DEF 14A
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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:

 


Table of Contents

REGIONS FINANCIAL CORPORATION

 

LOGO

 

 

PROXY STATEMENT

AND

NOTICE OF 2015 ANNUAL MEETING OF STOCKHOLDERS

 

 


Table of Contents

 

LOGO

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,

 

LOGO

O. B. Grayson Hall, Jr.

Chairman, President and Chief Executive Officer


Table of Contents
  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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TABLE OF CONTENTS  

 

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   


Table of Contents

LOGO

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

 

LOGO

Fournier J. Gale, III

Corporate Secretary

 

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LOGO

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.

 

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS

FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON APRIL 23, 2015:

The Notice of Annual Meeting and Proxy Statement,

Annual Report on Form 10-K for the year ended December 31, 2014

and Chairman’s Letter

are available at www.regions.com or www.proxyvote.com.

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:

 

  ¡    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.

 

  ¡    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.

 

  ¡    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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PROXY SUMMARY  

PROXY SUMMARY

 

This summary highlights certain information regarding Regions. This summary does not contain all of the information provided elsewhere in the proxy statement; therefore, you should read the entire proxy statement carefully before voting.

For more complete information regarding the Company’s 2014 performance, review the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.

 

 

2015 Annual Meeting of Stockholders

 

 

•    Date and Time:

   April 23, 2015, 9:00 A.M. (CDT)

•    Location:

  

Regions Bank, Upper Lobby Auditorium

1901 Sixth Avenue North

Birmingham, AL 35203

•    Record Date:

   February 23, 2015

•    Voting:

   Stockholders as of the record date are entitled to vote. Stockholders of record can vote by proxy several ways:

 

LOGO

  

 

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 to vote with your mobile device (may require free software).

 

LOGO

  

 

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.

 

LOGO

  

 

To vote by phone call 1-800-690-6903 and follow the recorded instructions. If you vote by telephone, you also will need your control number referenced above.

 

 

LOGO

  

 

If you request printed copies of the proxy materials be sent to you by mail, vote by filling out the proxy card and send it back in the envelope provided to: Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.

 

 

LOGO

  

 

Vote in person at the meeting.

   If you hold your stock in street name or through the Regions Financial Corporation 401(k) Plan, see Questions and Answers about the Annual Meeting and Voting beginning on page 14 for more information about how to vote your shares.

LOGO 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 proof of your stock ownership as of the record date and a valid photo identification. See page 15 for further details.

 

 

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  PROXY SUMMARY

Proposals That Require Your Vote

 

 

           

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 Ernst & Young LLP as 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.

Information about Regions

 

 

Regions is a financial holding company headquartered in Birmingham, Alabama that operates in the South, Midwest and Texas. Regions, through its subsidiaries, provides traditional commercial, retail and mortgage banking services, as well as other financial services in the fields of asset management, wealth management, securities brokerage, insurance, trust services, and specialty financing.

At December 31, 2014, Regions had total consolidated assets of approximately $119.7 billion, consolidated deposits of approximately $94.2 billion and total consolidated stockholders’ equity of approximately $17.0 billion.

Regions is a Delaware corporation. Regions’ principal executive offices are located at 1900 Fifth Avenue North, Birmingham, Alabama 35203.

Regions conducts its banking operations through Regions Bank, an Alabama state-chartered commercial bank that is a member of the Federal Reserve System. At December 31, 2014, Regions Bank operated 1,997 ATMs and 1,666 banking offices in 16 states.

 

 

2014 Business Highlights

 

 

Performance

  Increased diluted earnings per share by 4 percent compared to prior year.
  Increased stock price by 7 percent.
  Reduced adjusted expenses by 2 percent.*

Capital

  Returned approximately $500 million of capital through share repurchases and increased dividend.
  Maintained strong capital levels as the Tier 1 Common ratio was 11.65 percent, an increase of 44 basis points during the year.
  Improved overall asset quality as all credit metrics improved during 2014.

Customers

  Increased number of quality households and grew number of checking, savings, credit card and wealth management accounts.
  Increased loan balances by $3 billion or 4 percent.
  Increased deposit balances by $2 billion or 2 percent, while deposit costs reached historic lows.
 

 

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

 

 

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PROXY SUMMARY  

Stock Performance Graph

 

This graph shows the cumulative total stockholder return for Regions common stock in each of the five years from December 31, 2009 to December 31, 2014. The graph also compares the cumulative total returns for the same five-year period with the S&P 500 Index and the S&P Banks Index (also known as “S&P 500 Banks Index”).

The comparison assumes $100 was invested on December 31, 2009, in Regions common stock, the S&P 500 Index, and the S&P Banks Index (also known as “S&P 500 Banks Index”) and assumes that all dividends were reinvested.

 

LOGO

 

     Cumulative Total Return  
      12/31/09      12/31/10      12/31/11      12/31/12      12/31/13      12/31/14  

Regions

   $ 100.00       $ 133.08       $ 82.42       $ 137.49       $ 192.79       $ 209.43   

S&P 500 Index

     100.00         115.06         117.48         136.26         180.38         205.05   

S&P Banks Index

     100.00         119.84         107.00         132.74         180.15         208.10   

 

 

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  PROXY SUMMARY

 

Director Nominees (page 23)

 

 

     Age     Independent   Principal Occupation   Other Boards (1)   Regions Board Committee(s)

George W. Bryan (2)

    70      Yes   Chief Executive Officer, Old Waverly Properties, LLC      

• Audit Committee

• Risk Committee (Chair)

Carolyn H. Byrd (2)

    66      Yes  

Chairman and CEO,

GlobalTech Financial, LLC

 

• Popeyes Louisiana Kitchen, Inc.

• Federal Home Loan Mortgage Corporation

 

• Audit Committee (Chair)

• Risk Committee

David J. Cooper, Sr.

    69      Yes   Vice Chairman, Cooper/T. Smith Corporation  

• Alabama Power Company

 

• Compensation Committee

• Nominating and Corporate Governance (“NCG”) Committee

Don DeFosset

    66      Yes   Retired Chairman, President and CEO, Walter Industries, Inc.  

• Terex Corporation

• National Retail Properties

• ITT Corporation

 

• Compensation Committee (Chair)

• Risk Committee

Eric C. Fast (2)

    65      Yes   Retired CEO, Crane Co.  

• Automatic Data Processing, Inc.

• Lord Abbett Family of Funds

 

• Audit Committee

• Risk Committee

O. B. Grayson Hall, Jr.

    57      No  

Chairman, President and

CEO, Regions Financial Corporation and Regions Bank

 

• Zep, Inc.

• Vulcan Materials Company

   

John D. Johns (4)

    63      Yes   Chairman, President and CEO, Protective Life Corporation  

• Genuine Parts Company

• The Southern Company

 

• NCG Committee

• Risk Committee

Ruth Ann Marshall

    60      Yes   Retired President, The Americas, MasterCard International, Inc.  

• ConAgra Foods, Inc.

• Global Payments, Inc.

 

• Compensation Committee

• NCG Committee

Susan W. Matlock

    68      Yes  

Retired President and

CEO, Innovation Depot, Inc.

     

• Compensation Committee

• Risk Committee

John E. Maupin, Jr. (2)

    68      Yes   Retired President, Morehouse School of Medicine  

• LifePoint Hospitals, Inc.

• VALIC Company I and II

• HealthSouth Corporation

 

• Audit Committee

• NCG Committee

Charles D. McCrary (3)

    63      Yes   Retired President and CEO, Alabama Power Company      

• NCG Committee (Chair)

Lee J. Styslinger III (2)

    54      Yes   Chairman and CEO, Altec, Inc.  

• Vulcan Materials Company

 

• Audit Committee

• Compensation Committee

(1) Corporations subject to the registration or reporting requirements of the Securities Exchange Act of 1934, as amended, or registered under the Investment Company Act of 1940.

 

(2) Audit Committee Financial Expert.

 

(3) Lead Independent Director.

 

(4) Risk Management Expert.

Directors’ Skills and Qualifications

In addition to diversity, which is an important component of our Board’s composition, below are some of our current Directors’ skills and qualifications:

 

  ü   Academia
  ü   Ethics and integrity
  ü   Business operations
  ü   Corporate governance
  ü   Environmental/sustainability/corporate responsibility
  ü   Capital allocation
  ü   Financial expertise/literacy
  ü   Financial services industry
  ü   Insurance industry
  ü   International
  ü   Investments
  ü   Real estate
  ü   Risk management
  ü   Technology
  ü   Outside board experience
  ü   CEO or senior executive officer experience
  ü   Regulatory acumen
  ü   Innovator/growth creator
  ü   Strategic planning
  ü   Compliance and legal acumen
  ü   Executive compensation and benefits
 

 

 

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PROXY SUMMARY  

Corporate Governance (page 32)

 

Regions has a longstanding commitment to providing effective governance of Regions’ business and affairs for the benefit of stockholders. The Board’s Nominating and Corporate Governance (“NCG”) Committee periodically reviews our Corporate Governance Principles to maintain effective and appropriate standards of corporate governance. A commitment to strong governance practices is a hallmark of the Board’s stewardship on behalf of stockholders and stakeholders. As such, we regularly review our practices to ensure effective collaboration between management and our Board. Below are some of the governance best practices that we follow.

What We Do

 

ü

   Maintain an Overwhelmingly Independent Board    Of the Board’s current 13 Directors, 12 are independent, including the Lead Independent Director.

ü

   Recruit the Best Directors    Our Board reflects a range of talents, ages, skills, diversity, and expertise.

ü

   Strive for Board Diversity    Currently, 23 percent of our Directors are female and 15 percent are ethnically diverse.

ü

   Maintain a Declassified Board    Directors are elected annually by a majority of votes cast in an uncontested election.

ü

   Hold Frequent Board and Committee Meetings    The Board held 12 meetings in 2014, and the Board’s Committees held 27 meetings in 2014. The Board meets in executive session at each regular Board meeting and most conference call Board meetings.

ü

   Expect Director Attendance at Meetings    Our current Director attendance for Board and Committee meetings averaged over 95 percent in 2014, and each Director attended over 75 percent of Board and Committee meetings on which the Director served.

ü

   Maintain Independent Committees    The Board has four standing Committees to assist it in carrying out its work: Audit Committee, Compensation Committee, NCG Committee, and Risk Committee. Each of these Committees operate under a written charter approved by the Board and annually reviewed by each Committee and the NCG Committee.

ü

   Maintain Corporate Governance Principles    The Board has adopted comprehensive Corporate Governance Principles to guide its oversight and independent governance leadership.

ü

   Conduct Board Self-Evaluations    The Board and its Committees conduct annual self-evaluations.

ü

   Facilitate a Director Education Program    The Board has a robust Director Education Program to keep abreast of products, services and lines of business offered by the Company and its affiliates; significant risks and compliance issues; laws, regulations and requirements applicable to the Company and its affiliates; corporate governance best practices; and changes in the financial industry.

ü

   Conduct CEO Evaluation    The Board conducts an annual evaluation of the Chief Executive Officer.

ü

   Administer Board Orientation    New Directors attend a Board orientation session, including Committee-specific orientation sessions, as appropriate.

ü

   Maintain Stock Ownership Requirements    Robust stock ownership guidelines for Directors and Executive Officers have been implemented.

ü

   Properly Align Executive Compensation    We have specific policies and practices to align executive compensation with long-term stockholder interests; these policies and practices are routinely reviewed by the Compensation Committee in conjunction with an independent consultant.

ü

   Provide for a Strong Clawback Policy    We have adopted an enhanced clawback policy that applies to our Executive Officers, as well as a number of other senior officers.

ü

   Review Management and Succession Planning    The Board reviews management talent and succession at least annually.

ü

   Continuous Focus on Strategic Planning    The Board and management regularly focus on strategy and planning.

ü

   Promote Cross-Committee Membership    The Chairs of the Audit Committee and Risk Committee serve on both Committees.

ü

   Administer a Code of Conduct    The Company adopted a comprehensive Code of Business Conduct and Ethics (“Code of Conduct”) applicable to all Directors, Executive Officers and associates. Vendors and consultants are expected to adhere to any applicable Code of Conduct provisions.

ü

   Maintain an Ethics Council    We established an internal Ethics Council to ensure proper oversight and application of the Code of Conduct.

ü

   Actively Fight Cybersecurity Threats    The Company makes on-going investments in systems and technology as well as training and education for all associates to combat cybersecurity threats.

ü

   Keep Directors Informed    Our Directors and Committees are routinely provided with articles to stay well informed of trends and best practices with respect to corporate governance, risk management, compensation, audit, regulatory and other topics.

ü

   Remain Socially Responsible    We have a longstanding commitment to corporate social responsibility.

 

 

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ü

  Disclose Political Contributions    We disclose annually our independent expenditures and corporate political giving.

ü

  Maintain Mandatory Director Retirement Policy    Directors retire on the date of the next annual meeting of stockholders after reaching age 72.

ü

  Require Management Accountability    Management is accountable to the Board and the stockholders for their decisions.

ü

  Keep Stockholder Voting Rights Consistent with Ownership    All common stockholders are entitled to one vote per share of common stock. Holders of preferred stock are not entitled to vote at the meeting.

ü

  Pay for Performance    Majority of pay is not guaranteed. Executive compensation is tied to Company performance and aligned with the long-term interest of stockholders.

ü

  Communicate with our Stockholders    If requested by major stockholders, our Lead Independent Director will ensure he is available for consultation and direct communication.

What We Don’t Do

 

X   No Hedging of Regions Securities    Policies restricting all hedging of Regions equity securities by Directors, Executive Officers and associates have been adopted.
X   No Pledging of Regions Securities    Polices restricting pledging of Regions equity securities by Directors and Executive Officers are enacted.
X   No Selective Disclosure of Information    We have a Fair Disclosure Policy applicable to all Directors, Executive Officers and associates to ensure timely, transparent, consistent and accurate financial and other information is provided to the investing community on a non-selective basis.
X   No Adoption of a “Poison Pill”    There is no stockholder rights plan or “poison pill.”
X   No Family Relationships among Directors and Executive Officers    No immediate family relationships exist between any of our Directors or Executive Officers and any of our other Directors or Executive Officers.

 

Board Leadership Structure

Our Board leadership structure currently consists of a Chairman, who also serves as our President and Chief Executive Officer, a Lead Independent Director, and independent Committee chairs and members. The Board is presently composed of 13 Directors, 12 of whom are independent.

The Board believes that Regions is currently best served in combining the Chairman and Chief Executive Officer positions, complemented by an independent, strong and effective Lead Independent Director with robust responsibilities and duties.

Lead Independent Director

Charles D. McCrary serves as Regions’ Lead Independent Director. Both the Board and management believe that strong, independent Board leadership is a critical aspect of effective corporate governance.

Lead Independent Director responsibilities and duties are listed on page 33 and include, but are not limited to:

 

  Establishing the agenda and presiding at executive sessions of the independent Directors;

 

  Coordinating the activities of the independent Directors, including the authority to call meetings of independent Directors;

 

  If requested by major stockholders, ensuring that he or she is available for consultation and direct communication; and

 

  Regularly communicating with our Chairman on a variety of issues including business strategy and succession planning.

Strong Board Committees

The four standing Committees established by the Board meet on a regular basis and operate under written charters approved by the Board and annually reviewed by each Committee and NCG Committee. Each Committee performs an annual self-evaluation to determine whether the Committee is functioning effectively and fulfilling its duties as prescribed by its charter. All members of the Audit Committee have been determined to be an Audit Committee Financial Expert. The Risk Committee includes at least one Director who has experience in identifying, assessing, and managing risk exposures of large, complex financial firms as defined by Regulation YY of the Board of Governors of the Federal Reserve System (“Regulation YY”).

All members of the Audit Committee, the Compensation Committee, the NCG Committee, and the Risk Committee are independent. Cross-Committee membership is considered when the NCG Committee recommends Committee member assignment 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 and attends the majority of the Audit Committee meetings. The Chair of the NCG Committee, who also serves as the Lead Independent Director, attends a majority of all other Committee meetings as well. Currently, a majority of Directors serve on at least two Committees, providing further opportunities for cross-Committee membership.

