adjustment Events, as well as acquisitions and dispositions of businesses and assets) affecting the Company, any Subsidiary or Affiliate, or any business unit of the Company, or the financial statements of the Company, any Subsidiary or Affiliate, or any business unit, or in response to changes in applicable laws, regulations, accounting principles, tax rates and regulations or business conditions or in view of the Committee’s assessment of the business strategy of the Company, any Subsidiary or Affiliate or business unit thereof, performance of comparable organizations, economic and business conditions, personal performance of a Grantee, and any other circumstances deemed relevant; provided that the Committee will consider the extent to which any such adjustment may cause Awards to fail to be deductible under Section 162(m) of the Code.

(d)    Settlement of Performance Awards; Other Terms. Settlement of Performance Awards will be in cash, shares of Stock, other Awards or other property, or any combination of the foregoing, in the sole discretion of the Committee. The Committee will specify in the applicable Award Agreement the circumstances in which Performance Awards will be paid or forfeited in the event of a Grantee’s termination of employment. Any payment of a Performance Award intended to satisfy the requirements for deductibility under Section 162(m) of the Code will be conditioned on the written certification of the Committee in each case that the Performance Criteria and any other material conditions were satisfied.

 

12.

OTHER AWARDS

The Committee may grant other types of equity-based or equity-related Awards (including unrestricted shares of Stock) in such amounts and subject to such terms and conditions as the Committee will determine and may include, without limitation, Awards that upon grant are fully vested and non-forfeitable. Such Other Awards may entail the issue or transfer of actual shares of Stock or otherwise of amounts based on the value of shares of Stock. The terms and conditions applicable to Other Awards will be as determined by the Committee and set forth in an Award Agreement.

 

13.

CHANGE IN CONTROL

(a)    Except as otherwise provided in an applicable Award Agreement, in the event of a Change in Control, unless otherwise specifically prohibited under law or by the rules and regulations of a national security exchange applicable to the Company, if the employment of the Grantee is terminated by the Company without Cause or by the Grantee for Good Reason within the twenty-four (24) month period following such Change in Control:

(i)      any and all Stock Options and Stock Appreciation Rights granted under the Plan will become both vested and immediately exercisable as of the date of such termination of employment;

(ii)     any Restricted Period and other restrictions imposed on Restricted Stock or Restricted Stock Units will lapse, and Restricted Stock Units will become both vested and immediately payable as of the date of such termination of employment;

(iii)    any outstanding Performance Awards (including Awards intended to be qualify for deductibility under Section 162(m) of the Code) will become both vested and immediately payable as of the date of such termination of employment; and

(iv)    any Other Awards will become both vested and immediately payable as of the date of such termination of employment.

(b)    In the event of a Change in Control, the payout opportunities attainable under all outstanding Performance Awards (including Awards intended to be qualify for deductibility under Section 162(m) of the Code) will be deemed to have been earned based on the greater of targeted performance and actual performance being attained as of the effective date of the Change in Control and such Performance Awards will remain subject to time-based vesting for the remainder of the applicable performance period, subject to accelerated vesting in accordance with Section 13(a).

(c)    In the event of a Change in Control, the Committee may determine that all outstanding Awards will be cancelled upon a Change in Control, and the value of such Awards, as determined by the Committee in accordance with the terms of the Plan and the Award Agreement, will be paid out in cash, shares of Stock or other property within a reasonable time subsequent to the Change in Control; provided, that (i) no such payment will be made on account of an Incentive Stock Option using a value higher than the Fair Market Value of a share of Stock on the date of settlement and (ii) prior to the occurrence of a Change in Control, the Committee may determine to cancel without any payment or other consideration any Stock Options and SARs having, as applicable, an exercise price or reference price per share at the time of the Change in Control that is equal to or greater than the value of the consideration received by stockholders of the Company in respect of a share of Stock in connection with the Change in Control.

 

14.

