UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

SCHEDULE 14A

 

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.   )

 

 

Check the appropriate box:

 

M&T BANK 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):

 

 

 

 

 

 

 

 

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One M&T Plaza

Buffalo, New York

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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One M&T Plaza

Buffalo, New York 14203

March 7, 2019

Dear Shareholder,

You are cordially invited to attend the 2019 Annual Meeting of Shareholders of M&T Bank Corporation.  The Annual Meeting will be held at One M&T Plaza in Buffalo, New York, on Tuesday, April 16, 2019, at 11:00 a.m.

Shareholders will be asked to vote on the following matters:

 

 

Information about these matters can be found in the proxy statement.

Your vote is important.  Whether or not you plan to attend the Annual Meeting, please indicate your vote by promptly executing and returning the enclosed proxy card, or by voting by telephone or over the Internet.  Shareholders of record as of the close of business on February 28, 2019, the record date, are entitled to receive notice of and to vote at the Annual Meeting.

We urge you to vote for the election of the 18 nominees, to approve the M&T Bank Corporation 2019 Equity Incentive Compensation Plan, to approve, on an advisory basis, the 2018 compensation of M&T Bank Corporation’s Named Executive Officers, and to ratify the appointment of PricewaterhouseCoopers LLP as the independent registered public accounting firm of M&T Bank Corporation for the year ending December 31, 2019.

Sincerely,

RENÉ F. JONES

Chairman of the Board and

Chief Executive Officer

 

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IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 16, 2019

The Proxy Statement and 2018 Annual Report of M&T Bank Corporation (“M&T”) are available at https://ir.mtb.com/proxy.

YOUR VOTE IS IMPORTANT

It is important that your shares be represented and voted at the 2019 Annual Meeting of Shareholders.  If your shares of M&T common stock are registered in your name with M&T’s transfer agent, Computershare, you are considered to be a “shareholder of record” and your proxy materials were mailed directly to you.  You may vote in person at the meeting.  You may also vote your shares by telephone, over the Internet or by mailing your signed proxy card in the postage-paid envelope you were provided.  If your shares of M&T common stock are held by a broker, trustee, bank or other nominee, then that nominee is considered the shareholder of record and the shares are considered held in “street name” and you are the beneficial owner of the shares.  M&T provided its proxy materials to that nominee for distribution to you.  That nominee will also provide you with its voting instruction card.  As the beneficial owner of the shares, you have the right to direct your broker, trustee, bank or other nominee on how to vote and you are also invited to attend the meeting.  However, if you are a beneficial owner, you are not the shareholder of record and you may not vote your street name shares in person at the meeting unless you follow the instructions from your nominee, which includes obtaining a legal proxy from the nominee that holds your shares.  Please refer to the information your broker, trustee, bank or other nominee provided to you to determine what voting options are available to you.  New York Stock Exchange rules do not permit brokers to vote street name shares on “non-routine” matters such as the election of directors, approval of an equity incentive compensation plan, executive compensation and other “significant matters” unless they have received voting instructions from the beneficial owner.  M&T therefore encourages shareholders whose shares are held in street name to promptly direct their vote for all of the agenda items using the proxy instruction card sent by the broker, trustee, bank or other nominee.

DISCONTINUE MULTIPLE MAILINGS

If you are a shareholder of record and have more than one account in your name or at the same address as other shareholders of record, you may authorize M&T to discontinue mailings of multiple annual reports and proxy statements.  To discontinue multiple mailings, or to reinstate multiple mailings, please either mail your request to M&T Bank Corporation, Attention:  Shareholder Relations, One M&T Plaza, Buffalo, New York 14203, or send your request to Shareholder Relations via electronic mail at ir@mtb.com.

 

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One M&T Plaza

Buffalo, New York 14203

 

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

 

 

 

 

 

 

March 7, 2019

MARIE KING

Corporate Secretary

 

 

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TABLE OF CONTENTS

 

 

 

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PROXY STATEMENT

GENERAL INFORMATION – QUESTIONS AND ANSWERS

Why am I being provided this proxy statement?

M&T Bank Corporation (“we” or “M&T”) is providing this proxy statement to you because the Board of Directors is soliciting your proxy to vote your shares of M&T common stock at the 2019 Annual Meeting of Shareholders (the “Annual Meeting”), or any adjournment or adjournments thereof.  This proxy statement contains information about matters to be voted upon at the Annual Meeting and certain other information required by the U.S. Securities and Exchange Commission (“SEC”) and the New York Stock Exchange (“NYSE”).