Board Risk Oversight

Our Board has oversight for risk management with a focus on the most significant enterprise risks facing the Company, including strategic, reputational, liquidity, market, operational, financial, legal, and compliance risks.

 

 

 

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Continuing Education

Regions’ Corporate Governance Principles provide for Directors to receive continuing education in areas that will assist them in discharging their duties. The Board’s Director Education Program includes regular reviews of compliance and corporate governance developments, business-specific learning opportunities through site visits and Board meetings, and briefing sessions on topics that present special risks and opportunities to the Company. Directors are provided training on products, services and lines of business offered by the Company and its affiliates; significant risks and compliance issues; laws, regulations and supervisory requirements applicable to the Company and its affiliates; corporate governance best practices; changes in the financial industry; and other topics identified by the Directors.

Stock Ownership and Holding Period Requirements

The Board believes that Directors should have a financial stake in Regions so their interests are aligned with those of the stockholders. Currently, 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. Directors are required to retain 50 percent of the after-tax net value of any compensatory grant upon vesting until such time as the ownership guidelines are met. Each Director currently meets the robust Director Stock Ownership Guidelines.

Anti-Hedging and Pledging

Regions believes it is inappropriate for any Director, Executive Officer or associate to enter into speculative transactions in Regions equity securities and, therefore, prohibits all hedging transactions. Regions’ General Policy on Insider Trading prohibits all hedging transactions and future pledging of Regions equity securities by our Directors and Executive Officers. “Executive Officers” are those officers who perform a policy-making function.

Culture and Talent

Our management and Board believe a strong corporate culture is critically important to the long term sustainability of our business. We have implemented a very prescriptive process for building a stronger and more effective culture at Regions. In 2014, these efforts included:

 

  Strengthening “tone from the top” with increased communication.

 

  Introducing and embracing our commitment of creating “shared value.”

 

  Executing the Risk Ownership & Awareness initiative.

 

  Executing the Regions360TM relationship model.

 

  Sustaining commitment to service quality.

 

  Enhancing associate engagement.
  Increasing community involvement – more than 10,000 volunteer hours and charitable giving increased 15 percent to $10.5 million.

Corporate Social Responsibility

Corporate social responsibility at Regions encompasses coordinating, tracking and reporting on our ongoing work around diversity and inclusion, our corporate response when disasters strike, and our economic development, sustainability and associate volunteer efforts. Key initiatives and activities include:

 

  Annual Social Responsibility Report.

 

  Annual Sustainability Report.

 

  External Diversity Advisory Council and Internal Diversity Network.

 

  Supplier Diversity Program.

 

  Minority Capital Markets Initiative.

 

  Partnerships with the United Negro College Fund and Historically Black Colleges and Universities providing scholarships and financial education.

 

  “What A Difference A Day Makes” program, offering all associates an annual day of Company-paid time off to volunteer in his or her community.

At Regions, we recognize diversity and inclusion are essential to achieving and maintaining a competitive advantage, and our commitment is reinforced through our ongoing efforts to reflect, anticipate and adapt to the changing demographics of the communities where we live and work. Our public commitment to these efforts is supported by our Directors, Executive Officers, and associates. Our strategic approach to diversity and inclusion – inside and outside of Regions – is not only good business, it is the right thing to do for our customers, communities, associates and stockholders. We have a cross-functional network of Regions associates who work together to advance the Company’s comprehensive diversity and inclusion strategy. Additionally, the Regions Diversity Advisory Council, composed of academic, community, and business leaders, offers an objective perspective on matters of diversity and inclusion in our workplace and marketplace.

Policy on Political Contributions

Regions’ Policy on Political Contributions and Code of Business Conduct and Ethics govern and promote the highest standards of behavior by our Company and our associates with regard to political activities. The policies also ensure compliance with all current applicable federal and state campaign finance laws. Like most public companies, Regions recognizes that decisions made by governmental agencies and lawmakers can have a significant impact on our operations, stockholders, customers, and associates. Accordingly, we monitor and track issues that affect our business and express our views to lawmakers and regulators.

Regions may make corporate political contributions in states where permissible. These contributions may be directed to state party organizations and candidates for statewide offices, state legislatures, and, in rare instances, local offices.

 

 

 

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Also, where legally permitted, Regions may make independent expenditures or corporate contributions in connection with state and local ballot initiatives and referenda on important policy issues that are likely to impact our business and our stakeholders. However, Regions does not make contributions to political entities organized under Section 527 of the Internal

Revenue Code or to special interest lobbying groups organized under Section 501(c)(4) of the Internal Revenue Code to support political activities, even when legally permissible.

Regions discloses annually its independent expenditures and corporate political giving on its website at www.regions.com.

 

 

Ratification of Auditors (page 48)

 

We are asking our stockholders to ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the year 2015. Below is summary information with respect to fees paid by us for the audit, tax and regulatory compliance advisory services provided by Ernst & Young LLP during 2014 and 2013.

 

      2014      2013  

Audit fees

   $ 6,181,738       $ 5,780,074   

Audit related fees

     485,650         744,900   

Tax fees

     218,062         372,016   

All other fees

     1,738,909         319,065   

Total fees

   $ 8,624,359       $ 7,216,055   

See page 48 for more detail.

Executive Officers

 

 

Name    Age      Position

O. B. Grayson Hall, Jr.

     57       Chairman, President and Chief Executive Officer

David J. Turner, Jr.

     51       Chief Financial Officer

Fournier J. Gale, III

     70       General Counsel and Corporate Secretary

C. Matthew Lusco

     57       Chief Risk Officer

John B. Owen

     54       Head of Regional Banking Group

Brett D. Couch

     51       East Region President

Barb Godin

     61       Chief Credit Officer

C. Keith Herron

     51       Head of Strategic Planning and Execution

William E. Horton

     63       South Region President

Ellen S. Jones

     56       Chief Financial Officer for Business Operations and Support

David R. Keenan

     47       Director of Human Resources

Scott M. Peters

     53       Head of Consumer Services Group

William D. Ritter

     44       Head of Wealth Management Group

Cynthia M. Rogers

     58       Head of Operations and Technology Group

Ronald G. Smith

     54       Mid-America Region President

John M. Turner, Jr.

     53       Head of Corporate Banking Group

 

 

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2014 Executive Compensation (page 52)

 

 

In 2014, the majority of compensation awarded to our Named Executive Officers (“NEOs”) was performance-based:

 

  Base Salary comprising 13 percent of our CEO’s compensation and 25 percent for other NEOs.

 

  Annual Cash Incentives under our Management Incentive Plan for 2014 based on performance against our business plan as well as our performance peer group.
  Performance Share Units and Performance Cash Awards, which do not vest for three years and for which the ultimate value and amount is based on the future performance of the Company.

 

  Restricted Stock Unit grants, which do not vest for three years and are subject to maintaining certain safety and soundness criteria.
 

 

The chart below shows the 2014 compensation for Regions’ Chairman, President and CEO, O. B. Grayson Hall, Jr. and other NEOs, as a group, in each case expressed as a percentage of total direct compensation.

 

LOGO

For 2014, after reviewing our NEO pay levels compared to market medians, the Compensation Committee approved changes to the target compensation for our NEOs. Because Regions’ executive compensation is designed to balance competitive base compensation with incentive compensation that rewards performance over the short- and long-term with an emphasis on performance based pay that is both deferred and subject to future performance, the majority of the target increase was granted in the form of long-term incentive compensation and is more fully described in the Compensation Discussion and Analysis (“CD&A”) on page 52. In addition to the change to the long-term targets, the Committee also approved modest base salary adjustments.

 

 

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The following table shows actual NEO compensation attributable to the 2014 performance year. For details on how each element was determined, refer to the discussion of each compensation element described in the section 2014 Compensation Decisions – What We Paid and Why beginning at page 55.

2014 Compensation Overview Table

 

 

               Long Term Awards($)              
Name    Principal Position  

Salary

($)

   

Stock Awards

($)

   

Non
Equity
Incentives
(Cash)

($)

    Annual
Incentive
($)
   

Total

($)

 

O. B. Grayson Hall, Jr.

   Chief Executive Officer     993,750        3,333,333        1,666,667        1,738,069        7,731,819   

David J. Turner, Jr.

   Chief Financial Officer     627,250        800,000        400,000        790,711        2,617,961   

John B. Owen

   Head of Regional Banking Group     641,500        800,000        400,000        822,788        2,664,288   

Fournier J. Gale, III

   General Counsel     555,000        600,000        300,000        647,130        2,102,130   

C. Matthew Lusco

   Chief Risk Officer     550,000        600,000        300,000        641,300        2,091,300   

 

The table illustrates how the Compensation Committee viewed NEO compensation for 2014. It differs from the Summary Compensation Table required by the Securities and Exchange Commission (“SEC”) and included in the section Compensation of Executive Officers beginning on page 69 of this proxy statement. The principal differences can be summarized as follows:

 

  The table above provides the entire value of the long-term incentive grants made to NEOs in 2014 in the “Long Term Award” column. The annual grant consisted of three equal parts, Restricted Stock Units, Performance Share Units and a Performance Cash Award. Both the stock and non-equity (cash) portion of the 2014 grant is reflected in this table and considered 2014 compensation by the Compensation Committee.

 

     Under rules established by the SEC, the Summary Compensation Table reports only the portion delivered in the form of stock equivalents in the year granted. Cash
  awards from the 2014 grant will not be reflected in the Summary Compensation Table until the year they are earned, which for 2014 grants will be in 2017. Similarly, the Summary Compensation Table reports the value of the cash performance portion of the 2012 long-term incentive plan grant in the Non-Equity Incentive Compensation column in this year’s table because the performance period for that award ended as of December 31, 2014. As described in the CD&A on page 61, the 2012 performance grant was earned at 137.5 percent of target. The value of this award is not included in this alternative table as it is considered by the Committee to be compensation awarded for a previous year and subject to future performance criteria.

 

  The Summary Compensation Table reports the change in pension value and nonqualified deferred compensation earnings as well as all other compensation.

For more detail, refer to the CD&A beginning on page 52 of this proxy statement.

 

Approve the Regions Financial Corporation 2015 Long Term Incentive Plan (page 80)

 

 

We are seeking stockholder approval of a new equity compensation plan, the Regions Financial Corporation 2015 Long Term Incentive Plan (the “2015 Plan”). The 2015 Plan authorizes the issuance of up to 60 million shares of Regions common stock, subject to certain adjustments, in the form of stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance share units, performance units and other stock-based awards. The purpose of the 2015 Plan is to align Directors’ and associates’ interests with the long-term interests of stockholders through the use of equity awards as a form of compensation. Adopting the 2015 Plan will ensure there is a

sufficient pool of shares over the next few years to continue using equity awards in the Company’s compensation program.

If the 2015 Plan is approved, it will replace the Regions Financial Corporation 2010 Long Term Incentive Plan (the “2010 Plan”), and any authorized shares of stock that are not subject to an outstanding award will be cancelled and no further awards will be made under the 2010 Plan. However, outstanding awards under the 2010 Plan will continue to be governed by the terms of the 2010 Plan.

See page 80 for details and Appendix B for the 2015 Plan.

 

 

 

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2014 Annual Meeting Voting Results

 

At Regions’ annual meeting of stockholders held in 2014, the stockholders re-elected Regions’ 13 Director nominees, approved executive compensation (“Say-on-Pay”), and ratified the selection of Ernst & Young LLP as the independent registered public accounting firm for the 2014 fiscal year. The following is a summary of the voting on each matter presented to our stockholders last year:

 

Eligible Votes

     1,378,536,561            

Total Voted

     1,149,988,188         (83.42%)   

Broker Non-Votes

     215,210,149         (15.61%)   

 

Proposal    Votes “For”  

George W. Bryan

     98.54%   

Carolyn H. Byrd

     98.86%   

David J. Cooper, Sr.

     99.43%   

Don DeFosset

     99.44%   

Eric C. Fast

     99.58%   

O. B. Grayson Hall, Jr.

     94.72%   

John D. Johns

     96.03%   

James R. Malone

     98.63%   
Proposal    Votes “For”  

Ruth Ann Marshall

     99.41%   

Susan W. Matlock

     98.89%   

John E. Maupin, Jr.

     98.81%   

Charles D. McCrary

     97.53%   

Lee J. Styslinger III

     98.96%   

Say-on-Pay

     96.26%   

Ratification of Selection of Auditors

     98.75%   
 

 

Submission of Stockholder Proposals or Nominations for 2016 Annual Meeting of Stockholders (page 87)

 

 

Stockholder proposals submitted for inclusion in our 2016 proxy statement pursuant to Rule 14a-8 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), must be received by us by November 12, 2015.

The By-Laws of Regions include provisions requiring advance notice of a stockholder’s nomination of persons for election to the Board of Directors or the proposal of other

business to be considered by the stockholders even if not to be included in our 2016 proxy statement for our 2016 Annual Meeting. To be timely outside of Rule 14a-8 of the Exchange Act, such notice must be delivered no earlier than November 12, 2015 and no later than December 11, 2015 for our 2016 Annual Meeting.

See page 87 for details.

 

 

 

 

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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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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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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:

 

LOGO    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).
LOGO    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.
LOGO    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.
LOGO    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.
LOGO    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”):

 

LOGO    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).
LOGO    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.
LOGO    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.
LOGO    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:

 

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

 

As of February 23, 2015, Regions had issued 1,383,838,847 shares of common stock, of which 1,342,806,171 shares were outstanding and 41,032,676 shares were held as treasury stock. Treasury stock cannot be voted.

Stockholders are entitled to one vote for each share on all matters to come before the meeting. Only common stockholders of record at the close of business on February 23, 2015 (the

“Record Date”), will be entitled to vote at the annual meeting or any adjournment or postponement thereof.

Holders of our Preferred Stock are not entitled to vote at the annual meeting. As of February 23, 2015, 20,000,000 Class A Depositary Shares and 20,000,000 Class B Depositary Shares were issued and outstanding.

 

 

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

 

 

The following table presents information about beneficial ownership of Regions equity securities as of the Record Date by the Directors and Executive Officers of Regions. Unless otherwise indicated, each person has sole voting and investment power over the indicated shares. A person is deemed to be a beneficial owner of any security of which that person has the right to acquire beneficial ownership within 60 days from the Record Date. The shares of Regions common stock that are issuable to a person upon exercise of the vested portion of the outstanding options are assumed to be outstanding for the purpose of determining the percentage of shares beneficially owned by that person.

Most of the Directors of Regions have elected to defer receipt of some or all of the cash compensation they are due for services on the Board under the Directors’ Deferred Stock Investment

Plan (“DDSIP”). Each Director’s deferred amounts are credited as notional shares of Regions common stock as of the time of deferral and will be settled in actual shares of common stock at the end of the deferral period. Therefore, the ultimate value of the amounts deferred are tied to the performance of Regions common stock.

As of February 23, 2015, the Directors and Executive Officers as a group were credited with 4,516,135 notional shares of common stock, which are included in the table as additional information in the “Additional Underlying Units” column. These 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.

 

 

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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.

 

No change-in-control of Regions occurred during 2014, meaning that no person or group has acquired the ability to direct or cause the direction of management and policies of Regions through the ownership of voting securities, by contract, or otherwise, and no arrangements are known to Regions that may at a later date result in such a change-in-control of Regions.

Regions’ General Policy on Insider Trading prohibits (a) all hedging transactions by Directors, Executive Officers and all associates, and (b) future pledging of Company equity securities by our Directors and Executive Officers. Mr. Malone has reached Regions’ mandatory retirement age and is not standing for re-election; therefore, as of the 2015 annual meeting, there will be no pledged Regions equity securities by the Directors or Executive Officers.

 

 

Section 16(a) Beneficial Ownership Reporting Compliance

 

 

Section 16(a) of the Exchange Act requires Regions’ Directors, Executive Officers, Controller and stockholders who own more than 10 percent of a registered class of Regions equity securities, if any, to file reports of ownership and changes in ownership of Regions stock with the SEC. Regions’ Directors, Executive Officers, Controller and stockholders owning greater than 10 percent are required to furnish Regions with copies of all Section 16(a) forms they file.