AMENDMENT AND TERMINATION

The Committee or the Board may at any time and from time to time, alter, amend, modify, suspend, or terminate the Plan in whole or in part; provided that, except as provided at Section 5 hereof, no amendment by the Committee or the Board will (a) increase the total number of shares of Stock which may be issued subject to the Plan, (b) increase the benefits accruing to a Grantee under an outstanding Award, (c) change the requirements for Plan eligibility, (d) amend Sections 7(g) or 8(e) to allow for repricing of Stock Options or SARs, respectively, or (e) make any other change for which stockholder approval is required under any applicable law, regulation or exchange requirement, in each case, unless such change is approved by the stockholders of the Company in accordance with applicable law, regulation, or exchange requirement. Except as provided in Section 16(h), no action taken pursuant to this Section 14 of the Plan will, without the consent of the Grantee, be effective with respect to any Award which has been previously

 

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granted to a Grantee if it materially impairs such Award, except that the Committee and the Board have full discretion to amend the Plan to the extent necessary to preserve equity accounting treatment with respect to any Award and any outstanding Award Agreement will be deemed to be so amended without obtaining the consent of any Grantee. For purposes of the Plan, any action of the Board or the Committee that alters or affects the tax treatment of any Award will not be considered to materially impair the rights of any Grantee.

 

15.

UNFUNDED STATUS OF PLAN

The Plan is intended to constitute an “unfunded” plan for incentive compensation. With respect to any payments not yet made to a Grantee by the Company, nothing contained herein will give any such Grantee any rights that are greater than those of a general creditor of the Company.

 

16.

GENERAL PROVISIONS

(a)    Compliance with Applicable Law. Stock will not be issued (and no payment in any other form will be made) pursuant to the exercise or settlement of any Award granted under the Plan unless the exercise or settlement of such Award and the issuance and delivery of such Stock or other payment pursuant thereto will comply with all relevant provisions of applicable law, including, without limitation, the Securities Act, the Exchange Act, and the requirements of any stock exchange upon which the Stock may then be listed (collectively, “Applicable Law”), and will be further subject to the approval of counsel for the Company with respect to such compliance. The Committee may require any Grantee to make such representations, furnish such information and comply with or be subject to such other conditions as it may consider appropriate in connection with the issuance or delivery of Stock or payment of other benefits in compliance with applicable laws, rules, and regulations, listing requirements, or other obligations. This Plan and each Award and Award Agreement are subject to and shall be, to the fullest extent possible, interpreted to be consistent with Applicable Law. In the event of any conflict, the provisions of Applicable Law control over the terms of this Plan and any Award or Award Agreement. Notwithstanding anything in this Plan or any Award Agreement to the contrary, in no event shall any Award, payment or benefit under this Plan or any Award Agreement vest or be settled, paid or accrued, if any such vesting, settlement, payment or accrual would be in violation of Applicable Law. In the event of any such violation, the Company and any Award recipient will cooperate in good faith to endeavor to meet the requirements of Applicable Law in a manner which preserves to the greatest extent possible the intent and purposes of this Plan and the applicable Award, payment or benefit.

(b)    Certificate Legends. The certificates for shares of Stock may include any legend which the Committee deems appropriate to reflect any restrictions on transfer. All certificates for Stock issued or delivered under the Plan will be subject to such stock-transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations, and other requirements of the Securities and Exchange Commission, any stock exchange upon which the Stock is are then listed, and any applicable foreign, federal or state securities law, and the Committee may cause a legend or legends to be placed on any such certificates to make appropriate reference to such restrictions.

(c)    No Right to Employment. The adoption of the Plan will not confer upon any Eligible Recipient any right to continued employment or service with the Company or any Parent or Subsidiary, as the case may be, nor will it interfere in any way with the right of the Company or any Parent or Subsidiary to terminate the employment or service of any of its Eligible Recipients at any time.

(d)    No Rights as a Stockholder. Except as otherwise provided in an Award Agreement, no Grantee (or other person having rights pursuant to such Award) will have any of the rights of a stockholder of the Company with respect to Stock subject to such Award until such Stock is issued to such person, and, if requested by the Company, until such person has given the representation described in Section 16(a). Except as otherwise provided in an Award Agreement or pursuant to Section 5, no adjustment will be made for dividends, distributions or other rights (whether ordinary or extraordinary, and whether in cash, securities or other property) for which the record date is prior to the date such stock certificate is issued.

(e)    Non-Transferability. Except as otherwise provided by the Committee or in a Grantee’s Award Agreement, Awards may not be sold, pledged, assigned, encumbered, hypothecated, transferred, or disposed of in any manner other than by will, by the laws of descent or distribution, and as applicable, may be exercised, during the lifetime of the Grantee, only by the Grantee or the Grantee’s legal representative. Any attempt to dispose of any Awards in contravention of any such restrictions will be null and void and without effect. Notwithstanding the foregoing, the Committee in its discretion may permit a Grantee to transfer a Non-Qualified Stock Option by instrument to an inter vivos or testamentary trust in which the Stock Options are to be passed to beneficiaries upon the death of the Grantee, or by gift to Immediate Family. Notwithstanding anything herein or in an Award Agreement to the contrary, any permitted transfer of an Award shall be for no consideration.