We are first mailing this proxy statement and the accompanying form of proxy on or about March 7, 2019 to M&T common stock shareholders of record as of February 28, 2019.  A copy of M&T Bank Corporation’s Annual Report and Form 10-K for 2018, including financial statements, accompanies this proxy statement, but is not part of the proxy solicitation materials.

Where will the Annual Meeting be held and when?

The Annual Meeting will be held at One M&T Plaza in Buffalo, New York, on Tuesday, April 16, 2019, at 11:00 a.m.  M&T’s mailing address is One M&T Plaza, Buffalo, New York 14203, and its telephone number is (716) 842-5138.

Who is entitled to receive notice of and to vote at the Annual Meeting?

Common stock shareholders of record at 5:00 p.m. on February 28, 2019 are entitled to receive notice of and to vote at the Annual Meeting.  On February 28, 2019, M&T had outstanding 138,461,278 shares of common stock, $0.50 par value per share.  Each share of common stock is entitled to one vote.  Shares may not be voted at the Annual Meeting unless the owner is present or represented by proxy, as more fully explained in this proxy statement.

How can I vote by proxy?

You can vote by proxy by completing and returning the physical proxy card accompanying this proxy statement or by following the telephone or Internet voting procedures described on the proxy card or, if you hold your shares in street name, the voting instruction card you receive from your broker, trustee, bank or other nominee.  The telephone and Internet voting procedures are designed to authenticate that you are a shareholder by use of a control number and allow you to confirm that your instructions have been properly recorded.  If you are a shareholder of record, the method by which you vote will not limit your right to vote at the Annual Meeting if you later decide to attend in person.

 

 

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May I revoke my proxy?

How you hold your shares (shareholder of record or in street name) determines how and when you may revoke your proxy.  A shareholder of record may revoke a proxy that has been previously given at any time before it is exercised by giving written notice of such revocation or by delivering a later dated proxy, in either case, to the Corporate Secretary, at One M&T Plaza, Buffalo, New York 14203, or by voting in person at the Annual Meeting.  A beneficial owner of shares in street name must follow the instructions from his or her broker, trustee, bank or other nominee to revoke his or her previously given proxy.

How will my proxy be voted?

Your proxy will be voted in accordance with the directions you provide.  If you sign, date and return your proxy card but do not specify how you want to vote your shares, your shares will be voted FOR the election as directors of the 18 persons named under the section titled “NOMINEES FOR DIRECTOR”; FOR approving the M&T Bank Corporation 2019 Equity Incentive Compensation Plan; FOR approving, on an advisory basis, the 2018 compensation of M&T Bank Corporation’s Named Executive Officers; and FOR ratifying the appointment of PricewaterhouseCoopers LLP as the independent registered public accounting firm of M&T for the year ending December 31, 2019.

What is required for a quorum at the Annual Meeting?

The presence in person or by proxy of the holders of a majority of the outstanding shares of common stock constitutes a quorum for the transaction of business at the Annual Meeting.  Broker non-votes will be counted as being present or represented at the Annual Meeting for purposes of establishing a quorum, but, under NYSE rules, brokers will not be permitted to vote in the election of directors, approving the M&T Bank Corporation 2019 Equity Incentive Compensation Plan or on the advisory vote to approve the compensation of M&T Bank Corporation’s Named Executive Officers unless specific voting instructions are provided to the broker.  We therefore encourage beneficial owners of shares whose shares are held in street name to direct their vote for all agenda items on the form of proxy or instruction card sent by his or her broker, trustee, bank or other nominee.

What happens if an incumbent director nominee does not receive a majority of votes in favor of his or her election?

Pursuant to M&T’s Amended and Restated Bylaws, in an uncontested election of directors, the affirmative vote of a majority of the votes cast with respect to the nominee is required for the election of such nominee as a director, assuming a quorum is present or represented at the Annual Meeting.  If an incumbent director does not receive the required affirmative vote, that director would still be elected, but would be required to tender his or her resignation to the Board of Directors for consideration in accordance with M&T’s Amended and Restated Bylaws.

What approval is necessary to approve Proposals 2, 3 and 4?