Based solely on a review of the forms filed during or with respect to fiscal year 2014 and written representations from the reporting persons, Regions believes that its Directors, Executive Officers and Controller filed all required reports on a timely basis except one Form 4 filing by Director John E. Maupin, Jr.

 

 

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Table of Contents
  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 72nd 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.

 

 

 

LOGO  

 

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.

 

 

 

LOGO  

 

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  

 

LOGO  

 

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.

 

 

 

LOGO  

 

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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Table of Contents
  PROPOSAL 1 — ELECTION OF DIRECTORS  

 

 

LOGO  

 

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.

 

 

 

LOGO  

 

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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  PROPOSAL 1 — ELECTION OF DIRECTORS  

 

LOGO  

 

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.

 

 

 

LOGO  

 

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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  PROPOSAL 1 — ELECTION OF DIRECTORS  

 

 

LOGO  

 

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.

 

 

 

LOGO  

 

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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  PROPOSAL 1 — ELECTION OF DIRECTORS  

 

LOGO  

 

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.

 

 

 

LOGO  

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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Table of Contents
PROPOSAL 1 — ELECTION OF DIRECTORS  

 

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

 

Under the DDSIP, a Director may elect to defer receipt of some or all cash compensation. Deferred amounts are credited to a bookkeeping account for the Director, which is designated in notional shares of Regions common stock. Dividend equivalents, if any, are converted to additional notional shares of common stock in the Director’s account. At the end of the deferral period,

the Director’s account is settled in actual shares of common stock, plus cash for any fractional share. Receipt and taxability of benefits are deferred until the time of payment in accordance with the payment election made by the Director at the time of the deferral. Most of the Directors have elected to defer receipt of a portion of their cash compensation.

 

 

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  PROPOSAL 1 — ELECTION OF DIRECTORS  

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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Table of Contents
  CORPORATE GOVERNANCE  

 

CORPORATE GOVERNANCE

 

The following corporate governance documents are available on the Investor Relations section of our website at www.regions.com:

 

  Code of Ethics for Senior Financial Officers

 

  Code of Business Conduct and Ethics

 

  Corporate Governance Principles

 

  Audit Committee Charter

 

  Compensation Committee Charter

 

  Nominating and Corporate Governance (“NCG”) Committee Charter

 

  Risk Committee Charter

Also available on our website is information regarding our Executive Officers, our Board members and Board committee composition, instructions for how to contact the Board as well as a summary of Regions’ Fair Disclosure Policy.

This proxy statement as well as the Company’s 2014 Annual Report on Form 10-K and Chairman’s Letter are available on the Investor Relations section at www.regions.com.

The NCG Committee periodically reviews the Corporate Governance Principles to maintain effective and appropriate standards of corporate governance. The Board adopted the principles to further its longstanding goal of providing effective governance of Regions’ business and affairs for the long-term benefit of stockholders.

Regions’ Corporate Governance Principles address important governance matters adopted by the Board, including:

 

  Structure of the Board and its leadership, including the responsibilities and duties of the Lead Independent Director.
  Director qualification standards, including:

 

    A description of ordinary course relationships that will not be deemed to impair a Director’s independence;

 

    A limit on the number of other public company boards and other audit committees on which Directors may serve; and

 

    Mandatory retirement age of 72.

 

  Identification and nomination of potential new Directors.

 

  Director responsibilities, including, but not limited to:

 

    Attending Board and stockholder meetings;

 

    Meeting in executive session; and

 

    Complying with our Code of Business Conduct and Ethics, securities trading policies and confidentiality of Board information and materials.

 

  Board Committees, including number and types of committees.

 

  Board operations, including scheduling meetings and selecting agenda items for meetings.

 

  Director access to management and independent advisors.

 

  Director orientation and continuing education.

 

  Management succession planning.

 

  Annual performance evaluation of the Board, Committees and individual Directors.

 

  Board interaction with stockholders, investment managers and the media.

 

  Communications with the Board.
 

 

Letter from the Lead Independent Director

 

 

LOGO

 As the Lead Independent Director and the Chair of the Nominating and Corporate Governance Committee, I am honored to write this letter to you on behalf of the members of the Board. As stewards of the Company, the Board is committed to acting in a thoughtful and transparent manner in the best interest of Regions and its stockholders.

Both the Board and executive management believe that active and engaged leadership is a critical aspect of effective corporate governance. One of the most important responsibilities of the Board is to provide guidance and oversight to Regions’ executive management team to ensure that Regions is appropriately assessing and managing risk while pursuing a safe and sound strategic direction for the Company. For that reason, the Board is engaged with executive management on an ongoing basis regarding strategy issues, including oversight of Regions’ already robust risk management practices. In 2014, Regions launched its Risk Ownership and Awareness (“ROA”) program, which is a company-wide initiative designed to support Regions’ strategic priority to enhance risk management. ROA dovetails with the Company’s other recent initiative, Regions360TM, which focuses on creating shared value for our customers and the communities we serve. Growing the Company and protecting it from risk are complementary goals; the better we know our customers the better we can serve them while managing the risks associated with those relationships. Successful execution of ROA and Regions360 creates sustainable, long-term benefits for all of our stakeholders, including our customers, communities, associates, and stockholders.

Many of our Directors have strong risk management and financial services backgrounds, as well as other important experience, skills and qualifications that enable them to provide exceptional guidance and oversight to best position Regions successfully in the current economic and regulatory environment. Your Board will continue to assess and enhance Board governance to reflect these priorities because the Board believes that these efforts, among others, will generate long-term value for all of our stockholders. On behalf of the Board, I would like to express our sincere appreciation for your continued support of and investment in Regions.

 

LOGO

 

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Our Board Leadership Structure

 

 

Governance plays a critical role at Regions, and the Company understands that Governance is only as strong as its Board of Directors. The Board assumes an active role in providing oversight of and guidance to Regions’ executive management team in order to maintain a strong system of checks and balances. Furthermore, Regions’ Corporate Governance Principles are comprehensive. They address: Board leadership structure; Lead Independent Director’s responsibilities; Director qualification standards and responsibilities; management succession planning; assessment of Board, Committees, and individual Director performance; Director compensation; Director orientation and continuing education; direct access of the Board to management and independent advisors, and more.

In addition, based on the requirements of the NYSE listing standards, Regions’ Corporate Governance Principles and an assessment of its current needs, the Board believes that an appropriate leadership structure includes a substantial majority of independent Directors, extremely capable Committee Chairs, and a strong Lead Independent Director with specific duties. The Board’s current leadership structure meets these attributes.

The Board is currently composed of 13 Directors, 12 of whom are independent. Directors are required to stand for election each year, allowing our stockholders the opportunity to express their views on each Director’s individual performance on an annual basis. All Board Committees are chaired by independent Directors. Additionally, all members of the Audit Committee, the Compensation Committee, the NCG Committee, and the Risk Committee are independent. Our Executive Officers benefit from the highly experienced, well-informed, and fully engaged Board members who have experience managing various organizations, both public and private. In addition, many of our Directors have experience in areas such as corporate governance, strategic planning, risk management, information technology, and financial modeling. We have not adopted a policy with respect to separating the Chairman and Chief Executive Officer positions. The Board believes that the leadership structure should be flexible to accommodate different approaches based on an evaluation of relevant facts and circumstances as it deems in the best interest of the Company and its stockholders.

The Board considers its structure and leadership each year in conjunction with its NCG Committee. At the present time, the

Board currently believes that the Company is best served in combining the Chief Executive Officer and Chairman positions, complemented by an independent, strong and effective Lead Independent Director. The Board currently believes that the Company benefits from having a combined Chief Executive Officer and Chairman structure, with a single leader having primary responsibility for managing its operations and who represents the Company to our stockholders, customers, associates, regulators, and the public. This structure also allows the Board to carry out its oversight responsibilities with the full involvement of each independent Director. Additionally, this structure utilizes Mr. Hall’s extensive experience and knowledge regarding the Company and provides for effective leadership of our Board and Company, while simultaneously providing for robust communication between the Board and management. Moreover, this combination also provides clear accountability to the stockholders, customers and associates concerning the performance of the Company.

Mr. Hall has more than 30 years experience with the Company and has been Chief Executive Officer for five years. Under his leadership, the Company has successfully met a number of challenges over the past years. Regions is a large financial institution and Mr. Hall, with over three decades of banking experience, including service on our Board of Directors since 2008, and service as President since October 2009, has extensive knowledge, expertise and experience in all aspects of our current business operations. In the Board’s opinion, Mr. Hall is the best person to understand and clearly articulate to the Board the opportunities and challenges facing the Company, and also has the leadership and management skills to promote the Company’s values and execute its strategies. Mr. Hall’s service as Chairman provides clarity of leadership and effectively allows the Company to present its vision and strategy in a unified voice.

Under the Corporate Governance Principles, unless there is an Independent Non-Executive Chairman of the Board, the Chair of the NCG Committee, who must be “independent” under the rules of the NYSE, and who is elected by and from the independent Board members, serves as the Lead Independent Director for the Board. Charles D. McCrary has served as the Lead Independent Director since 2013.

As Lead Independent Director, Mr. McCrary’s responsibilities and duties follow:

 

 

  ü   Presides at Board meetings when the Chairman is not present.  

 

  ü   Establishes the agenda and presides at executive sessions of the non-management and independent Directors.  

 

  ü   Acts as a liaison and facilitates communication between the Chairman and the non-management and independent Directors.  

 

  ü   Approves meeting agendas and information sent to the Board.  

 

  ü   Approves meeting schedules to ensure that there is sufficient time for discussion of all agenda items.  

 

  ü   Coordinates the activities of the non-management and independent Directors.  

 

  ü   Calls meetings of non-management and independent Directors.  

 

  ü   Assures that he or she is available for consultation and direct communication if requested by major stockholders.  

 

  ü   Communicates, as appropriate, with our regulators.  

 

  ü   Regularly communicates with our Chairman on a variety of issues including business strategy and succession planning.  

 

  ü   Maintains close contact with the Chair of each standing Committee of the Board, and serves as an ex-officio member of each Committee where he/she is not a member.  

 

  ü   Assists the Committee Chair in the establishment of Committee agendas and schedules.  

 

  ü   Provides input into the assessment of the Board Committees effectiveness, structure, organization and charters, and the evaluation of the need for changes.  

 

  ü   Coordinates the performance of the annual Board and Committees self-evaluation and the evaluation of the Chairman and Chief Executive Officer.  

 

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Board, Committee and Individual Director Evaluation Program

 

 

Each year the NCG Committee oversees the self-evaluation process for our Board, its Committees, and individual Directors. This self-evaluation is seen as a necessary process in ensuring the Board and its Committees are best equipped to create superior economic value for the Company’s stockholders over time by creating shared value for our customers and communities. More specifically, the self-evaluation will assess the Board’s and Committees’ performance in areas such as:

 

  Board and Committee structure and composition.

 

  Efficiency of Board and Committee meetings.

 

  Directors’ ability to carry out key Board responsibilities.

 

  Exchanges between the Board and management.

 

  Interactions with key stakeholders.

 

  Assessing Board member performance.

 

  Committee-level assessment.

Using the above overarching topics as a springboard for discussion, the Chair of the NCG Committee facilitates the self-evaluation discussions, during which Directors bring their individual expertise and experience to bear on the topics raised. The self-evaluation pays particular attention to the Board’s oversight of Regions’ risk management framework and the risk-taking activities undertaken by management and the Board’s ability to take actions and make decisions independently from Regions’ management.

Each Committee also conducts its own self-evaluation for those topics that are applicable only to the Committee.

 

 

Director Independence

 

 

To be independent under NYSE rules, our Board must make an affirmative determination that a Director does not have a “material relationship” with Regions. Under our Corporate Governance Principles, the Board has determined that a substantial majority of its members must be independent.

Under the rules of the NYSE, no Director qualifies as independent unless the Board affirmatively determines that the Director has no material relationship with Regions (either directly or as a partner, stockholder or officer of an organization that has a material relationship with Regions).

The NYSE bright-line independence tests. The NYSE has bright-line tests that disqualify a Director from being determined to be independent. The following relationships will preclude a Director from being considered independent for a period of three years:

 

  The Director is employed by Regions;

 

  The Director has an immediate family member who is an Executive Officer of Regions;

 

  The Director or an immediate family member has received in a year more than $120,000 in direct compensation from Regions (not including certain permitted payments such as Director and committee fees);

 

  Certain relationships with Regions’ external or internal auditors;

 

  The Director or an immediate family member is employed as an executive officer of another company and a Regions Executive Officer serves on that other company’s compensation committee; or

 

  The Director is a current employee, or an immediate family member is a current executive officer, of a company that made payments to, or received payments from, Regions in an amount that exceeds the greater of $1,000,000 or 2 percent of the applicable company’s consolidated gross revenues.

Corporate Governance Principles guidance regarding independence. The fact that none of the NYSE’s bright-line

tests are applicable to our current non-management Directors does not make a Director independent. The Board must still consider all circumstances surrounding any existing relationship between Regions and a Director to determine whether a material relationship exists outside of the bright-line tests.

To aid in conducting this evaluation, our Corporate Governance Principles describe relationships and transactions that, in the absence of unusual facts and circumstances, would not impair a Director’s exercise of independent judgment or compromise the oversight role that an independent Director of Regions is expected to perform, and therefore presumptively are not material:

 

  The Director or an immediate family member has a customer relationship with Regions that is established and administered by Regions in the ordinary course of business, on terms and conditions not more favorable than those afforded by Regions to other similarly situated customers.

 

  If the Director or immediate family member has a loan or extension of credit, and that loan was made or credit was extended on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons, and involved no more than the normal risk of collectability and presented no other unfavorable features.

 

  If Regions employs an adult family member of the Director in the ordinary course of business in a capacity other than as an Executive Officer.

 

  The Director’s or immediate family member’s interest in a transaction results solely from service as a director (or comparable position) of another company that is a party to the transaction or from the beneficial ownership of less than 10 percent of the other entity’s equity.

 

  The transaction is one where the rates or charges involved in the transaction are determined by competitive bids, or the transaction involves the rendering of services as a common or contract carrier, or public utility, at rates or charges fixed in conformity with law or governmental authority.
 

 

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In applying this guidance, an “immediate family member” includes a person’s spouse, parents, children, siblings, mothers- and fathers-in-law, sons- and daughters-in-law, brothers- and sisters-in-law, and anyone (other than domestic employees) who shares such person’s home. If a Director has a relationship that would be deemed non-material under our guidelines for independence, but meets one of the NYSE’s bright-line tests, the NYSE test governs and the Director will not be treated as independent.

Board independence considerations. The Board has made an affirmative determination as to all 13 current Directors’ independence. The NCG Committee presented to the Board its evaluations of each Director and made a recommendation as to each Director’s independence.

The following specific relationships were also considered while making a determination:

 

  All of the Directors, except Directors DeFosset and Fast, either individually or through an affiliated entity, have customer relationships with Regions’ subsidiaries, such as a deposit, brokerage, trust or other financial services relationship in the ordinary course of Regions banking and/or brokerage business, on terms and conditions not more favorable than those afforded by Regions or its subsidiaries to other similarly situated customers.

 

  Directors Bryan, Byrd, Cooper, Johns, Malone, Matlock, Maupin, McCrary and Styslinger, either individually or through an affiliated entity, have bank loans from Regions’ subsidiaries on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans by Regions’ subsidiaries to unrelated persons, and involving no more than the normal risk of collectability and no other unfavorable features.

 

  Directors Bryan, Byrd, Cooper, DeFosset, Johns, Malone, Matlock, Maupin, McCrary and Styslinger 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 in any of 2012, 2013 or 2014.

 

  Director Byrd serves as an outside director of the Federal Home Loan Mortgage Corporation (“Freddie Mac”). The revenue Regions’ subsidiaries receives from servicing loans for Freddie Mac is not a material portion of Regions’ total revenues. Additionally, Regions’ subsidiaries are not dependent solely on Freddie Mac as a purchaser of loans.