(f)    Payment of Taxes/Right of Offset. As a condition to the receipt of any shares of Stock pursuant to any Award or the lifting of restrictions on any Award, or in connection with any other event that gives rise to a withholding obligation on the part of the Company relating to an Award (including, without limitation, for FICA taxes and any other federal, state, local or foreign taxes of any kind required by law to be withheld with respect to such Award), the Company will require that the Grantee remit to the Company, or make arrangements satisfactory to the Committee regarding payment of, an amount sufficient in the opinion of the Committee to satisfy such withholding obligation. If the event giving rise to the withholding obligation involves the issue or transfer of shares of Stock, then, unless the applicable Award Agreement provides otherwise, the Committee may permit the Grantee to satisfy the withholding obligation by electing to have the Company withhold shares of Stock or by tendering previously owned shares of Stock, in each case having a Fair Market Value equal to the minimum statutory amount of tax to be withheld (or by any other mechanism as may be required or appropriate to conform with local tax and other rules). For this purpose, Fair Market Value will be determined as of the date on which the amount of tax to be withheld is determined (and the Company may cause any fractional share amount to be settled in cash). The

 

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obligations of the Company under the Plan will be conditional on the making of such payments or arrangements, and the Company will, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to the Grantee.

(g)    Tax Notifications. Each Grantee will promptly notify the Company of any election the Grantee makes under Section 83(b) of the Code or any disposition of shares of Stock delivered pursuant to the exercise of an Incentive Stock Option under the circumstances described in Section 421(b) of the Code (relating to certain disqualifying dispositions).

(h)    Section 409A. Notwithstanding anything to the contrary in this Plan or an Award Agreement, if a Grantee is a “specified employee” as determined pursuant to Section 409A of the Code as of the date of his or her “separation from service” (within the meaning of Final Treasury Regulation 1.409A-1(h)) and if any Award or payment or settlement of an Award provided hereunder both (i) constitutes a “deferral of compensation” within the meaning of Section 409A and (ii) cannot be paid or provided in the manner otherwise provided without subjecting the Grantee to “additional tax”, interest or penalties under Section 409A, then any such payment or settlement that is payable or that would be settled during the first six months following Grantee’s “separation from service” shall be paid or provided to Grantee on the first business day of the seventh calendar month following the month in which his or her “separation from service” occurs or, if earlier, at Grantee’s death. In addition, any payment or benefit due upon a termination of Grantee’s employment that represents a “deferral of compensation” within the meaning of Section 409A shall only be paid or provided to Grantee upon a “separation from service”. For the purposes of this Agreement, each Award made pursuant hereto shall be deemed to be a separate payment. This provision does not prohibit the vesting of any Award or the vesting of any right to eventual payment or distribution of any amount or benefit under the Plan or any Award Agreement. In the event a Grantee is subject to income inclusion, additional interest or taxes, or any other adverse consequences under Section 409A of the Code, neither the Company, the Board, the Committee, nor its or their employees, designees, agents or contractors shall be liable to any Grantee or other persons in connection with any adverse consequences under Section 409A of the Code.

(i)    Lapse or Forfeiture at or Following Termination of Employment. Unless otherwise provided in an Award Agreement or as determined by the Committee in its discretion:

(i)    Any Award, including, without limitation, Awards that are unvested, vested and unexercised, or subject or not subject to restrictions, shall automatically and immediately lapse and be forfeited if the Grantee’s employment is terminated by the Company for Cause.

(ii)    In the case of a Stock Option or Stock Appreciation Right, the following shall determine the date such Stock Option or Stock Appreciation Right shall lapse on account of termination of employment, provided that in no case shall an Stock Option or Stock Appreciation Right extend beyond the original expiration date specified in the grant thereof:

(A)    Except as provided below, any Stock Option or Stock Appreciation Right that is not vested and fully exercisable on the date a Grantee’s employment terminates shall lapse.