For Proposal 2, the affirmative vote of a majority of the votes cast at the Annual Meeting is required to approve the M&T Bank Corporation 2019 Equity Incentive Compensation Plan, which, under NYSE rules and guidance applicable to shareholder approval of equity compensation plans, means that the number of votes cast “for” Proposal 2 must exceed the aggregate of the number of votes cast “against” Proposal 2 plus abstentions with respect to Proposal 2.  For each of Proposals 3 and 4, the affirmative vote of a majority of the votes cast at the Annual Meeting is required to approve, on an advisory basis, the 2018 compensation of M&T Bank Corporation’s Named Executive Officers and to ratify the appointment of PricewaterhouseCoopers LLP as the independent registered public accounting firm of M&T for the

 

 

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year ending December 31, 2019, which means, the number of votes cast “for” a proposal must exceed the number of votes cast “against” the proposal.

An abstention will not constitute a vote cast and therefore will not affect the outcome of the vote on the election of directors, the advisory vote to approve the 2018 compensation of M&T Bank Corporation’s Named Executive Officers, or the ratification of PricewaterhouseCoopers LLP as the independent registered public accounting firm of M&T for the year ending December 31, 2019.  With respect to approval of the M&T Bank Corporation 2019 Equity Incentive Compensation Plan, under NYSE rules and guidance applicable to shareholder approval of equity compensation plans, an abstention is treated as a vote cast and it will have the same effect as a vote “against” the approval of the M&T Bank Corporation 2019 Equity Incentive Compensation Plan.  Broker non-votes will not constitute votes cast for the election of directors, the approval of the M&T Bank Corporation 2019 Equity Incentive Compensation Plan or for the approval of the compensation of M&T Bank Corporation’s Named Executive Officers, and therefore will have no effect on the outcome of any of these proposals.

Who is paying for the solicitation of proxies?

M&T will bear the cost of soliciting proxies in the accompanying form of proxy.  We are making this solicitation by mail, by telephone and in person using the services of employees of M&T or its subsidiaries at nominal cost.  We will reimburse brokers, trustees, banks and other nominees for expenses they incur in mailing proxy materials to beneficial owners of M&T’s common stock.

How do I propose actions for the 2020 Annual Meeting of Shareholders?

SEC Rule 14a-8

In order for a shareholder proposal for the 2020 Annual Meeting of Shareholders to be eligible for inclusion in M&T’s proxy statement pursuant to SEC Rule 14a-8, we must receive the proposal at our principal executive offices no later than November 8, 2019.  You must provide your proposal to us in writing and it must comply with the requirements of SEC Rule 14a-8.

Advance Notice Procedures

M&T’s Amended and Restated Bylaws state that no business may be brought before an annual meeting of shareholders unless it is specified in the notice of the meeting or is otherwise brought before the meeting by the Board of Directors or by a shareholder entitled to receive notice of and to vote who has delivered notice to M&T (containing the information specified in M&T’s Amended and Restated Bylaws) no earlier than 150 days and no later than 120 days prior to the anniversary of the date on which M&T first mailed its proxy materials for the preceding year’s annual meeting of shareholders.  These advanced notice procedures are separate from the SEC’s requirements that a shareholder must meet in order to have a shareholder proposal included in M&T’s proxy statement pursuant to SEC Rule 14a-8.  A shareholder wishing to submit a proposal for consideration at the 2020 Annual Meeting of Shareholders should do so no earlier than October 9, 2019 and no later than November 8, 2019.

Proxy Access Procedures

M&T’s Amended and Restated Bylaws permit a shareholder, or a group of up to 20 shareholders, who has continuously owned at least 3% of the outstanding shares of M&T’s common stock for at least three years to nominate and include in our proxy statement for the annual meeting of shareholders director nominees constituting up to the greater of two directors or 20% of the total number of directors

 

 

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serving on the Board of Directors on the last day on which notice of a nomination may be delivered (known generally as “proxy access”).

The proxy access notice must be in writing and contain the information specified in M&T’s Amended and Restated Bylaws for a proxy access nomination and must be delivered no earlier than 150 days and no later than 120 days prior to the anniversary of the date on which M&T first mailed its proxy materials for the preceding year’s annual meeting of shareholders. A shareholder wishing to submit a proxy access notice regarding a nomination for the 2020 Annual Meeting of Shareholders should do so no earlier than October 9, 2019 and no later than November 8, 2019.