 

  Director Johns serves as Chairman, President and Chief Executive Officer of Protective Life Corporation (“Protective”), which was throughout 2014 a publicly traded life insurance company located in Birmingham, Alabama. Effective February 1, 2015, Protective became a wholly-owned subsidiary of Dai-ichi Life Insurance Company, Limited, and is no longer a publicly traded company. The NCG Committee and the Board have determined that the relationships between Regions and Protective would not impair Director Johns’ independence given that the transactions are:

 

    not material to Protective in light of its annual income or gross revenues because the payments to or received from Protective were well below 2 percent of Protective’s consolidated gross revenues and were less than 0.07 percent in 2014, 0.03 percent in 2013, and less than 0.05 percent in 2012;
    not material to Regions in light of its annual income or gross revenues;

 

    conducted at arm’s-length in the ordinary course of business of each party to the transactions;

 

    not material to Director Johns as Chairman, President and Chief Executive Officer of Protective;

 

    not involving a personal stake of Director Johns in the transactions;

 

    not involving Director Johns in the negotiations or discussions leading to the transactions; and

 

    typical of transactions that Protective conducts with other financial institutions.

Director Johns does not have a direct or indirect material interest in the transactions arising out of the business relationships between Regions and Protective, and Director Johns has no material relationships with Regions that would impair his exercise of independent judgment as a Director.

 

  Director Maupin serves as Chair of the Board of Directors of Regions Community Development Corporation, a non-profit corporation sponsored by Regions dedicated to providing technical assistance for affordable housing, small business and community development initiatives.

 

  Directors Cooper and Johns also served throughout 2014 on the board of directors of Alabama Power Company (a subsidiary of The Southern Company), where Director McCrary previously served as President and Chief Executive Officer. Throughout 2014, Directors Johns and McCrary served on the board of directors of Protective Life Corporation, where Director Johns is the Chairman, President and Chief Executive Officer. C. Dowd Ritter, the father of Regions Executive Officer William D. Ritter, serves on the board of directors of Alabama Power Company and Protective Life Corporation. Directors Hall and Styslinger also serve on the board of directors of Vulcan Materials Company.

In each case, the Board concluded, in light of the applicable independence standards of the NYSE and the description of relationships and transactions contained in the Corporate Governance Principles that such relationship would not be considered to impair a Director’s exercise of independent judgment or compromise the oversight role that an independent Director of Regions is expected to perform, and therefore are not material.

Director Hall is employed by Regions. Therefore, under the NYSE bright-line relationship test he was determined not to be independent.

Board independence determinations. The Board has affirmatively determined that each Director is an independent Director, other than O. B. Grayson Hall, Jr., Chairman, President and Chief Executive Officer. The following named current Directors have been determined by the Board to be independent:

 

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

 

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Director Malone, who has reached Regions’ retirement age, is not standing for re-election.

During a portion of 2014, one former Director, John R. Roberts, served on the Board. In early 2014, the Board made the determination that Mr. Roberts was independent based upon the applicable independence standards of the NYSE; the description of relationships and transactions contained in the Corporate Governance Principles; and the consideration by the Board of all relevant transactions, relationships and arrangements with respect to Mr. Roberts.

Additional determinations made by the Board. The Board has also affirmatively determined that all members of the Audit Committee are “independent” and “financially literate.” Additionally, all members of the Audit Committee have banking or related financial management expertise as defined by the Federal Deposit Insurance Corporation Improvement Act of 1991. Finally, each of Directors Bryan, Byrd, Fast, Maupin and

Styslinger has accounting or related financial management expertise as described in Section 303A.07 of the NYSE Governance Rules and is an Audit Committee Financial Expert as defined in Item 407(d) of Regulation S-K of the Securities Act. In addition, all members of the Audit Committee are independent within the meaning of the independence standards for audit committee members under the Sarbanes-Oxley Act of 2001.

The Board also determined that Director Johns, a member of the Risk Committee, is a Risk Management Expert as defined by Regulation YY that implements certain of the enhanced prudential standards mandated by Section 165 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Over 92 percent of Regions’ Directors, as well as all members of the Audit Committee, the Compensation Committee, the NCG Committee, and the Risk Committee, are independent directors within the meaning of the listing standards of the NYSE.

 

 

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

 

 

Directors and Executive Officers of Regions and beneficial owners of more than 5 percent of Regions common stock and their affiliates were customers of, and had transactions with, Regions and our subsidiaries in the ordinary course of business during 2014, and additional transactions may be expected to take place in the ordinary course of business. As previously noted, included in such transactions are outstanding loans and commitments from Regions Bank, all of which were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with persons not related to Regions, and did not involve more than the normal risk of collectibility or present other unfavorable features.

Other Business Relationships. We have entered into other business relationships with entities known to or reasonably believed by us to own more than 5 percent of our common stock. These relationships are in the ordinary course of business and are described below:

BlackRock, Inc. and subsidiaries are the beneficial owners of more than 5 percent of our common stock. On October 14, 2011, Regions entered into an amended and restated agreement (the “BlackRock Agreement”) with BlackRock Financial Management, Inc. (“BlackRock Financial”), a subsidiary of BlackRock, Inc. (“BlackRock”) for BlackRock Financial to provide risk management and advisory services for Regions’ mortgage servicing rights portfolio and their proprietary trading, portfolio management and risk reporting system for Regions’ investment portfolio. The initial term of the BlackRock Agreement is for five years and upon the expiration of the initial term, the BlackRock Agreement can be renewed for successive 24-month terms unless otherwise terminated. The BlackRock Agreement provides that Regions will pay BlackRock Financial a fee of $2,250,000 per year plus an additional fee depending on the size of the portfolio. Regions paid BlackRock Financial approximately $2,530,000 in 2014. The Regions Financial Corporation

Retirement Plan had invested approximately $290.5 million in BlackRock Funds as of December 31, 2014 and paid investment management fees of approximately $319,000 in 2014. Trust accounts held at Regions Bank have invested approximately $232.5 million in BlackRock-sponsored securities as of year end 2014. Regions does not receive any revenue share, fees or commissions for client accounts invested in these securities. Additionally, in 2014, affiliates of BlackRock paid Regions fees and interest on credit facilities of approximately $860,000. These relationships began before BlackRock became the beneficial owner of more than 5 percent of Regions common stock and are expected to continue.

The Vanguard Group, Inc. and subsidiaries (“Vanguard”) are the beneficial owners of more than 5 percent of our common stock. At year end 2014, trust accounts held at Regions Bank have invested approximately $1.448 billion in mutual funds offered by Vanguard entities. Regions does not receive any revenue share, fees or commissions for client accounts invested in these funds. This relationship began before Vanguard became the beneficial owner of more than 5 percent of Regions common stock and is expected to continue.

State Street Global Advisors and affiliates (“State Street”) are reasonably believed by us to own over 5 percent of our common stock as of the Record Date. State Street entities administer rabbi trusts for certain retirement and deferred compensation plans maintained by Regions. Regions pays State Street a nominal monthly administration fee for these services. At year end 2014, trust accounts held at Regions Bank had approximately $20.5 million invested in State Street equities; however, trust accounts had no positions in mutual funds sponsored by State Street entities. Regions does not receive any revenue share, fees or commissions for client accounts invested in these funds. These relationships began before State Street first became the beneficial owner of more than 5 percent of Regions common stock and are expected to continue.

 

 

Policies Relating to Transactions with Related Persons and Code of Conduct

 

 

Related Person Transactions Policy. The Board has adopted a written policy entitled the “Related Person Transactions Policy.” This policy provides a mechanism for the identification, evaluation, and approval or disapproval of significant transactions involving Regions and persons related to Regions as described below.

For purposes of this policy, a “related person transaction” is a transaction, arrangement or relationship (or any series of similar transactions, arrangements or relationships) in which Regions was, is or will be a participant and the amount involved exceeds $120,000 in any fiscal year, and in which any “related person” (defined below) had, has or will have a direct or indirect material interest. The category of related persons consists generally of Regions’ Directors, Director nominees and Executive Officers, any person or entity who is known to be the beneficial owner of more than 5 percent of any class of Regions voting securities, and immediate family members of any of the foregoing persons, and “associated entities” of the foregoing persons.

An “associated entity” of a related person means a firm, corporation, or other organization in which the related person is an executive officer or other executive managerial position. Associated entity also includes a firm, corporation or other organization in which the related person owns a 10 percent or greater equity interest or the related person engages in a transaction or series of transactions with Regions and the related person receives a measurable financial benefit resulting from the transaction(s).

Certain types of transactions are excluded from the category of related person’s transactions and are not subject to this policy even if the amount exceeds $120,000. For example, a related person transaction does not include any transaction that involves services of a public utility at rates or charges fixed in conformity with law or governmental authority.

Each Director and Executive Officer is required to provide the General Counsel, and periodically update, a list of his or her immediate family members, the affiliated entities of his or her

 

 

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immediate family members, and additional information elicited for administration of this policy. The General Counsel maintains a master list of related persons and affiliated entities, and distributes it to the heads of various units within Regions and to the areas of accounts payable and accounts receivable, which will use the information to identify potential related person transactions in order to effectuate this policy.

Any related person transaction is subject to either advance notification procedures (if identified in advance) or ratification procedures. In either case, the related person must provide to the General Counsel notice of the facts and circumstances of the transaction, including: (1) the related person’s relationship to Regions and the person’s interest in the transaction; (2) the significant facts of the potential transaction, including the proposed aggregate value of the transaction without regard to the amount of any profit or loss; (3) the purpose of, and the benefits to Regions of the potential transaction; (4) if applicable, the availability of other sources of comparable products or services; (5) an assessment of whether the potential transaction is on terms that are no less favorable to Regions or are comparable to the terms available to an unrelated third party or to associates generally; and (6) an assessment of whether the potential related person transaction is consistent with Regions’ Code of Business Conduct and Ethics (the “Code of Conduct”).

The General Counsel will assess whether the transaction is subject to this policy. If it is determined that the transaction is a related person transaction, it will be submitted to the NCG Committee for consideration at the next NCG Committee meeting or, if it is not practicable to wait until the next NCG Committee meeting, to the NCG Committee’s Chair for prompt consideration.

The NCG Committee, or its Chair, will consider the relevant facts and circumstances of the related party transaction, including but not limited to: (1) the benefits to Regions; (2) the impact on a Director’s independence in the event the related person is a Director, an immediate family member of a Director or an entity in which a Director is a partner, significant stockholder or executive officer; (3) the availability of other sources for comparable products or services; (4) the terms of the transaction; (5) the terms available to unrelated third parties or to associates generally; and (6) whether the potential related person transaction is consistent with the Code of Conduct. Any Director or Executive Officer who is or whose family members or affiliated entities are the subject of the related person transaction is not permitted to participate in the review, consideration or approval of the related person transaction.

The NCG Committee (or its Chair) is authorized to approve or ratify those related person transactions that are in, or are not inconsistent with, the best interests of Regions and its stockholders, and that are consistent with the Code of Conduct, as the NCG Committee or its Chair determines in good faith. Other related person transactions should be disapproved by the NCG Committee (or its Chair) and should not be entered into or continued by Regions. The NCG Committee (or its Chair) will report the decision to the General Counsel, who will report the decision to the appropriate Regions personnel.

This policy also grants the NCG Committee the authority to address situations in which an unauthorized related person transaction subject to this policy is initiated and is subsequently disapproved.

The NCG Committee will annually review and consider any previously approved or ratified related person transaction that remains ongoing.

Regulation O Policies and Procedures. We maintain additional policies and procedures to help ensure our compliance with Regulation O. This regulation imposes various conditions on a bank’s extension of credit to Directors and Executive Officers. Any extensions of credit must comply with our Regulation O policies and procedures.

As previously discussed, a Director can meet our guidance for independence if the Director or immediate family member has a loan or extension of credit, and that loan was made or credit was extended on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons, and involved no more than the normal risk of collectability and presented no other unfavorable features.

Our Regulation O policies and procedures require that:

 

  Extensions of credit (including interest rates and collateral) to covered individuals or entities must be made on substantially the same terms as those prevailing at the time for comparable transactions with those who are not covered.

 

  The covered extension of credit must be made following credit underwriting procedures no less stringent than those prevailing at the time for comparable transactions with non-covered individuals or entities. The extension of credit may not involve more than the normal risk of repayment or present other unfavorable features.

 

  The amount of covered extensions of credit do not exceed individual and aggregate lending limits, depending on the identity of the borrower and the nature of the loan.

Our subsidiary bank, Regions Bank, designates a Regulation O Credit Officer to review extensions of credit to determine our compliance with our policies and procedures. If an extension of credit would result in an aggregate credit extension of more than $500,000 to a covered individual or entity, the board of Regions Bank must approve it. Reports of all extensions of credit made to Executive Officers under Regulation O are provided to the Regions Bank board.

All loans to Directors and Executive Officers:

 

  Comply with our Regulation O policies and procedures;

 

  Are made in the ordinary course of business;

 

  Are made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans with persons not related to Regions; and

 

  Do not involve more than the normal risk of collectibility or present other unfavorable features.
 

 

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Code of Conduct. Regions’ Code of Conduct contains several provisions that also serve to regulate transactions with our associates and Directors and to guide them in avoiding situations that could be viewed as actual or perceived conflicts of interest. For example, the Code of Conduct prohibits activities that could be construed as self-dealing, such as:

 

  Personally extending credit to a non-relative who applied for and was denied credit by Regions;

 

  Representing Regions in a relationship or transaction in which the associate or Director has a family, financial or other material interest;

 

  Representing an entity other than Regions in any transaction with Regions;

 

  Co-signing, acting as power of attorney or otherwise representing a customer (other than an immediate family member) with respect to a Regions account;

 

  Purchasing any property that the associate or Director understands Regions intends to purchase;

 

  Using Regions’ property or corporate time for personal gain not related to job performance;

 

  Processing of bank transactions by an associate for that associate’s own personal account, for the account of an immediate family member or for an account on which the associate is a signatory; and

 

  Borrowing from customers, suppliers or other persons or companies that do business with Regions except those that engage in lending in the ordinary course of their business on terms offered others in the normal course of business.

Additionally, under the Code of Conduct, associates or Directors who learn of a business opportunity in the course of their service for Regions cannot appropriate that opportunity for themselves or for others. Instead, the Code of Conduct requires that they allow Regions to take advantage of the opportunity.

Among other things, the Code of Conduct is designed to provide guidance and resources to help ensure, among other things, that:

 

  Regions and its associates remain in compliance with all applicable laws and regulations.

 

  Regions is a safe and nondiscriminatory place to work and do business.

 

  Confidential and proprietary information is protected.

 

  Inappropriate gifts or favors are not accepted.

 

  Conflicts of interest are avoided.

Any material departure from a provision of the Code of Conduct on behalf of a member of the Operating Committee, a Director or a Senior Financial Officer (as defined in the paragraph below) may only be waived by the Board, and any such waiver will be promptly disclosed as required by applicable law, rule or regulation.

Code of Ethics for Senior Financial Officers. The Board has adopted a separate Code of Ethics for Senior Financial Officers that supplements the Code of Conduct and applies to Regions’ Chief Executive Officer, Chief Financial Officer, and the Principal Accounting Officer and Controller. This Code of Ethics may be found on the Regions’ website at www.regions.com in the Corporate Governance Section of Investor Relations. Regions will disclose any amendments or waivers with respect to its Code of Ethics for Senior Financial Officers on its website.

 

 

Director Attendance

 

 

Pursuant to Regions’ Corporate Governance Principles, Directors are expected to attend and participate in all Board meetings and meetings of Committees on which they serve. Directors are expected to be available for consultation with management as requested from time to time.

In 2014, all incumbent Directors attended at least 75 percent of the aggregate number of the meetings held by the Board and by Committees of which they were members.

Our current Director attendance for Board and Committee meetings averaged over 95 percent in 2014. In his role as Lead Independent Director, Mr. McCrary attended a majority of the meetings of the Board Committees of which he is not a member.

 

 

Director Attendance at the Annual Meeting

 

 

As stated in Regions’ Corporate Governance Principles, Directors are expected to attend all meetings of stockholders.

At the 2014 annual meeting, all 13 incumbent Directors either attended in person or participated via telephone conference call in the meeting.