(B)    If the Grantee’s employment is terminated for reasons other than (I) by reason of Disability or death or Retirement, or (II) by the Company for Cause, for that Grantee and with respect to any Stock Option or Stock Appreciation Right that is vested and fully exercisable on the date of termination of employment, the period for exercising that Stock Option or Stock Appreciation Right shall end 90 days after the date of the Grantee’s termination of employment and any unexercised Stock Option or Stock Appreciation Right shall lapse at the end of such 90-day period.

(C)    If the Grantee’s employment terminates by reason of Disability, for that Grantee and with respect to any Stock Option or Stock Appreciation Right that is vested and fully exercisable on the date of termination of employment, the period for exercising that Stock Option or Stock Appreciation Right shall end one year after the date of the Grantee’s termination of employment and any unexercised Stock Option or Stock Appreciation Right shall lapse at the end of such one-year period.

(D)    If the Grantee’s employment terminates by reason of death, or if the Grantee dies during the applicable 90-day or one-year period described above, respectively, for that Grantee and with respect to any Stock Option or Stock Appreciation Right that is vested and fully exercisable on the date of termination of employment, the period for exercising such Stock Option or Stock Appreciation Right shall end one year after the date of the Grantee’s death and any unexercised Stock Option or Stock Appreciation Right shall lapse at the end of such one-year period. Upon the Grantee’s death, the Stock Option or Stock Appreciation Right may be exercised by the Grantee’s beneficiary.

(E)    If the Grantee’s employment is terminated by reason of Retirement, then each of that Grantee’s then outstanding Stock Options and Stock Appreciation Rights shall immediately vest and remain exercisable for the original term of each such Stock Option and Stock Appreciation Right.

(iii)    In the case of any Restricted Stock or Restricted Stock Unit as to which the substantial risk of forfeiture or the prohibition or restriction on transfer has not lapsed, or any Other Award that is subject to any transfer restriction hereunder:

(A)    If the Grantee’s employment is terminated by reason of death, Disability or Retirement, then the restrictions will lapse, and the unearned or unvested portion of the Award will become immediately vested, earned and nonforfeitable.

(B)    If the Grantee’s employment is terminated for any reason other than by reason of death, Disability, or Retirement, then the restricted or unearned portion of the Award shall automatically and immediately be cancelled and forfeited.

 

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(iv)    In the case of any Performance Award as to which the substantial risk of forfeiture or the prohibition or restriction on transfer has not lapsed, such Performance Award shall be payable as set forth in Section 11 above and the applicable Award Agreement.

(v)    Whether military, government or other service or other leave of absence shall constitute a termination of employment shall be determined in each case by the Committee at its discretion, and any determination by the Committee shall be final and conclusive; provided that a Grantee’s employment shall be deemed to be terminated upon the first date following the passage of six months of leave unless the Grantee’ has a statutory or contractual right to reemployment. A termination of employment shall not occur in a circumstance in which a Grantee’ transfers from the Company to one of its Parents or Subsidiaries, transfers from a Parent or Subsidiary to the Company, transfers from one Parent or Subsidiary to another Parent or Subsidiary or, in the discretion of the Committee as specified at or prior to such occurrence, in the case of a spin-off, sale or disposition of the Grantee’s employer from or by the Company. The Committee may in its sole discretion take any further action that it deems to be equitable under the circumstances or in the best interests of the Company, including, without limitation, waiving or modifying any limitation or requirement with respect to any Award under this Plan. A Grantee shall not be considered retired if and so long as he or she continues to serve as a director of the Company or a Subsidiary of the Company.

(vi)    Without limiting in any way the generality of the Committee’s power to specify any terms and conditions of an Award consistent with applicable law, the Committee may specify in an Award Agreement that the Grantee’s rights, payments, and benefits with respect to an Award will be subject to reduction, cancellation, forfeiture, or recoupment upon the occurrence of certain specified events, in addition to any otherwise applicable vesting or performance conditions of an Award. Such events may include, without limitation, the Grantee’s failure to accept the terms of the Award Agreement, termination of employment under certain or all circumstances, violation of material Company policies, breach of noncompetition, confidentiality, nonsolicitation, noninterference, corporate property protection, or any supplementary policy or agreement that may apply to the Grantee, or other conduct by the Grantee that is detrimental to the business or reputation of the Company and its Affiliates.