These proxy access procedures are separate from the advance notice procedures referred to above, from the SEC’s requirements that a shareholder must meet in order to have a shareholder proposal included in our proxy statement pursuant to SEC Rule 14a-8 referred to above, and from the procedures you must follow to submit a director nominee for consideration by the Nomination, Compensation and Governance Committee (the “NGC Committee”) as described in this proxy statement.

What do I have to bring in order to attend the Annual Meeting in person?

In order to be admitted to the Annual Meeting, you will need to bring a valid photo ID or other satisfactory proof of identification.  If you are a beneficial owner of shares in street name, you must also bring evidence of your M&T share ownership that can include a notice from your broker, trustee, bank or other nominee regarding the availability of these proxy materials or a recent account statement from the broker, trustee, bank, or other nominee that holds your shares and confirms your beneficial ownership of those shares.

 

 

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PROPOSAL 1

ELECTION OF DIRECTORS

Upon the recommendation of the NCG Committee, the Board of Directors recommends the following 18 persons for election as directors of M&T, to hold office until the 2020 Annual Meeting of Shareholders and until their successors have been elected and qualified.  Seventeen of the 18 nominees listed below were elected at the 2018 Annual Meeting of Shareholders.  

If any nominee for any reason, becomes unavailable for election, or if a vacancy occurs before the election (which events are not expected), it is intended that the shares represented by the proxies will be voted for such other person, if any, as the Board of Directors shall designate.

 

 

 

 

 

 

 

Each nominee’s business experience, including occupation, current public company directorships, and public company directorships held at any time during the past five years is provided.  Additionally, the specific experience, qualifications and skills, including education, of each nominee that was considered by the NCG Committee are listed.  The information with respect to each nominee is as of February 28, 2019 and includes each nominee’s affiliations with M&T’s subsidiary banks, Manufacturers and Traders Trust Company (also known as “M&T Bank”) and Wilmington Trust, National Association (“Wilmington Trust, N.A.”).  The information contained in this proxy statement concerning the nominees is based upon statements made or confirmed to M&T by or on behalf of such nominees, except to the extent certain information is contained in M&T’s records.

The Board of Directors believes that the experience, qualifications and skills of each of the director nominees contributes to an effective and well-functioning board providing oversight of M&T’s business and management.

 

 

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NOMINEES FOR DIRECTOR

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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ROBERT E. SADLER, JR.

 

 

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DIRECTOR COMPENSATION

The following table sets forth M&T’s 2018 compensation structure for directors’ fees (for directors who are not salaried officers of M&T or its subsidiaries):

Elements of 2018 Directors’ Fees

 

Pursuant to the terms of the M&T Bank Corporation 2008 Directors’ Stock Plan (“Directors’ Stock Plan”), each director can elect to receive payment of his or her annual compensation in cash, in shares of M&T common stock, or in a combination of cash and shares of common stock for services as a director or advisory director of M&T and its subsidiaries.  Compensation is paid at the end of each calendar quarter in an amount equal to one quarter of a director’s annual retainer and the meeting fees earned during such quarter.  All directors are entitled to reimbursement for travel expenses incidental to their attendance at meetings.  The Board of Directors has determined that no fees (retainer, attendance or otherwise) will be paid to a director who is a salaried officer of M&T or any of its subsidiaries, or to any director who receives payment for services provided to M&T or any of its subsidiaries immediately after ceasing to be a salaried officer.

The 2019 Equity Incentive Compensation Plan sets an annual limit on the aggregate amount of equity awards and cash fees paid to non-employee directors during a calendar year when an e.  

If the terms of the M&T Bank Corporation 2019 Equity Incentive Compensation Plan described in Proposal 2 are approved by shareholders, beginning in 2019, the maximum aggregate grant date value of shares of M&T common stock awarded to any non-employee director during any calendar year for services rendered as a non-employee director, taken together with any cash fees earned for services as a non-employee director during the calendar year, may not exceed $350,000 in total value.  In determining this dollar limit, the value of the awards will be calculated based on the grant date fair value of the awards for financial statement purposes.