 

 

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Meetings of Independent Directors

 

 

All Directors, and then the independent Directors, meet in executive sessions at each regular meeting of the Board, and have the opportunity to meet in executive sessions at regularly scheduled conference call meetings held by the Board.

These executive sessions provide the opportunity for discussion of the CEO’s performance, compensation, succession planning, critical strategic matters and other topics that should in some instances be discussed without management being present.

 

Regions’ independent Directors met 12 times in 2014 in executive session with no other attendees present.

Mr. McCrary, as the Lead Independent Director, presided over all but one of the executive sessions of the independent Directors. Independent Director George W. Bryan presided over the one executive session held during Mr. McCrary’s absence.

 

 

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

 

 

The Corporate Governance Principles adopted by the Board include a mechanism for stockholders and other interested parties to communicate with Directors.

The Board believes questions or concerns related to matters such as financial results, strategic direction, executive compensation, corporate governance and general Board oversight, including accounting, internal accounting controls, auditing and other related matters are appropriately addressed to the Board. Matters that deal with the Company’s general business operations are more appropriately addressed by management.

The Corporate Secretary will circulate communications to the appropriate Director or Directors, with the exception of those communications that are of a personal nature or not related to the duties and responsibilities of the Board, including without limitation, routine customer service complaints. The Corporate Secretary will maintain a log of any such communications not

shared with the Board and such log will be provided to the Board on a quarterly basis. In addition, Directors may review any communication upon request.

Items such as commercial solicitations, opinion survey polls, new product or service suggestions, resumes, job inquiries and mass mailings will not be shared with the Board nor maintained in a log.

Stockholders and other interested parties may send communications directed to the Board, a Committee of the Board, the Chairman of the Board, the Lead Independent Director, the independent Directors as a group or an individual member of the Board by sending a letter with clear notation as “Board Communication” or “Director Communication” to:

Regions Financial Corporation

c/o Office of the Corporate Secretary

1900 Fifth Avenue North

Birmingham, Alabama 35203

 

 

Board’s Role in the Risk Management Process

 

 

The Board oversees the management of risk through its Risk Committee, with guidance from the Audit Committee on major financial risks, while the Compensation Committee oversees risk as it relates to compensation matters. The Board sets the foundation for the Company’s risk culture by establishing the Board’s Risk Appetite Statement, which documents the Company’s tolerance for risk. The Risk Appetite Statement is reviewed and approved annually by the Risk Committee. The Risk Committee monitors the Company’s performance to ensure alignment with the tolerance levels articulated in the Risk Appetite Statement. The Risk Committee is responsible for the risk-management policies of Regions’ enterprise operations and oversight of the operation of Regions’ enterprise risk-management framework. This includes the policies, procedures, strategies and systems established by management to identify, measure, mitigate, monitor and report major risks, including emerging risks and other enterprise risks, as well as capital planning, management and assessment processes.

In accordance with Regulation YY, the Risk Committee is required to consist of a minimum of three outside members of the Board. Members of the Risk Committee are appointed by the Board based on the recommendation of the NCG Committee and serve at the Board’s discretion. Currently, the Risk Committee

consists of seven independent Directors, with a least one Director who has experience in identifying, assessing, and managing risk exposures of large, complex financial firms. The Chair of the Risk Committee, as designated by the Board, is required to be a director who (i) is not an officer or employee of the Company; (ii) has not been an officer or employee of the Company during the previous three years; (iii) is not a member of the immediate family of a person who is, or has been within the last three years, a Regulation O executive officer of the Company; and (iv) is an independent director under Item 407 of SEC Regulation S-K.

The categories of enterprise risks (including emerging risks) overseen by the Risk Committee currently include legal risk, reputational risk, liquidity risk, credit risk, market risk, strategic risk, compliance risk and operational risk. In addition, the Risk Committee approves, at least annually, the contingency funding plan that sets out the Company’s strategies for addressing liquidity needs during liquidity stress events, as well as certain other plans from time to time. The Risk Committee is required to meet at least quarterly or more frequently if it deems necessary and fully document and maintain records of its proceedings, including risk-management decisions. The Risk Committee meets, receives and reviews information and regular reports from the Chief Risk Officer (“CRO”) and the Risk Management team

 

 

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on at least a quarterly basis, as well as from others from time to time, and recommends actions and other steps to be taken, as it deems appropriate. In addition, the Risk Committee receives written reports from an independent review function regarding material liquidity risk management, as applicable and permitted by law. In the course of these reviews, the Risk Committee interacts on a regular basis with the CRO, the Chief Credit Officer, the Credit Review Director, and the Internal Audit Director. The Risk Committee is also responsible for ensuring that the compensation of the CRO is consistent with providing an objective assessment of the risks taken by the Company.

The Risk Committee reports to the Board with respect to any notable risk management issues and coordinates with other Board and management level committees as appropriate regarding risk-related issues. In addition, the Risk Committee, along with the CRO, oversees the Risk Management team’s responsibilities, budget and staffing. In carrying out its duties, the Risk Committee is authorized to select, retain, terminate and approve fees and other retention terms of independent legal, accounting or other advisors as it deems appropriate, without seeking approval of management or the Board.

The Audit Committee also plays a role in risk management oversight. The Audit Committee reviews the guidelines and policies by which risk management and risk assessments are undertaken with respect to Regions’ major financial exposures. The Audit Committee discusses these major financial exposures with Regions’ management, as well as steps taken to monitor

and control such exposures. In addition, the Audit Committee assists and advises the Board in monitoring the integrity of the Company’s financial reporting processes, including matters relating to internal controls over financial reporting. The Audit Committee also has oversight responsibilities for compliance with legal and regulatory requirements, as well as the internal audit function and independent auditor. Furthermore, the Audit Committee reviews any significant report and management response to such report including any significant instance where business units or risk management personnel have not adhered to the Company’s risk governance framework.

The Compensation Committee also participates in risk management oversight particularly as it relates to compensation risk. The Compensation Committee considers, in establishing and reviewing the Company’s associate and executive compensation programs, whether these programs encourage unnecessary or excessive risk taking that could threaten the value of or have a material adverse effect on Regions and has concluded that they do not. Moreover, in consultation with senior risk officers, the Compensation Committee establishes and maintains appropriate processes and procedures and sufficient personnel to management compensation-related risks. The Compensation Committee, in consultation with management, also oversees regulatory compliance with respect to compensation matters, including any required certification or reporting requirements under applicable law. Like the Risk Committee, the Compensation Committee also receives information from Regions’ Risk Management team and, in particular, Regions’ CRO.

 

 

Relationship of Compensation Policies and Practices to Risk Management

 

 

Regions has long adhered to compensation policies and practices that are designed to support a strong risk management culture. Accordingly, we employ strong and effective corporate governance which includes active oversight and monitoring by the Compensation Committee over our incentive compensation practices.

While we cannot avoid all risk, the successful execution of our strategy requires effective management of the risks we decide to take. Our risks may be generated from external or internal sources, and may or may not be within our control. We do not attempt to eliminate all risk, but rather identify, understand, assess, monitor and manage the risk. We want our decisions to reflect a defined risk appetite and a moderate risk profile. It is our responsibility to establish an enterprise risk management framework that facilitates risk management for the benefit of our stockholders.

As we describe in the Compensation Discussion and Analysis (“CD&A”) section which begins on page 52, we attempt to align how we manage risk with how we compensate associates. The process of limiting risk starts with the Board in setting the risk appetite for the Company and establishing policies and implementing appropriate limits. Strategic business plans are developed for each business group and unit of the Company, and these plans recognize and account for the risk tolerances supported by the Board. Compensation policies and plans are then designed and periodically reviewed and revised to ensure

that they continue to support the strategic direction for the Company.

Consistent with effective risk management principles, base salaries of associates are competitive and represent a significant portion of the compensation of all associates and, therefore, do not encourage excessive risk taking in order to increase compensation levels. Variable compensation payments are made to many, if not most, associates within the Company, and provide an important tool to motivate associates to excel at executing our business plans. However, variable incentive policies and plans by design are aimed at aligning long-term associate and stockholder interests and overall represent a small percentage of total revenue. Compensation decisions also rely on the Compensation Committee’s and management’s discretion to consider other factors, such as effective risk management, compliance with controls and ethical conduct, competition for top talent, market-based pay levels, and the need to attract, develop, grow, and retain the leadership team.

As further discussed in our CD&A, our Compensation Committee continues to monitor the effect changes in the economic environment have on our existing risk management practices.

Certain practices established by the Company include:

 

  A strong clawback policy;
 

 

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  A policy providing guidance to business leadership as to the appropriate use of discretion in compensation decisions;

 

  A policy covering adverse risk events and how we consider those events in making compensation decisions;

 

  Robust compliance, internal control, disclosure review and reporting programs;

 

  Long-term compensation awards that are subject to substantial future performance requirements;

 

  A robust internal governance process covering the administration of our incentive compensation programs; and

 

  A policy that prohibits hedging strategies related to the ownership stakes our key associates have in Regions.

As more fully described in the CD&A, the Compensation Committee oversees our compensation practices, and meets at least on an annual basis with Regions’ CRO to review incentive compensation arrangements for associate compensation plans in order to identify any features that might encourage unnecessary and excessive risk-taking or manipulation of earnings. Based on our approach to enterprise risk management, including the comprehensive risk review and assessment of our incentive compensation plans, our risk assessments for significant businesses and staff functions, and the continued emphasis on incorporating risk mitigating practices and performance requirements within our compensation programs, we believe that the risks arising from our compensation plans, policies, and practices are not reasonably likely to have a material adverse effect on the Company.

 

 

Compensation Consultant Disclosure

 

 

Since 2012, the Compensation Committee has retained Frederic W. Cook & Co., Inc. (“Cook & Co.”) to provide independent advice and information regarding the design and implementation of our executive compensation programs. Cook & Co. is a nationally recognized compensation consulting firm that works exclusively for the Compensation Committee. The duties and services provided by Cook & Co. are more fully described in the CD&A section of this proxy statement.

It is the Compensation Committee’s view that its compensation consultant and any other advisors should be able to render candid and direct advice independent of management’s influence, and numerous steps have been taken to satisfy this objective.

Annually, and most recently in December 2014, the Compensation Committee considered the independence of Cook & Co. in light of current SEC rules and NYSE listing standards. The Compensation Committee requested and

received a letter from Cook & Co. addressing its independence, including the following factors: (1) other services provided to us by the consultant; (2) fees paid by us as a percentage of the consulting firm’s total revenue; (3) policies or procedures maintained by the consulting firm that are designed to prevent a conflict of interest; (4) any business or personal relationships between the individual consultants involved in the engagement and a member of the Compensation Committee; (5) any Regions equity securities owned by the individual consultants involved in the engagement; and (6) any business or personal relationships between Regions’ Executive Officers and the consulting firm or the individual consultants involved in the engagement.

The Compensation Committee discussed these considerations and concluded that the work of Cook & Co. did not raise any conflict of interest.

 

 

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

 

 

Our Board has established four standing committees: an Audit Committee, a Compensation Committee, a NCG Committee and a Risk Committee. Each of these Committees meet on a regular basis and operate under a written charter approved by the Board.

In addition, each standing Committee reviews and reassesses its charter on an annual basis. Moreover, each Committee performs an annual self-evaluation to determine whether such Committee is functioning effectively and fulfilling its duties as prescribed by its charter. Each Committee may form and delegate authority to subcommittees or one or more committee members.

 

We describe the main responsibilities of the Board’s standing Committees on the following pages. The descriptions of the Committee functions in this proxy statement are qualified by reference to the charters and our relevant By-Law provisions. The charters for these Committees discussed in this section are all available on Regions’ website at www.regions.com in the Corporate Governance section of Investor Relations.

In addition, our By-Laws authorize the Board to create other committees as needed.

 

 

 

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Board and Committee Meetings in 2014

 

 

The table to the right shows the number of Board and Committee meetings held in 2014. Under our Corporate Governance Principles, Board members are expected to attend and participate in all Board meetings and meetings of Committees on which they serve and to attend all meetings of stockholders.

Each Director attended at least 75 percent of the combined total number of meetings of the Board and all Committees on which the Director served (the threshold for disclosure under SEC rules).

Attendance for current Directors for Board and Committee meetings averaged over 95 percent in 2014.

 

     

Number of

Meetings Held

 

Board of Directors

     12   

Audit Committee

     8   

Compensation Committee

     7   

NCG Committee

     6   

Risk Committee

     6   
 

 

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 LOGO

                                   C   

Carolyn H. Byrd LOGO

       C                               

David J. Cooper, Sr.

                                     

Don DeFosset

                C                      

Eric C. Fast LOGO

                                     

John D. Johns þ

                                     

James R. Malone

                                      

Ruth Ann Marshall

                                     

Susan W. Matlock

                                     

John E. Maupin, Jr. LOGO

                                     

Charles D. McCrary *

                           C            

Lee J. Styslinger III LOGO

                                     
Member

 

C Chair

 

LOGO Audit Committee Financial Expert

 

þ Risk Committee Risk Management Expert

 

* Lead Independent Director

 

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Chair

 

 

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Carolyn H. Byrd

Other Members

 

 

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George W. Bryan

 

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Eric C. Fast

 

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John E. Maupin, Jr.

 

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Lee J. Styslinger III

Audit Committee

 

The Audit Committee currently consists of Carolyn H. Byrd (Chair), George W. Bryan, Eric C. Fast, John E. Maupin, Jr., and Lee J. Styslinger III. All of these Directors are independent and were selected for membership on the Audit Committee based on the recommendation of the NCG Committee.

The Audit Committee has a written charter that is posted on our website at www.regions.com and is reviewed and approved on an annual basis.

The purpose of the Audit Committee is to assist the Board in monitoring the:

 

(a) Integrity of the Company’s financial statements, financial reporting processes and financial controls;

 

(b) Independent auditor’s qualifications and independence;

 

(c) Performance of the Company’s internal audit function and independent auditors; and

 

(d) Company’s compliance with legal and regulatory requirements.

Each member of the Audit Committee must be independent and financially literate as defined by the SEC and NYSE regulations. Additionally, at least one member of the Audit Committee must be an Audit Committee Financial Expert as that term is defined by the SEC. Pursuant to the Audit Committee’s written charter, members of the Audit Committee may only serve on two other public company audit committees.

The Audit Committee meets at least quarterly, and more often if deemed necessary or advisable. In 2014, the Audit Committee met eight times.

Additionally, pursuant to its charter, the Audit Committee will:

 

  Appoint or replace the independent auditor;

 

  Pre-approve all auditing services, internal control-related services and permitted non-audit services to be performed by the independent auditor;

 

  Retain independent legal, accounting or other advisers as it deems necessary or advisable;

 

  Discuss with management (i) the Company’s major financial risk exposures and (ii) the steps management has taken to monitor and control such exposures;

 

  Review and discuss financial statements and disclosure matters that will be filed with the SEC;

 

  Review and discuss with management all non-GAAP information;

 

  Oversee, review and evaluate the Company’s relationship with the independent auditor and the independent auditor’s performance and independence; and

 

  Oversee the Company’s internal audit function.

 

The Audit Committee serves as a Board-level oversight role. Management is responsible for preparing the Company’s consolidated financial statements, for maintaining internal controls, and for complying with laws and regulations. The independent auditors are responsible for auditing the Company’s consolidated financial statements and internal controls.

The Audit Committee regularly meets with Regions’ internal auditors and Ernst & Young LLP, with and without management present, to discuss the results of their examinations, their evaluations of Regions’ internal accounting and financial reporting controls, and the overall quality of Regions’ financial reporting.

The Audit Committee also must prepare the report required to be included in this proxy statement. The Audit Committee has approved such report, which is on page 50.

Audit Committee Financial Experts

The Board believes that all of the members of the Audit Committee have accounting or related financial management expertise under the rules of the NYSE. Additionally, all members qualify as Audit Committee Financial Experts within the meaning of the rules of the SEC.

In addition, all Audit Committee members are financially literate, as required by NYSE listing standards, and all members meet the additional criteria for independence of audit committee members as set forth in Rule 10A-3(b)(1) under the Exchange Act.