(j)    Deferral of Awards; Dividend Equivalent Rights. The Committee will be authorized to establish procedures pursuant to which the payment of any Award may be deferred at the election of a Grantee. Subject to the provisions of the Plan and any Award Agreement, the recipient of an Award (including, without limitation, any deferred Award), other than Awards of Stock Options and SARs, may, if so determined by the Committee, be entitled to receive, currently or on a deferred basis, cash dividends, or cash payments in amounts equivalent to other dividends or distributions on shares of Stock, with respect to the number of shares of Stock covered by the Award, as determined by the Committee, in its sole discretion; provided, however, that the recipient of a Performance Award shall only be paid any dividends or dividend equivalent rights upon vesting of the applicable Performance Award. The Committee may provide that such amounts (if any) will be deemed to have been reinvested in additional shares of Stock or otherwise reinvested.

(k)    Nature of Payments; Other Payments or Awards. Any and all grants of Awards and issuances of Stock under the Plan will constitute a special incentive payment to the Grantee and will not be taken into account in computing the amount of salary or compensation of the Grantee for the purpose of determining any benefits under any pension, retirement, profit-sharing, bonus, life insurance or other benefit plan of the Company or under any Agreement with the Grantee, unless such plan or Agreement specifically provides otherwise. Nothing contained in the Plan will be deemed in any way to limit or restrict the Company from making any Award or payment to any person under any other plan, arrangement or understanding, whether now existing or hereafter in effect.

(l)    Binding on Successors. The terms of this Plan will be binding upon and inure to the benefit of the Company and its successors and assigns.

(m)    Non-Uniform Treatment. The Committee’s determinations under the Plan need not be uniform and may be made by it selectively among persons who receive, or are eligible to receive, Awards (whether or not such persons are similarly situated). Without limiting the generality of the foregoing, the Committee will be entitled, among other things, to make non-uniform and selective determinations, amendments and adjustments, and to enter into non-uniform and selective Award Agreements, as to the persons to receive Awards under the Plan, and the terms and provisions of Awards under the Plan.

(n)    Severability. If any of the provisions of this Plan or any Award Agreement is finally held to be invalid, illegal or unenforceable (whether in whole or in part), such provision will be deemed modified to the extent, but only to the extent, of such invalidity, illegality or unenforceability and the remaining provisions will not be affected thereby; provided that, if any of such provisions is finally held to be invalid, illegal, or unenforceable because it exceeds the maximum scope determined to be acceptable to permit such provision to be enforceable, such provision will be deemed to be modified to the minimum extent necessary to modify such scope in order to make such provision enforceable under the Plan.

(o)    Waiver of Claims; Clawback. Before being selected by the Committee to receive an Award, no Eligible Recipient has any right to any benefits under the Plan. Accordingly, in consideration of the Grantee’s receipt of any Award hereunder, he or she expressly waives any right to contest the amount of any Award, the terms of any Award Agreement, any determination, action or omission hereunder or under any Award Agreement by the Committee, the Company or the Board, or any amendment to the Plan or any Award Agreement (other than an amendment to the Plan or an Award Agreement to which his or her consent is expressly required by the express terms of the Plan or an Award Agreement). Awards under the Plan shall be subject to the clawback, recapture or recoupment policy, if any, that the Company may adopt from time to time to the extent provided in such policy and, in accordance with such policy, as in effect from time to time, may be subject to the requirement that the Awards be forfeited, reduced, or repaid to the Company after they have been distributed or paid to the Grantee.

 

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(p)    Right of Offset. Except with respect to Awards that are intended to be “deferred compensation” subject to Section 409A, the Company will have the right to offset against its obligation to deliver shares of Stock (or cash, other securities or other property) under the Plan or any Award Agreement any outstanding amounts (including, without limitation, travel and entertainment or advance account balances, loans, repayment obligations under any Awards, or amounts repayable to the Company pursuant to tax equalization, housing, automobile or other employee programs) that the Grantee then owes to the Company as determined by the Committee.

(q)    No Third Party Beneficiaries. Except as expressly provided therein, neither the Plan nor any Award Agreement will confer on any person other than the Company and the Grantee of any Award any rights or remedies thereunder. The exculpation and indemnification provisions of Section 3(e) will inure to the benefit of a Covered Person’s estate and beneficiaries and legatees.

 

17.

EFFECTIVE DATE OF PLAN

The Plan will become effective on the date it is initially approved by the Company’s stockholders (the “Effective Date”).

 

18.