 

 

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The following table sets forth the compensation of M&T’s directors in fiscal year 2018:

2018 Director Compensation

 

 

M&T Bank Corporation Directors’ Stock Plan

Pursuant to the terms of the Directors’ Stock Plan, each director can elect to receive payment of his or her annual compensation in cash, in shares of M&T common stock, or in a combination of cash and shares of M&T common stock for services as a director or advisory director of M&T and its subsidiaries.  The number of shares of M&T common stock paid is determined by dividing the amount of such compensation payable in shares of M&T common stock by the closing price of M&T’s common stock on the NYSE on the business day immediately preceding the day the compensation is payable.  Shares of M&T common stock received in payment of fees vest immediately upon grant.

M&T Bank Corporation 2019 Equity Incentive Compensation Plan

If the 2019 Equity Incentive Compensation Plan described in Proposal 2 is approved by shareholders, awards may be granted under the M&T Bank Corporation 2019 Equity Incentive Compensation Plan to non-employee directors.

 

 

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M&T Bank Directors’ Fees

M&T directors, who also serve as directors of M&T Bank, if not salaried officers of M&T or its subsidiaries, receive attendance fees for each M&T Bank board, council or committee meeting attended, unless any such meeting is held concurrently with a meeting of the M&T board or committee.  Except as described below, such attendance fees and the cash versus stock allocations are identical to the schedule of fees paid to directors of M&T for board and committee meetings attended described above.

Mr. Baird, as a member of the Directors Advisory Council of the New York City/Long Island Division of M&T Bank, received an annual retainer of $15,000 and a fee of $1,750 for each meeting he attended.  Mr. Cunningham, as Chairman of the Directors Advisory Council of the Hudson Valley Division of M&T Bank, received a fee of $1,000 for each meeting he attended.  Mr. Geisel, as Chairman of the Directors Advisory Council of the Baltimore-Washington Division of M&T Bank, received a fee of $300 for each meeting he attended.  Mr. Grossi, as a member of the Directors Advisory Council of the Baltimore-Washington Division of M&T Bank, received a fee of $300 for each meeting he attended.  Mr. Sadler, as Chairman of the Wilmington Trust, N.A. Florida Advisory Council, received a fee of $2,000 for each meeting he attended.  

 

 

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CORPORATE GOVERNANCE OF M&T BANK CORPORATION

Corporate Governance Standards

M&T’s Board of Directors believes that the purpose of sound and effective corporate governance is to ensure that shareholder value is maximized in a manner that is consistent with legal requirements and the highest standards of business ethics and integrity.  The Board has consistently adhered to corporate governance standards that the Board believes promotes this purpose.  The Board initially adopted corporate governance practices in 1997 and adopted formal corporate governance standards in 2003.  Annually, the Board evaluates, in light of best practices and regulatory guidance, its Corporate Governance Standards.

The Board last amended its Corporate Governance Standards in October 2018.  The current Corporate Governance Standards are available on M&T’s website at https://ir.mtb.com/corporate-governance.  These standards address, among other things, director qualifications and responsibilities, board committees, director compensation and independence, director orientation and continuing education, annual performance evaluations, corporate disclosure policy, controls and procedures regarding financial reporting and disclosure, and codes of business conduct and ethics.

Pursuant to M&T’s Amended and Restated Bylaws, in an uncontested election when a quorum is represented, the affirmative vote of a majority of the votes cast with respect to such director nominee is required for the election of that nominee as a director.  If an incumbent director in an uncontested election does not receive the affirmative vote of a majority of the votes cast with respect to such director, that director would still be elected, but would be required to tender his or her resignation to the Board of Directors.  The Board will then determine whether or not to accept such resignation, taking into account the recommendation of the NCG Committee.  The Board will publicly disclose, in a press release or SEC filing, its decision to accept or reject such resignation within 90 days after the certification of the election results.

Availability of Corporate Governance Standards

In addition to being available on M&T’s website at https://ir.mtb.com/corporate-governance, any shareholder can request copies of M&T’s Corporate Governance Standards, the charters for each of the Audit Committee, Risk Committee, NCG Committee, or the Executive Committee, as well as our Code of Business Conduct and Ethics, and our Code of Ethics for CEO and Senior Financial Officers.  To make a request, shareholders may either mail their request to M&T Bank Corporation, Attention:  Shareholder Relations, One M&T Plaza, Buffalo, New York 14203, or send such request to Shareholder Relations via electronic mail at ir@mtb.com.