Accounting or Audit-Related Matters

The Audit Committee has established procedures for the receipt, retention and evaluation of complaints and submissions concerning accounting and audit-related matters, the features of which include insulation from management, safeguards for protecting anonymity and confidentiality of associate submissions, alternative methods for submissions, dedication of resources for investigations and the recording and preservation of findings.

The procedures are administered by the Audit Committee and a limited number of individuals in Regions’ corporate security, risk, legal and internal audit areas. Regions has notified its associates that the procedures are in place and how to direct a complaint or submission.

In addition, any interested party may communicate concerns regarding accounting, internal accounting controls or auditing matters directly to the attention of the Audit Committee as follows:

Regions Financial Corporation

Attention: Audit Committee Chair

c/o Office of the Corporate Secretary

1900 Fifth Avenue North

Birmingham, Alabama 35203

 
 

 

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Compensation Committee

 

The Compensation Committee currently consists of Don DeFosset (Chair), David J. Cooper, Sr., Ruth Ann Marshall, Susan W. Matlock and Lee J. Styslinger III.

Each member of the Compensation Committee must be independent as defined by the NYSE. Accordingly, all of our Directors who serve on the Compensation Committee are independent, qualify as a “non-employee director” within the meaning of Rule 16b-3 under the Exchange Act, and satisfy the requirement as an “outside director” for the purposes of IRC Section 162(m).

These Directors were selected for membership on the Compensation Committee based on the recommendation of the NCG Committee. The Compensation Committee has a written charter, which is posted on our website at www.regions.com and is reviewed and approved on an annual basis.

The purpose of the Compensation Committee is to assist the Board in:

 

(a) Fulfilling its responsibilities relating to the compensation of the Executive Officers;

 

(b) Ensuring that all executive compensation is fair, appropriate, reasonable, and in compliance with all applicable regulations; and

 

(c) Performing such other duties and responsibilities in accordance with its charter.

The Compensation Committee met seven times in 2014. The Compensation Committee regularly invited certain members of management to its meetings as it deemed appropriate, consistent with the maintenance of the confidentiality of compensation discussions. The CEO did not attend any portion of a meeting where his performance was evaluated or his compensation discussed.

The Compensation Committee has the additional authority and responsibilities relating to compensation matters to:

 

  Approve the Company’s compensation philosophy;

 

  Supervise and monitor the Company’s compensation plans and programs to determine whether they are properly aligned with the Company’s strategic and financial objectives and ensure that such employee compensation plans and programs are supportive of the Company’s Risk Appetite Statement as established by the Board and maintain the appropriate processes and procedures and sufficient personnel to manage compensation-related risks;

 

  Review and approve all Company goals and objectives relevant to the CEO’s compensation and evaluate the CEO’s performance in light of those goals and objectives;

 

  Determine the CEO’s compensation (including base salary, incentive compensation, long-term compensation, executive benefits, and perquisites);
  Approve the compensation of the Executive Officers and such senior officers as the Compensation Committee determines appropriate;

 

  Review and approve any employment agreement, new hire award or new hire payment proposed to be made with any proposed or current Executive Officer;

 

  Ensure that the compensation and other incentives granted to the Chief Risk Officer are consistent with providing an objective assessment of the risks taken by the Company, in consultation with the Risk Committee;

 

  Review and approve any severance, change-in-control or similar termination agreement, award or payment proposed to be made with any current or former Executive Officer;

 

  Approve the creation, termination and amendment of executive compensation plans;

 

  Approve any new equity compensation plan or any material change to an existing plan where stockholder approval is not required;

 

  Review and make recommendations as to the form and amount of Director compensation in connection with the NCG Committee;

 

  Retain and obtain the advice of any compensation consultant, outside legal counsel, or any such other advisors as it deems necessary or desirable to assist with the execution of its duties and responsibilities; and

 

  perform an annual self-evaluation.

The Compensation Committee meets at least on an annual basis with Regions’ CRO to review incentive compensation arrangements for employee compensation plans in order to identify any features that might encourage unnecessary and excessive risk-taking or manipulation of earnings.

The Compensation Committee also must prepare the report required to be included in this proxy statement. The Compensation Committee has approved such report, which appears on page 68.

Compensation Philosophy

In determining the long-term incentive award component of compensation for the Executive Officers, the Compensation Committee considers the Company’s performance for the year. The Compensation Committee may also take into consideration such items as relative stockholder return, the award practices of competitive financial institutions, the awards granted in past years, the Compensation Committee’s assessment of the current and expected contribution of the Executive Officer to the Company’s success, and such other factors as the Compensation Committee considers appropriate.

Compensation Committee Interlocks and Insider Participation

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

 

Chair

 

 

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Don DeFosset.

Other Members

 

 

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David J. Cooper, Sr.

 

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Ruth Ann Marshall

 

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Susan W. Matlock 

 

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Lee J. Styslinger III

 

 

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Chair

 

 

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Charles D. McCrary

Other Members

 

 

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David J. Cooper, Sr.

 

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John D. Johns

 

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Ruth Ann Marshall

 

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John E. Maupin, Jr.

Nominating and Corporate Governance Committee

 

The NCG Committee currently consists of Charles D. McCrary (Chair), David J. Cooper, Sr., John D. Johns, Ruth Ann Marshall, and John E. Maupin, Jr. All of these Directors are independent. The NCG Committee has a written charter, which is posted on our website at www.regions.com and is reviewed and approved on an annual basis.

The primary purpose of the NCG Committee is to assist the Board by:

 

(a) Identifying individuals qualified to become Board members; and

 

(b) Establishing and maintaining effective corporate governance policies and practices.

The NCG Committee has direct access to and open communication with management and may obtain advice and assistance from internal legal, accounting or other advisors. The NCG Committee is authorized to select, retain, terminate, and approve the fees of independent legal, accounting, or other advisors as it deems appropriate.

Each member of the NCG Committee must be independent as defined by the SEC and NYSE. In the absence of a Non-Executive Chairman of the Board, the NCG Committee Chair serves as the Lead Independent Director.

The NCG Committee meets as frequently as deemed necessary, but not less than three times per year. In 2014, the NCG Committee met six times.

The NCG Committee recommends to the Board the Director nominees for each annual meeting, and may recommend the appointment of qualified individuals as Directors between annual meetings.

The NCG Committee oversees and facilitates the annual evaluation of the performance of the Board, all committees and individual Directors.

The NCG Committee annually reviews and recommends any changes to its charter and the charters of the other standing Committees.

Further, the NCG Committee assesses the Board’s leadership structure, recommends the appropriate size of the Board, and makes an annual evaluation of the independence of each Director.

In addition, the NCG Committee will:

 

  Monitor Directors’ service on other boards to ensure that each Director has adequate time to appropriately serve on Regions’ Board;

 

  Make recommendations as to the appropriate stock ownership and compensation of non-employee Directors, in consultation with the Compensation Committee;

 

  Review and assess the Company’s Corporate Governance Principles and Code of Conduct;

 

  Oversee the Company’s management succession plan; and

 

  Oversee any amendment to the Company’s Certificate of Incorporation or By-Laws. The NCG Committee recommends to the Board the number,
   

identity and responsibilities of Board committees, including the Chair of each Committee and the membership of each Committee.

The NCG Committee assesses the skills, qualifications and experience of our Directors and each year recommends a slate of nominees to the Board. From time to time, the NCG Committee also evaluates changes to the composition of our Board. In evaluating existing Directors or new candidates, the NCG Committee assesses the needs of the Board and the qualifications of the individual. See the discussion on pages 24 through 29 for more information on each of our current Director nominees.

In consultation with the Chairman and CEO, the NCG Committee evaluates potential new candidates for Board membership, including candidates recommended by stockholders in compliance with procedures set forth in the By-Laws of the Company. Stockholders who wish to nominate Directors at an annual meeting in accordance with the procedures in our By-Laws should follow the instructions in the section Submission of Stockholder Proposals or Nominations for 2016 Annual Meeting of Stockholders on page 87.

The NCG Committee will seek Board members from diverse professional backgrounds who combine a broad spectrum of experience and expertise with a reputation for integrity, such that the Board will maintain an appropriate mix of skills and characteristics to meet the needs of the Company. The NCG Committee and the Board assess the qualifications of Director nominees based on criteria such as general business knowledge, an understanding of the financial services industry, experience in positions with a high degree of responsibility, leadership positions in the companies or institutions with which they are affiliated, and the contributions they can make to the Board and management.

Director nominees are evaluated based on their individual merits, taking into account the Company’s needs and the composition of the Board. Although the Board has not adopted a formal policy on diversity, the NCG Committee considers the diversity of Directors in the context of the Board’s overall needs. The NCG Committee evaluates diversity in a broad sense, recognizing the benefits of demographic diversity, but also considering the breadth of diverse backgrounds, skills, and experiences that Directors may bring to our Board.

To assist in its identification of qualified Directors, the NCG Committee reviews key qualifications and skills that are described on pages 22 and 23 of this proxy statement.

The NCG Committee may identify potential Directors in a number of ways, including recommendations made by current or former Directors or members of management and through contacts in the business, civic, academic, legal and non-profit communities. When appropriate, the NCG Committee may retain a search firm to identify candidates.

 
 

 

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  CORPORATE GOVERNANCE  

 

Risk Committee

 

The Risk Committee currently consists of George W. Bryan (Chair), Carolyn H. Byrd, Don DeFosset, Eric C. Fast, John D. Johns, James R. Malone and Susan W. Matlock. All of these Directors are independent and were selected for membership on the Risk Committee based on the recommendation of the NCG Committee.

The Chair of the Risk Committee, as designated by the Board, is required to be a Director who (i) is not an officer or employee of the Company; (ii) has not been an officer or associate of the Company during the previous three years; (iii) is not a member of the immediate family of a person who is, or has been within the last three years, a Regulation O executive officer of the Company; and (iv) is an independent director under Item 407 of SEC Regulation S-K. The Risk Committee must include at least one Director who has experience in identifying, assessing, and managing risk exposures of large, complex financial firms. Mr. Johns has been determined as the Risk Committee’s Risk Management Expert.

The Risk Committee has a written charter, which is posted on our website at www.regions.com and is reviewed and approved on an annual basis.

The Risk Committee is responsible for: (a) the risk management policies of the Company’s enterprise operations; (b) oversight of the Company’s risk management framework; and (c) the Board’s risk appetite parameters to be used by management to operate the Company.

Generally, Regions’ enterprise risks (including emerging risks) can be categorized as follows: legal risk, reputational risk, liquidity risk, credit risk, market risk, strategic risk, compliance risk and operational risk. The Risk Committee considers risk in relation to the potential for growth and increase in stockholder value.

The Risk Committee met six times in 2014. The Risk Committee has direct access to management, with open lines of communication. The Risk Committee meets separately with each of the CRO, Chief Credit Officer, the Credit Review Director, and Internal Audit Director at least quarterly, or more frequently if the Risk Committee deems advisable.

The Risk Committee oversees Regions’ enterprise risk management framework, including policies, procedures, strategies and systems established by management to identify, measure, mitigate, monitor and report major risks, including emerging risks and other enterprise risks.

The Risk Committee reviews and approves the level and nature of risks that Regions is willing to assume and communicates such approval in the form of a measurable Risk Appetite Statement.

The Risk Committee monitors the Company’s performance to ensure alignment with the tolerance levels articulated in the Risk Appetite Statement.

The Risk Committee ensures that the compensation of the CRO is consistent with providing an objective assessment of the risks taken by the Company.

In addition, the Risk Committee approves, at least annually, the contingency funding plan that sets out the Company’s strategies for addressing liquidity needs during liquidity stress events. The Committee will also receive written reports from an independent review function regarding material liquidity risk management.

The Risk Committee also has oversight of the Company’s fiduciary activities, including oversight of trust powers exercised by Regions Bank.

The Risk Committee receives information from the Risk Management team and other management groups, and advises management on the following items:

 

  Asset and liability management and trading activities.

 

  Compliance with asset/liability policies, limits, activities, and procedures.

 

  Operational risk, including information technology activities.

 

  Risks associated with the Company’s technology infrastructure.

 

  Business continuity planning.

 

  Non-credit losses and credit risk, including the level and adequacy of the allowance for loan and lease losses.

 

  Credit risk rating system.

 

  Compliance risk, reputational risk, legal risk and strategic risk.

 

  Market risk, including the oversight of funding activities and liquidity risk.

The Risk Committee has oversight of the Company’s Credit Review function, including approving the appointment of the Credit Review Director and reviewing his or her performance and compensation on an annual basis.

In addition, the Risk Committee has direct access to and open communication with management. The Risk Committee has complete authority to obtain advice and assistance from internal legal, accounting or other internal advisors. In the course of performing its duties and responsibilities, the Risk Committee is also authorized to select, retain, and terminate independent legal, accounting or other advisors as it deems appropriate, without seeking approval of management or the Board.

The Risk Committee coordinates with other Board Committees, as appropriate, concerning risk management matters within the other Committees’ respective areas of responsibility. The Risk Committee makes regular reports to the Board, communicates with the Company’s regulators when appropriate, and performs such other activities that it deems necessary or advisable to fulfill its purpose.

 

Chair

 

 

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George W. Bryan

Other Members

 

 

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Carolyn H. Byrd

 

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Don DeFosset

 

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Eric C. Fast

 

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John D. Johns

 

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James R. Malone

 

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Susan W. Matlock

 

 

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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

 

The consolidated balance sheets of Regions Financial Corporation and its subsidiaries as of December 31, 2014 and 2013, and the related consolidated statements of operations, other comprehensive income (loss), changes in stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2014, are included in Regions’ Annual Report on Form 10-K for the 2014 fiscal year. Regions, acting through its management and Board of Directors, has the primary responsibility for the financial statements and the reporting process, including the systems of internal accounting controls. Ernst & Young LLP, independent auditors engaged by Regions, are responsible for planning and conducting the annual audit, for expressing an opinion on the conformity of Regions’ audited financial statements with U.S. generally accepted accounting principles and for annually auditing the effectiveness of Regions’ internal controls over financial reporting.

The Audit Committee oversees Regions’ financial reporting process on behalf of the Board of Directors. In fulfilling its oversight responsibilities, the Audit Committee has reviewed and discussed the audited financial statements with Regions’ Management, including a discussion of the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments, the clarity of disclosures in the financial statements, the analysis of financial condition and results of operations, and the effectiveness of internal controls over financial reporting.

The Audit Committee has reviewed with Ernst & Young LLP their judgments as to the quality, not just the acceptability, of Regions’ accounting principles and such other matters as are required to

be discussed with the Audit Committee under auditing standards generally accepted in the United States, including the matters required to be discussed by Statement on Auditing Standards No. 61, as amended (AICPA, Professional Standards, Vol. 1 AU Section 380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T.

The Audit Committee has received the written disclosures and the letter from Ernst & Young LLP required by applicable requirements of the Public Company Accounting Oversight Board regarding Ernst & Young LLP’s communications with the Audit Committee concerning independence, and has discussed with Ernst & Young LLP their independence in relation to Regions.

The Audit Committee has discussed with Regions’ internal auditors and Ernst & Young LLP the overall scope and plans for their respective audits. The Audit Committee regularly meets with Regions’ internal auditors and Ernst & Young LLP, with and without management present, to discuss the results of their examinations, their evaluations of Regions’ internal accounting and financial reporting controls, and the overall quality of Regions’ financial reporting.

In reliance on the reviews and discussions referred to above, and subject to the limitations on the role and responsibilities of the Audit Committee referred to above and in the Audit Committee Charter, the Audit Committee approved including the audited financial statements in the Annual Report on Form 10-K for the year ended December 31, 2014, for filing with the SEC.

 

 

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

 

 

Our compensation and benefit programs operate under the guidance and oversight of the Compensation Committee of the Board (the “Committee”). The Committee is responsible to the Board for approving Regions’ executive compensation objectives and ensuring that the compensation programs and policies of the Company support the business goals and strategic plans approved by the Board including a commitment to a strong risk management culture. Throughout the following pages, we describe our executive compensation philosophy and the decisions we made in 2014. In this Compensation Discussion and Analysis (“CD&A”) we focus on the compensation of our Named Executive Officers (“NEOs”) for 2014 who were:

 

Name    Principal Position

O. B. Grayson Hall, Jr.

   Chief Executive Officer

David J. Turner, Jr.