TERM OF PLAN

No Award will be granted pursuant to the Plan on or after the tenth anniversary of the Effective Date (or, in the case of Incentive Stock Options, the tenth anniversary of the earlier of the Effective Date and Board approval of the Plan) or any earlier termination of the Plan as provided in Section 14, but Awards granted before the earlier of such dates may extend beyond that date.

 

19.

GOVERNING LAW

The Plan and all determinations made and actions taken pursuant hereto will be governed by and construed in accordance with the laws of the State of Delaware without regard to principles of conflict of laws.

 

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REGIONS FINANCIAL CORPORATION ATTN: INVESTOR RELATIONS 1900 5TH AVENUE NORTH BIRMINGHAM, AL 35203		VOTE BY INTERNET - www.proxyvote.com or scan the QR Barcode above Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Follow the instructions to obtain your records and to create an electronic voting instruction form.   ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.   VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions.   VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.

 

TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:

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The Board of Directors recommends you vote FOR the following proposals:

Election of Directors

For

Against

Abstain

Proposal 1. Nominees:

1a.        1b.        1c.        1d.        1e.        1f.        1g.        1h.        1i.        1j.        1k.        1l.

George W. Bryan    Carolyn H. Byrd    David J. Cooper, Sr.    Don DeFosset    Eric C. Fast    O. B. Grayson Hall, Jr.    John D. Johns    Ruth Ann Marshall    Susan W. Matlock    John E. Maupin, Jr.    Charles D. McCrary    Lee J. Styslinger III

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The Board of Directors recommends you vote FOR the following proposal:

For

Against

Abstain

Proposal 2.    Ratification of Selection of Ernst &                        Young LLP as the Independent                        Registered Public Accounting Firm for                        2015.

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The Board of Directors recommends you vote FOR the following proposal:

Proposal 3.    Nonbinding Stockholder Approval of                        Executive Compensation.

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The Board of Directors recommends you vote FOR the following proposal:

Proposal 4.    Approval of the Regions Financial                        Corporation 2015 Long Term                        Incentive Plan.

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For address changes and/or comments, please check this box and write them on the back where indicated.

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Please indicate if you plan to attend this meeting.

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Yes

No

Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer.

Signature [PLEASE SIGN WITHIN BOX]

Date

Signature (Joint Owners)

Date

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Table of Contents

REGIONS FINANCIAL CORPORATION

Annual Meeting of Stockholders

April 23, 2015

9:00 A.M. Central Time

Upper Lobby Auditorium of Regions Bank

1901 Sixth Avenue North

Birmingham, AL 35203

Admission Ticket

to the

Regions Financial Corporation 2015 Annual Meeting of Stockholders

PLEASE BRING THIS ADMISSION TICKET AND A VALID GOVERNMENT-ISSUED PHOTO IDENTIFICATION FOR ADMISSION TO THE MEETING.

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:

The Notice and Proxy Statement, Annual Report on Form 10-K and Chairman’s Letter are available at www.proxyvote.com.

 

 

M81793-P60108        

 

PROXY CARD   REGIONS FINANCIAL CORPORATION   This proxy is solicited by the Board of Directors   The undersigned hereby appoints Fournier J. Gale, III and Jeffrey A. Lee, and each of them, proxies with full power of substitution, to vote all of the shares of common stock of Regions Financial Corporation held of record by the undersigned at the Annual Meeting of Stockholders to be held on Thursday, April 23, 2015, and at any adjournments thereof. This card also provides voting instructions for shares held in the Regions Financial Corporation 401(k) Plan or the Computershare Investment Plan for Regions Financial Corporation and held of record by the trustees or agents of such plans. This proxy, when properly executed, will be voted in the manner directed by you. If you sign and return this proxy but do not give any directions, then the proxies will vote FOR Proposal 1, Election of all Director Nominees, FOR Proposal 2, Ratification of Selection of Ernst & Young LLP as the Independent Registered Public Accounting Firm for 2015, FOR Proposal 3, Nonbinding Stockholder Approval of Executive Compensation, and FOR Proposal 4, Approval of the Regions Financial Corporation 2015 Long Term Incentive Plan. The proxies, in their discretion, are further authorized to vote (i) for the election of a person to the Board of Directors, if any nominee named herein becomes unable or unwilling to serve and (ii) on any other matter that may properly come before the meeting.

Address Changes/Comments:

(If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.)   (Continued and to be signed on reverse side)