Codes of Ethics

M&T makes its policies and procedures available to all of our employees.  These policies include our Code of Business Conduct and Ethics.  Further, M&T requires all employees to annually certify that they have read and are familiar with the employee policies and procedures and their content, including our Code of Business Conduct and Ethics, and that they will adhere to such policies and procedures.

 

 

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M&T’s Code of Business Conduct and Ethics applies to our directors, officers, advisors and employees, as well as to our agents and representatives, including consultants.  Our Code of Business Conduct and Ethics requires that individuals avoid conflicts of interest, comply with all laws and other legal requirements, conduct business in an honest and ethical manner, and otherwise act with integrity and in the best interests of M&T.  In addition, our Code of Business Conduct and Ethics expects individuals to report any observed illegal or unethical behavior and provides a retaliation-free reporting mechanism.  Our Code of Business Conduct and Ethics is a guide to help ensure that all individuals live up to the highest ethical standards.

M&T also maintains a Code of Ethics for CEO and Senior Financial Officers that applies to our Chief Executive Officer, Chief Financial Officer, Controller and all other senior financial officers designated by the Chief Financial Officer from time to time.  This Code of Ethics supplements our Code of Business Conduct and Ethics and is intended to promote honest and ethical conduct, full and accurate financial reporting and compliance with laws, as well as other matters.

Our Code of Business Conduct and Ethics and the Code of Ethics for CEO and Senior Financial Officers is available on M&T’s website at https://ir.mtb.com/corporate-governance.

In accordance with SEC rules, M&T will post on its website or file a Form 8-K to report any amendment to or waiver from any provision in the Code of Ethics for CEO and Senior Financial Officers that applies to our Chief Executive Officer, Chief Financial Officer, Controller, or persons performing similar functions.

Board Diversity

 

M&T strives to foster an inclusive workplace where we respect and value individual differences.  We believe that employee diversity enhances the organization’s ability to succeed at all levels.  Likewise, M&T values diversity among its Board members.  Our Corporate Governance Standards provide that the NCG Committee, in discharging its duties to review director nominee qualifications, consider experience, skill set and diversity in the context of Board needs and obligations.  In light of these guidelines, the NCG Committee endeavors to identify nominees that possess diverse educational backgrounds, business experiences, life skills, geographic representation and community involvement.  In addition, the Board should reflect gender, racial, sexual orientation, national origin and ethnic diversity.  Over 26% of our Board members represent these diverse constituencies (two women, two people of color, and one person from the LGBTQ community).  Also, the current directors range in age from 54 to 85; the average age is 68.  Half of our Board members were elected to the Board of Directors for the first time in the last five years.  The NCG Committee does not assign specific weight to any particular criteria; the goal is to identify nominees that, considered as a group, will possess the talents, skill sets and characteristics necessary for the Board of Directors to fulfill its responsibilities.

Board Independence

Pursuant to our Corporate Governance Standards, the Board conducts an annual review of director independence.  As a result of the review performed in February 2018, the Board determined, based upon the recommendation of the NCG Committee, that 14 of the 17 members then serving as directors met the NYSE standard for independence.  In February 2019, the Board conducted its annual director independence review and, based upon the recommendation of the NCG Committee, determined that of the 18 nominees standing for election as directors at the Annual Meeting, all of whom are currently serving as such, 14 meet the NYSE standard for independence.  Currently, only Messrs. Jones, Gold, Pearson and Sadler are not deemed to be independent.  

 

 

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The Board applies the standards of the SEC, NYSE and M&T’s Corporate Governance Standards to assist it in making independence determinations.  The Board considers all relevant facts and circumstances in determining whether a material relationship exists with M&T.  Material relationships that the Board may consider include commercial, banking, consulting, legal, accounting, industrial, charitable and family relationships.  The NYSE rules set forth specific relationships that will always bar independence.  Under the NYSE “bright-line” tests, each of the following relationships will automatically bar a director from being independent:  

An employee-director of M&T (or a director with an immediate family member who is an M&T executive officer) will not be independent until three years after the employment relationship ends.  The other bright-line tests will bar independence if they existed at any time during the prior three years.  