   Chief Financial Officer

John B. Owen

   Head of Regional Banking Group

Fournier J. Gale, III

   General Counsel

C. Matthew Lusco

   Chief Risk Officer

One of the central principles of our executive compensation program is tying pay to Company performance. The operating environment during 2014 proved challenging for the banking industry as we experienced modest domestic economic improvement, sustained low market interest rates, global economic weakness, falling oil prices and elevated geopolitical tensions. For Regions particularly, the interest rate environment proved to be the biggest headwind to our financial performance. Despite the difficult operating environment, however, Regions continued to improve performance in a consistent and steady manner demonstrated by both quantitative financial results, as well as a number of qualitative strategic successes. The performance demonstrated in 2014 with respect to our five main strategic initiatives, as subsequently described, both supports our positive momentum and provides a solid foundation for future growth:

Strengthen Financial Performance

 

  Net income available to common stockholders increased to $1.103 billion for 2014 and represents the third best year of performance in our history.

 

  We increased our annual common dividend in 2014 by 80 percent from $0.10 per share to $0.18 per share and executed $256 million in share repurchases. Total stockholder return for the year was 8.63 percent and for the three-year period ending 2014, stockholder return was first in our performance peer group at 154.1 percent.

Enhance Risk Management

 

  Credit quality improved significantly in 2014 as net charge-offs declined $409 million or 57 percent.

 

  Loan loss provision declined from $138 million to $69 million as of the end of the year.

 

  Non-performing assets declined by $309 million or 24 percent and criticized commercial and consumer loans declined $413 million or 11 percent.

 

  Citing our improved risk profile, we received ratings upgrades from Standard & Poor’s, Fitch and DBRS and an outlook upgrade from Moody’s during the course of 2014.

Focus on the Customer

 

  Regions’ associates have a passion for service as evidenced through retail customer service scores and brand loyalty scores, which were both in the top quartile of companies measured by Gallup.

 

  We were recognized by the Temkin Group as the top rated bank in their 2014 National Customer Experience Rankings, scoring 10 points ahead of the banking average.

 

  In 2014, Regions won the J.D. Power Small Business Banking Satisfaction award for the South Region.

Build the Best Team

 

  For the second consecutive year, associate engagement scores improved. We are building on this positive trend by executing on new initiatives to maximize associate contributions, creating an organizational culture that is more open and transparent and provides opportunities for different opinions and perspectives to be heard.

 

  We reorganized the Company, creating separate divisions devoted to corporate and retail customers and strengthened our teams with important hires in support of these customers. We also increased our emphasis on sound risk management with the addition of experienced and talented associates throughout our risk management disciplines.

Manage Performance

 

  Our commitment to the Regions360TM relationship model has generated improved results in terms of loans, deposits, fees and accounts. Regions360 relationships increased 3 percent for the year, delivering customer account growth across 100 percent of our 19 markets and loan growth across 80 percent of our lending categories.

 

  We also extended our record of prudently managing expenses. We reduced full-year adjusted expenses1 for the fourth consecutive year in 2014, while continuing to invest in the talent and technology necessary to accelerate our momentum.

 

  Effective performance management also requires a strong risk management culture. In 2014, we rolled out our Risk Ownership and Awareness (“ROA”) initiative. As a core foundational discipline, execution on ROA, together with Regions360, leads to shared value. Creating shared value is about meeting the financial needs of our customers in a prudent and balanced manner that provides value for all involved. Successful execution creates long-term benefits for customers, stockholders, communities and associates and ultimately produces business success for the Company.
 

 

 

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:

 

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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 DISCUSSION AND ANALYSIS  

 

Compensation Philosophy and Objectives

 

 

A well-designed executive compensation program serves to attract, motivate and retain talented executives who can lead the Company in achieving strategic objectives that increase stockholder value, as well as protect the safety and soundness of the Company. This section discusses how we look at compensation and make the decisions that we do.

Our philosophy and decisions are founded on a set of five core guiding principles:

 

  1. Compensation targets should be set at competitive levels.

 

  2. Actual compensation levels should be related to performance with incentive, or “at risk,” compensation playing a greater role in the total compensation for more senior officers.

 

  3. Compensation should be aligned with the long-term interests of stockholders and consistent with the safety and soundness of the Company.
  4. Compensation programs and levels should not encourage associates to take unreasonable risks that may damage the long-term value of the Company.

 

  5. Compensation programs should align with our corporate values.

In applying these principles to our executive compensation program, the Committee must be thoughtful about program design. We believe that in order to ensure compensation delivered to our executives is balanced between near-term performance and progress toward our longer-term objectives, the Committee must exercise sound judgment. Therefore, while performance is measured based on objective criteria, a level of discretion and flexibility in the decision making process has been reserved as a critical component of the program.

 

 

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  COMPENSATION DISCUSSION AND ANALYSIS  

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   

 

Cash Base Salary. Base salaries are paid primarily to attract the level of talent we need and should be paid at a competitive level. Base salaries are adjusted as needed based on individual position, responsibilities, experience and contribution of the individual executive, as well as internal equity and taking into consideration market competitiveness and cost of living changes. Because base salaries impact other items of compensation such as the value of target annual incentives, as well as benefits such as pension and life insurance, the Committee also considers the impact of changes on these items before approving extraordinary changes in base salaries.

As noted in the previous table, in 2014 after review of all of these considerations, the Committee approved a modest increase in base salary for each of the NEOs.

Annual Cash Incentive Payments. Corporate performance must first meet a basic earnings requirement before any incentive is paid. For 2014, the Committee established a minimum threshold of $500 million in net income in order to fund the incentive pool. Net income for 2014 was $1.155 billion, and therefore, the potential incentive pool for our NEOs was funded at the maximum incentive opportunity, giving the Committee the latitude to determine actual incentive amounts based on other quantitative and qualitative performance objectives established at the beginning of the year.

Each of our NEOs earned annual cash incentives under a performance plan that considers corporate performance, as well as individual performance. For our NEOs, 80 percent of the annual bonus is based on corporate performance results as subsequently described. The remaining 20 percent is based on a qualitative evaluation of the individual’s performance with respect to our five main strategic priorities: Strengthen Financial Performance, Enhance Risk Management, Focus on the Customer, Build the Best Team, and Manage Performance.

Corporate performance is evaluated based on the achievement of goals in the areas of profitability, credit management, and customer service on an absolute basis compared to internal goals and expectations, as well as on a relative basis as compared to the performance of banks within our performance peer group. Seventy-five percent of the bonus determination is based on absolute results while 25 percent of the determination is based on peer comparisons on the same metrics.

Each year, the Committee weights each of the three main performance categories and establishes targets based on our financial plans, budgets and expectations for the year. At the beginning of 2014, the three major categories received performance weights as follows: (1) profitability – 50 percent; (2) credit management – 25 percent; and (3) customer service – 25 percent. Within each major performance category, the Committee also considers various measures that are important to demonstrating our performance within the category and establishes sub-metrics including specific goals and weightings for each.

Threshold, target and superior performance levels are set for each performance metric, and straight line interpolation of performance between points is utilized when measuring performance at the end of the year.

Although specific performance requirements are set at the beginning of the year, the Committee has reserved some discretion in the plan design to consider performance either on a GAAP or a non-GAAP adjusted basis. The Committee believes that blending the clarity provided by predetermined targets and expectations, together with the thoughtful application of discretion to consider items that should be excluded from performance calculations, provides the flexibility and judgment critical to the Committee’s ability to deliver incentive compensation that reflects both near-term performance results and progress toward longer-

 

 

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term objectives. This combination of fixed formulas combined with latitude in assessing performance based on the Committee’s informed judgment, allows for consideration of unanticipated market conditions and events that may impact operating performance. We believe that this latitude is important in mitigating risk as it reduces the potential that our executives may be encouraged to take actions with respect to unanticipated items based on the effect the actions may have on their incentive compensation, rather than based on the merits and impact that the actions may have on achieving our long-term goals and objectives.

Once the Committee makes its assessment of performance, incentive results also are subject to certain safety and soundness hurdles which are established at the beginning of the year. Compensation guidance issued by the Board of Governors of the Federal Reserve System (the “Federal Reserve”) to all banking institutions instructs companies that compensation plans should consider the “full range of current and potential risks including the cost and amount of capital and liquidity needed to support risks.” To address this principle, the Committee included two modifiers in the plan design that will reduce bonus payments if important safety and soundness measures are not achieved for the year. In the event Regions does not maintain liquidity and capital at levels determined to be vital to the safety and soundness of the organization, deductions (20 percent for each measurement) will be applied to the measured achievement of goals in the corporate factor performance component of the plan. In other words, even

if overall corporate performance meets the financial, credit management and customer service goals set by the Board, if that performance comes at the expense of capital and/or liquidity requirements, the portion of incentive compensation based on corporate performance may be reduced by up to 40 percent.

Following the end of 2014, the Committee met with members of executive management and its independent compensation consultant to review corporate and individual performance results for the year. In assessing corporate performance, the Committee exercised the discretion afforded in the plan design to review performance based on the financial results of the Company, excluding certain positive and negative “Adjusted” items, as reported to our stockholders in earnings releases and related annual reports and filings. The Committee believes these results most accurately reflect the performance of the Company as it relates to stockholder value. The Committee believes that excluding these adjusted items provides a more meaningful basis for comparisons to Regions’ internal goals as well as to the performance of peers in our performance peer group. The exclusion of these items impacts the Return on Average Assets, Return on Average Tangible Common Equity and Net Income sub-metrics within the profitability category. Appendix A to this proxy statement provides more detailed information with respect to the adjustments, including a complete reconciliation of GAAP to non-GAAP measurements.

 

 

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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As previously noted, our NEO annual incentives are based 80 percent on corporate performance and 20 percent on a qualitative assessment of individual performance. With respect to our CEO, Regions utilizes a formal process for the assessment of performance through which independent Board members provide a complete evaluation in the areas of leadership, strategic planning, financial performance management, customer relations, and management of personnel, communications and Board relations. In its performance deliberations, the Committee

had access to the input from the full Board and independently assessed the CEO’s performance achievement at 135 percent of target. In making their determination, the Committee particularly noted the Company’s financial performance in light of the slowness of the economic recovery and the extended and extraordinary low interest rate environment. The Board also cited the CEO’s leadership in rebuilding regulatory and investor confidence.

 

 

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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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   

 

Long Term Incentive Plan (“LTIP”) Grants. The Committee understands that deferring a large part of compensation plays an important role in linking incentives to risk outcomes or aspects of performance that become apparent only with the passage of time. The responsibilities of our NEOs are largely strategic in nature and risk outcomes may not be known for extended periods. Therefore, when making compensation decisions for 2014, the Committee made adjustments primarily in this compensation component. In addition to traditional continued service requirements, the Committee also elected to subject these awards to future safety, soundness and performance-based requirements.

The approach is simple and balanced in order to drive long-term performance, enhance retention, create alignment with stockholders and address longer-term risk concerns. Grants to NEOs in 2014 include three vehicles: (1) performance-based restricted stock unit awards (“PSUs”), (2) performance-based cash awards, and (3) restricted stock unit awards (“RSUs”) subject to vesting hurdles based on adherence to important safety and soundness measures.

 

The RSUs represent one-third of the entire award and include a three-year time-based vesting requirement, which means that the awards will generally not vest unless the executive remains employed until April 2017, the third anniversary of the grant. In addition, up to 40 percent of the award may be forfeited if Regions does not continually meet standards for liquidity and capital deployment designed to protect the safety and soundness of the Company.

The remaining two-thirds of the award is represented by performance-based awards which include a three-year service-based vesting requirement and are additionally subject to specific performance criteria to determine the ultimate value. The performance-based awards are split equally between PSUs and a performance-based cash award.

As previously noted, the Committee elected to issue the grants that are split equally among RSUs, PSUs and performance-based cash awards. The following table presents the total economic value of the grant (at target) and the division of the grant between each long-term vehicle:

 

 

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   

 

Vesting of both PSUs and performance-based cash is based on two measures: cumulative compounded Diluted Earnings Per Share (“EPS”) growth and Return on Average Tangible Common Equity (“ROATCE”). Each measure carries a 50 percent weight in determining the final value of the performance award. These operating measures were chosen for a number of reasons: (i) they are critical to the long-term success of the Company, (ii) they are transparent to stockholders and the NEOs, and (iii) when used together, they create healthy tension between profitability and the quality of earnings, which is important in protecting the safety and soundness of the organization.

Each metric is weighted equally and is measured based upon both absolute performance against Company goals over the next three years as well as an evaluation of our performance relative to our peers. We do this through the use of the matrix where the “X” axis represents our performance against the absolute goals

we set for ourselves over the next three years, and the “Y” axis represents our performance against banks selected as our performance peer group on these same measures. The rationale for this approach is to have a balanced look at performance.

Absolute Diluted EPS and ROATCE goals provide NEOs with a goal to strive for, but given ongoing marketplace volatility and a changing regulatory environment, establishing absolute goals and targets for a multi-year time period is challenging. We set the goals for this portion of the matrix measurement by considering financial and operational expectations set through our strategic planning process over the performance period of January 1, 2014 to December 31, 2016. In the opinion of the Committee, these goals and expectations represent challenging yet achievable levels of performance that both create stockholder value and protect the safety and soundness of the Company.

 

 

 

 

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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In addition to absolute performance, we also chose to consider our Diluted EPS and ROATCE performance relative to other banking competitors. Relative measurement mitigates the problems inherent with setting long-term goals in a volatile and uncertain environment, but if used as the single measurement could allow for the outcome of being the “best of the worst.” By

establishing absolute goals within a range of outcomes, coupled with performance against banks in our performance peer group, a matrix mitigates some of the challenges associated with setting precise goals that could incent imprudent risk taking on behalf of executives and avoids the “best of the worst” outcome that is possible with the exclusive use of relative measurement.

 

 

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.

 

We do not disclose the internal targets set for the three-year performance period in the above matrix as such disclosure could be construed as earnings guidance. As previously noted, we believe the target levels set represent challenging yet achievable levels of performance. Additionally, for awards granted in 2014, we subject them to a minimum cumulative Net Income threshold before any payment is made. While we do not disclose the actual threshold level, the requirement is approximately one-half of the cumulative amount we projected for the three-year period ending December 31, 2016 as a part of our strategic planning process.

Differences in How the Committee Views Compensation and SEC Reporting Requirements. In order to understand the decisions made by our Committee for 2014 and the value of the compensation granted to executives, it is important to understand the difference between what the Committee considers as current year compensation and what SEC rules and regulations require us to report. The values of 2014 long-term awards as considered by the Committee and shown in the table above differ from the values listed in the Summary Compensation Table on pages 69 through 71 and the Grants of Plan-Based Awards table on page 71 in two important ways.

The first difference is in how cash-based performance awards and equity awards are treated under SEC rules. As previously noted, the Committee elected to divide the total long-term award granted to our NEOs for 2014 into three equal portions including two equity denominated grants (RSUs and PSUs) and one cash-based grant (cash performance award). The value of equity denominated awards

are required to be reported by the SEC in the “Stock Awards” column of the Summary Compensation Table in the year they are granted, which is the same way the Committee considers these awards.

The final one-third of the award granted for 2014, the cash performance award, was awarded to be paid in cash following the end of the performance period in 2016. In accordance with SEC rules, while the grant of these cash-based awards is reported in the Grants of Plan-Based Awards Table in the year of grant (page 71), it is not reported in the Summary Compensation Table until the end of the applicable performance period. At that time, the value of the cash award earned will be reported in the column headed “Non-Equity Incentive Plan Compensation.”

Due to this difference, the Summary Compensation Table on pages 69 through 71 does not include the value of the cash performance award grant made by the Committee in 2014 to our NEOs but does include the final value of the cash performance award grant made to NEOs in 2012. When considering current year compensation, our Committee views long-term cash performance awards as compensation in the year that they are granted just as both the Committee and the SEC consider grants of long-term awards that are equity based.