In making its determination as to the independence of the directors, the Board considered specific transactions, relationships and arrangements with directors and their immediate family members and any such person’s business affiliations.  For each of Mr. Hawke and Ms. Rich, the Board considered payments by M&T to a company (in the case of Ms. Rich, a travel agency with which she is affiliated and, in the case of Mr. Hawke, the international law firm in which he was formerly a partner and throughout 2018 was an employee with no share in the profits of the firm) for services in an amount that with respect to Ms. Rich’s affiliated travel agency did not exceed the greater of $1 million or 2% of such company’s consolidated gross revenues and with respect to Mr. Hawke’s law firm employer did not exceed $120,000.  The Board determined that neither Mr. Hawke nor Ms. Rich have a direct or indirect material interest in the transactions with the entities that M&T engaged for professional and transactional services.  Additionally, the Board considers ordinary course banking and financial services transactions provided by M&T and its subsidiaries as generally described in the section titled “TRANSACTIONS WITH DIRECTORS AND EXECUTIVE OFFICERS,” in making its determination as to independence.

With respect to the independence determination for Mr. Salamone, Mr. Salamone served as Chairman and Chief Executive Officer of Hudson City from September 2014 until the completion of the acquisition of Hudson City by M&T in November 2015.  Mr. Salamone was named Chairman and Chief Executive Officer of Hudson City in September 2014, during the period in which the merger between Hudson City and M&T awaited regulatory approval and following the unexpected death of Hudson City’s prior Chairman and Chief Executive Officer.  As provided for in the merger agreement with Hudson City, concurrent with the consummation of the merger, Mr. Salamone’s status as Chairman and Chief Executive Officer of Hudson City ended and he joined the Board of Directors as a non-employee Director.  Never having been employed by M&T and receiving no remuneration as such, Mr. Salamone is currently independent under SEC and NYSE rules.  As a result of a leading proxy advisory firm’s arbitrary five-year

 

 

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standard for director independence, he is viewed as an “insider” on the Audit Committee, which resulted in an adverse voting recommendation and a 70.42% approval vote for Mr. Salamone at the 2018 Annual Meeting of Shareholders.  Mr. Salamone faces similar issues for the 2019 and 2020 Annual Meetings of Shareholders after which he will have passed the fifth anniversary of the merger with Hudson City, thus being viewed as “independent” by the proxy advisory firms.  Mr. Salamone brings valuable public accounting experience to the Audit Committee.

The Board, upon the recommendation of the NCG Committee, considered all relevant facts and circumstances, including these transactions, relationships and arrangements and, consistent with the applicable independence standards, determined that none impair the relevant director’s independence as a director of M&T or as a member of any of the committees on which he or she serves.  Based on its review of all relevant information, the Board affirmatively determined that, other than Messrs. Jones, Gold, Pearson and Sadler, who do not meet the NYSE bright-line independence standards, each member of the Board of Directors is “independent” and does not have any material relationships with M&T or its subsidiaries.

Board Leadership Structure

Chairman and Lead Independent Director

Mr. Jones was elected as M&T’s Chairman of the Board and appointed Chief Executive Officer in December 2017, following the death of Robert G. Wilmers who had held those posts for more than 30 years.  Mr. Jones has been an employee of M&T for over 25 years and has been a member of executive management for 14 years.  The Board believes that in light of Mr. Jones’ significant broad-based experience with M&T, his leadership tenure with the organization, and his close working relationship with Mr. Wilmers, that the same leadership structure is appropriate for the Board of Directors as it fosters effective decision-making and clear accountability.  The Board adheres to the Corporate Governance Standards on this topic and annually elects a non-executive Vice Chairman of the Board of Directors who performs the duties of lead independent director.  Mr. Brady has served as the lead independent director since June 2015.  The lead independent director presides over the executive sessions of the non-management directors.

Executive Sessions of the Non-Management Directors

The non-management directors meet at regularly scheduled executive sessions without management.  Mr. Brady, Vice Chairman of the Board of Directors and the lead independent director, presides at these meetings.  In the absence of the lead independent director, the non-management directors determine which director will preside at such meetings.

Board’s Role in Risk Oversight

The Board of Directors has delegated its risk oversight duties to the Risk Committee.  At each Board meeting, the Board receives separate reports from the Chairman of the Risk Committee as well as the Chair of the Audit Committee.  In 2018, the Audit Committee and the Risk Committee held one joint meeting.  In addition, in 2018, the Executive Committee and Risk Committee held one joint meeting.  M&T’s risk governance committees, including the Management Risk Committee, which is the primary management-level risk committee, provide regular reports to the Risk Committee.  Further, M&T’s Chief Risk Officer provides regular reports directly to the Risk Committee and twice per year to the Audit Committee.