In 2012, similar to 2014, our Committee awarded our NEOs a long-term incentive grant divided into three portions, one of which was a cash denominated award subject to a three-year performance period that ended at December 31, 2014. The following table sets forth the original value of the 2012 award, the performance metrics

 

 

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achieved for the performance period and the ultimate value of the award earned by NEOs as of the end of 2014:

 

LOGO

The second difference in how the Committee views compensation and how it is required to be reported relates to the two-thirds of our long-term incentive compensation grants that are made in the form of equity. As noted above, SEC rules require that companies report the value of equity denominated awards in the equity compensation column of the Summary Compensation Table in the year they are granted. This is the

same way the Committee considered these awards. However, there is a difference in the values noted in the previous table and the values noted in the aforementioned tables due to the way we determine the number of shares each NEO will receive after the Committee has established the economic value of an award.

To determine the number of PSUs and RSUs, we divide the award value granted by the 30-day average closing price of Regions common stock for the 30 calendar days preceding the grant date to determine the number of units to be granted. We use this method of averaging stock price over a period of time because it minimizes the potential impact of day-to-day stock price changes on the ultimate number of shares granted. This value for 2014 was $10.89. The Summary Compensation Table and the Grants of Plan-Based Awards table require us to report the grant date fair value of shares, determined in accordance with applicable accounting standards that require us to use the closing price of Regions common stock on the date of the grant in valuation. For 2014, the grant date value of shares was $11.25 per share. Because the closing price of shares on the date of the grant was greater than the 30-day average share price used to calculate the number of shares granted, the tables accompanying this CD&A reflect a higher value than considered by the Committee.

For further information, page 12 of this proxy statement includes an alternative compensation table that details the way the Committee views the compensation decisions made for 2014.

 

 

Other Benefits and Perquisites

 

 

In addition to the compensation elements described above, our NEOs participate in other benefit and perquisite programs, many of which are available to all associates.

Regions Retirement Plans. Regions sponsors both a defined benefit and a defined contribution (401(k)) retirement program. In addition to the descriptions below, the operation of these benefit plans and the value of the benefits that NEOs accrue under these plans are more fully described in the discussion that accompanies the Pension Benefits and Nonqualified Deferred Compensation tables on pages 73 through 75 of this proxy statement as well as in the Summary Compensation Table on pages 69 through 71.

(1) Regions Financial Corporation Retirement Plan (the “Retirement Plan”) and Supplemental Executive Retirement Plan (“SERP”). These plans are traditional defined benefit plans. The Retirement Plan is a tax-qualified plan under Section 401(a) of the Internal Revenue Code and our NEOs participate in this plan on the same basis as all associates. The SERP is a nonqualified plan that provides for benefits using the same general formula for benefit determination as is used in the Retirement Plan with three main differences: (1) the SERP definition of eligible compensation includes compensation that exceeds qualified plan limits and includes annual cash bonus payments that are not included in the qualified plan’s definition of compensation, (2) the SERP averages compensation over a consecutive three-year period rather than the consecutive five-year period utilized in the qualified plan, and (3) the SERP counts service up to 35 years while the qualified plan counts service only up to 30 years.

While participation requirements were impacted over time due to several corporate transactions, the Retirement Plan and the SERP generally were closed to new participants following our

last merger. Several of our executives participate in and continue to accrue benefits in these plans.

In addition, a limited number of Executive Officers are eligible for an alternative target retirement formula in the SERP as a result of a previously grandfathered arrangement. The alternative target benefit includes a more generous formula for determining retirement benefits, but was designed to be highly retentive as it includes significant vesting requirements. A participant must work for the Company for a minimum of 10 years and must reach age 60 before the alternative target benefits vest. Any termination of employment (except in the case of death, disability or a change-in-control) prior to reaching age 60 with a minimum of 10 years of service will result in a forfeiture of amounts attributable to the alternative target benefit in excess of the regular benefit.

As noted in the Pension Benefits table on page 74, all of our NEOs with the exception of Mr. Gale are eligible for a pension benefit. Mr. Hall and Mr. Owen are entitled to receive the alternative target benefit under the SERP; however, neither is currently vested in the benefit. Mr. Hall has accrued the minimum years of service required to vest in the benefit, but is not yet age 60. Mr. Owen has neither accrued the minimum number of years of service nor reached the minimum vesting age at this time. SEC rules require us to report the value of the benefit although it may not yet be vested; therefore, the numbers included in the Pension Benefits table (page 74) and in the column of the Summary Compensation Table relating to increases in pension benefits (page 70) include amounts not yet earned for Mr. Hall and Mr. Owen. Although Mr. Hall is not vested in the alternative target benefit, he has accrued vested benefits in the Retirement plan and the SERP utilizing the regular formula. Mr. Owen is only entitled to the alternative target benefit, and will receive no pension type benefit from the Company unless he meets the vesting requirements for the alternative target benefit in the future.

 

 

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Mr. Turner participates in both the Retirement plan and the SERP, but is not eligible for the alternative target benefit and his benefits are determined using the regular SERP calculations previously discussed. Mr. Lusco does not participate in the Retirement plan but is a participant in the SERP. His benefit is calculated using the regular SERP calculations previously discussed. In addition, Mr. Lusco’ s participation in the SERP is subject to important and significant vesting requirements. Mr. Gale was hired after the plans were closed to new associates and after he had already reached full retirement age; therefore he does not participate in either plan and will not receive any pension benefits from the Company.

The Pension Benefits description and table on pages 73 and 74 include a more detailed description of retirement benefits and a calculation of the value of pension benefits for each NEO. In addition, the Summary Compensation Table on pages 69 through 71 provides a figure that represents the change in the lump sum value of pension benefits from 2013 to 2014. Several factors influence the calculation of this change. First, as a result of the limitations of the Troubled Asset Relief Program on base and bonus opportunity, average pay as utilized in each plan’s benefit formula has been lower than normal for a portion of the averaging period. After returning to profitability and more normalized pay practices, average pay as calculated for plan benefit purposes increased in 2013 and 2014, therefore increasing the average pay taken into account in calculating the benefit. Further, additional years of service earned, the passage of time, and discount rates lower than historical averages have all played a role in producing a greater change in pension benefit than last year. For our CEO particularly, because pension benefits are calculated based on years of service with the Company, his long and tenured service also impacts the value of the benefit and the increase from year to year.

(2) Regions Financial Corporation 401(k) Plan (the “401(k) Plan”) and Supplemental 401(k) Plan. These plans are defined contribution plans and generally allow eligible associates to contribute on a pre-tax or Roth basis a portion of their total base and annual incentive compensation into investment accounts that are held and invested on a tax-deferred basis until termination of employment or retirement age. The 401(k) Plan is a tax-qualified 401(k) savings plan under Section 401(a) of the Internal Revenue Code in which all eligible associates can participate, while the Supplemental 401(k) Plan is a nonqualified plan for associates whose participation in the 401(k) Plan is generally limited due to tax-qualified plan wage and contribution limits. The Company makes a contribution to the plans equal to the deferral rate elected by the participant up to a maximum of 4 percent of pay. In addition to the Company matching

contribution, the Company also provides a non-contributory 2 percent allocation to the plan for any associate who does not participate in the Retirement Plan described above. In 2014, all of our NEOs participated in these plans and received the Company matching contribution of 4 percent of pay. In addition, because Mr. Gale is not a participant in the Retirement Plan or SERP previously described, he also was eligible for and received the additional non-contributory 2 percent allocation.

Perquisites. Our NEOs are eligible to participate in employee benefit programs generally available to all associates. While we generally do not offer a broad range of perquisites (“perks”) to our Executive Officers, we have provided certain personal benefits that are not generally available to the rest of our associates. The Committee periodically reviews the perks available to Executive Officers to determine whether these programs continue to serve the purpose of providing benefit to the Company. The Committee has historically discontinued any program that it determines is not based on sound business rationale.

In General. In 2014, NEOs continued to be eligible for financial planning services, Company-provided security coverage for private residences, certain relocation benefits and enhanced coverage for annual physicals. Any special benefits our NEOs received are included in the Summary Compensation Table on pages 69 through 71 of this proxy statement.

Use of Corporate Aircraft. The use of corporate aircraft is subject to a formal policy adopted by the Committee that sets forth the criteria and procedures applicable to any use of the aircraft.

It has long been our policy to require that our CEO use Company-owned or other non-commercial aircraft for business travel when possible. In addition, it is our policy to allow our CEO to travel for personal reasons up to a maximum value of $100,000 per year. In the event the value of personal use (as measured based on the incremental cost of operating the aircraft) exceeds $100,000 in any year, our policy requires the CEO to reimburse the Company the full incremental cost of operating the aircraft.

Mr. Hall is subject to an Aircraft Time Sharing Agreement with the Company that governs the terms and conditions of personal use of the aircraft. Although the policy and the agreement allow for personal use without cost up to $100,000 per year, Mr. Hall’s use in 2014 was limited and represented incremental cost to the Company of less than $30,000. The Board also has authorized the CEO to make corporate-owned aircraft available for the personal travel of other Company associates on a limited basis such as in the event of emergency or when personal use may be in the best interest of the Company due to efficiency and/or safety concerns.

 

 

Compensation Framework, Policies, Processes and Risk Considerations

 

 

As previously noted, our compensation and benefit programs operate under the guidance and oversight of the Compensation Committee of the Board. The Committee is composed of independent Directors who are not eligible to participate in any of the management compensation programs or other employee benefit or compensation plans of the Company, except for grants of equity compensation under the 2010 Long Term Incentive Plan. Board members who served as members of the Committee in 2014 include:

 

Members serving the entire year:

Don DeFosset–Chair beginning April 24, 2014

David J. Cooper, Sr.

Susan W. Matlock

Ruth Ann Marshall

Lee J. Styslinger III

Members serving for a partial year:

James R. Malone–Chair until April 24, 2014

Eric C. Fast–until April 2014

 

 

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Each of the Committee members has been determined to be independent as defined by NYSE rules and applicable SEC rules and regulations. The Committee operates under a written charter adopted by the Board. A copy of the charter is available at www.regions.com under Investor Relations/Corporate Governance.

Committee Meetings. The Committee holds meetings as often as it deems necessary to perform its duties and responsibilities, but in no case less than three times a year. Although many compensation decisions are made in the first quarter of the year, the decision-making process is continuous and neither ends nor begins with any one meeting. During 2014, the Committee met seven times to review, discuss and approve compensation decisions for the Company.

Prior to the start of each calendar year, the Board meets with members of executive management to discuss the business plans and goals for the Company for the coming year. Members of the executive management team advise the Board with respect to business plans, business risks, expected financial results and stockholder return expectations of the Company. Subsequently, there are a series of Committee meetings, including executive sessions (without executive management present), to review and approve all of the compensation plans and performance measures to be used to evaluate the CEO’s and other members of executive management’s performance for the coming year. The Committee consults with executive management regarding business plans and budgets in establishing performance targets and objectives. The Committee also consults with its independent compensation consultant and then establishes the base pay amount and incentive opportunities for the CEO. For other Executive Officers, the CEO reviews the performance of each officer and makes recommendations on base pay and annual and long-term incentive opportunities considering job performance, scope of responsibilities, and influence as well as internal equity considerations and the competitive market information provided by the consultant. The Committee discusses the CEO’s recommendations, usually in executive session, and approves the agreed upon results. The Committee also meets with the Chief Risk Officer (“CRO”) of the Company at least on an annual basis to review the Company’s incentive compensation programs in order to ensure that these programs do not encourage our associates to take unnecessary and excessive risks that may threaten the safety and soundness of Regions.

The Committee asks its independent compensation consultant to attend all regularly scheduled meetings, as well as some of the Committee’s special meetings. Other outside advisors, including legal counsel, also may attend meetings when the members feel additional guidance on specific topics is needed. Meetings are typically attended by the Chairman/CEO, the Director of Human Resources, and the Head of Compensation and Benefits for the Company. The Chief Financial Officer attends meetings at which Company budget and performance information is presented and representatives from the risk management function, including the Company’s CRO, attend meetings as needed and at least once a year to review risk assessments of the Company’s incentive

plans. The Committee also will hear from the heads of business groups of the Company with respect to details about the operation and effectiveness of incentive compensation programs in place within the business groups. From time to time, the Committee also may ask to hear presentations from other Company leaders regarding topics of interest to the Committee. Every Committee meeting, however, includes an executive session without the participation of any member of the executive management team. The independent compensation consultant typically participates in a portion of these executive sessions.

Independent Compensation Consultants. During 2014, the Committee engaged the firm of Frederic W. Cook & Co., Inc. (“Cook & Co.”) to serve as the independent compensation consultant to the Committee and to provide advice relating to Regions’ executive compensation programs and practices.

As one of the largest independent compensation consulting firms in the country serving as a consultant to a large number of Fortune 500 companies, the Committee believes that the consultants at Cook & Co. can advise the Committee on best practices for compensation governance, including practices outside of the financial services industry. The Committee has reviewed the independence of Cook & Co. as required under standards adopted by the NYSE as required by the SEC under the Dodd-Frank Act. The Committee discussed these considerations and concluded that the work of the consultant did not create any conflict of interest.

While the independent compensation consultant reports directly to the Committee, the Committee has instructed the consultant to work with Regions’ management to obtain information and further the goals of the Committee. Cook & Co. performs no work for executive management and provides no other services to Regions.

The scope of services provided by the independent compensation consultant for the Committee during 2014 included:

 

  Attending all Committee meetings;

 

  Providing the Committee with competitive market data to assist in establishing appropriate target levels for compensation components, such as base salary levels, annual incentives, and long-term performance awards, as well as benefit levels for executive management;

 

  Assisting the Committee with the review of and enhancements to existing annual incentive and long-term incentive programs;

 

  Advising the Committee in connection with year-end compensation determinations;

 

  Advising the Committee regarding regulatory and compliance issues and on the development of new best practices and market competitive information with respect to compensation guidelines established by the Federal Reserve and other banking regulatory bodies; and

 

  Providing current trend information on industry and executive compensation issues.
 

 

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Other Policies and Practices Impacting Compensation Decisions

 

 

Use of Peer Groups for Benchmarking Purposes. In determining market competitiveness for compensation, the Committee, with the assistance of its independent compensation consultant, regularly reviews the compensation of our Executive Officers against that of the Company’s compensation peer group as well as the financial services industry in general. The compensation peer group used by the Committee for evaluating compensation is not the same as the group of companies that make up the S&P 500 Banks Index, which is the index included in the stock performance chart presented in Regions’ Annual Report on Form 10-K for the year ending December 31, 2014. Our compensation peer group represents a smaller group of financial institutions tailored primarily by asset size and core business services. The Committee believes that the companies listed below have executive positions that are most similar in breadth and scope to Regions and represent the financial institutions that primarily compete with us for our top executive talent. Included in our compensation peer group are the following financial institutions:

 

•    BB&T Corporation

 

•    Capital One Financial Corporation

 

•    Comerica Incorporated

 

•    Fifth Third Bancorp

 

•    Huntington Bancshares Incorporated

  

•    KeyCorp

 

•    M&T Bank Corporation

 

•    The PNC Financial Services Group, Inc.

 

•    SunTrust Banks, Inc.

 

•    U.S. Bancorp

 

 

  
  

In addition to annually reviewing specific information with respect to the selected peer group, the Committee’s independent compensation consultant also periodically reviews the Company’s total compensation program against broader financial services industry survey data compiled by other sources (including compensation surveys prepared for the financial services industry by McLagan, a leading compensation consulting firm focused specifically on the financial services industry).

In addition to our compensation peer group, both our short-term annual incentive plan and our long-term plan use a peer group that we measure our performance against. The banks included in the S&P 500 Banks Index have formed the foundation for our performance peer group for a number of years. In 2013, however, the S&P 500 Banks Index experienced a slight change in make-up when First Horizon National Corporation (“First Horizon”) was dropped from the index. In considering the peer group against which to measure our performance for 2014, we chose to continue to include First Horizon in the performance peer group for a number of reasons, including providing continuity of year-over-year comparisons and because they operate a similar business model and are an in market competitor.

Included in our 2014 performance peer group are the following financial institutions:

 

•    BB&T Corporation