 

 

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Board Attendance

The Board of Directors held 11 meetings in 2018.  Each of the directors attended at least 75% of the total number of meetings of the Board and each committee on which the director served.

M&T’s Corporate Governance Standards encourage all members of the Board of Directors to attend its Annual Meeting of Shareholders, absent exigent circumstances.  Of the nominees standing for election at the Annual Meeting, 17 were elected at the 2018 Annual Meeting of Shareholders and 14 of those directors attended that meeting.

Communications with the Board of Directors

Any shareholder or other interested party wishing to communicate with the Board of Directors or any individual director may submit his or her written correspondence to M&T Bank Corporation’s Corporate Secretary, One M&T Plaza, Buffalo, New York 14203.  The Corporate Secretary may facilitate direct communications to the Board, the lead independent director, the non-management directors as a group, or individual directors, by reviewing and summarizing such communications.

Board Committees and Member Composition During 2018

 

 

 

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Audit Committee

The Audit Committee has the authority and responsibility to engage and discharge the independent registered public accounting firm, pre-approve all audit and non-audit services to be provided by such firm, review the plan and results of the auditing engagement, review management’s evaluation of the adequacy of M&T’s system of internal controls over financial reporting, direct and supervise investigations into matters within the scope of its duties, and perform the duties set forth in its written charter and such other duties as are required by applicable laws or securities exchange rules.  In addition, the Audit Committee serves as the Examining Committee for Wilmington Trust, N.A. and reviews the activities of the Examining Committee of M&T Bank.  Ms. Bontempo (Chair) and Messrs. Grossi, Salamone, Scharfstein and Washington served as members of the Audit Committee during 2018, and each currently serves as a member.  The Audit Committee held six meetings in 2018, including one joint meeting with the Risk Committee.

The Audit Committee is comprised solely of directors who are not officers or employees of M&T and who the Board has determined have the requisite financial literacy to serve on the Audit Committee.  The Board determined that no member of the Audit Committee has any material relationship with M&T that might interfere with the exercise of the member’s independent judgment and that each member meets the standards of independence established by the SEC and the NYSE.  In addition, the Board of Directors has determined that at least one member of the Audit Committee meets the NYSE standard of having “accounting or related financial management expertise.”  The Board, based upon the recommendation of the NCG Committee, after reviewing all relevant facts and circumstances, determined that Ms. Bontempo and Mr. Grossi each is an “audit committee financial expert.”  

The Audit Committee is governed by a written charter approved by the Board of Directors.  The Audit Committee Charter is available on M&T’s website at https://ir.mtb.com/corporate-governance.

Executive Committee

The Board of Directors has empowered its Executive Committee to act when the Board of Directors is not in session, during which time the Executive Committee possesses all of the Board’s powers in the management of the business and affairs of M&T Bank Corporation, except as otherwise limited by law.  Messrs. Sadler (Chairman), Baird, Brady and Jones served as members of the Executive Committee during 2018 and each currently serves as a member.  The Executive Committee met 11 times in 2018, including one joint meeting with the Risk Committee.  

The Executive Committee is governed by a written charter approved by the Board of Directors.  The Executive Committee Charter is available on M&T’s website at https://ir.mtb.com/corporate-governance.  

Nomination, Compensation and Governance Committee

The Nomination, Compensation and Governance Committee is responsible for evaluating the efforts of M&T and of the Board of Directors to maintain effective corporate governance practices and identifying candidates for election to the Board of Directors.  In addition, the NCG Committee is responsible for administering M&T’s equity compensation plans and awarding grants thereunder.  It administers various equity and incentive plans, including the M&T Bank Corporation Annual Executive Incentive Plan, the M&T Bank Corporation 2005 Incentive Compensation Plan, the Directors’ Stock Plan, the M&T Bank Corporation 2009 Equity Incentive Compensation Plan (“2009 Equity Incentive Compensation Plan”), the M&T Bank Corporation Employee Stock Purchase Plan and, if approved by

 

 

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shareholders, the 2019 Equity Incentive Compensation Plan described in proposal 2.  The NCG Committee recommends the remuneration and benefits of directors and Section 16 reporting officers of M&T and its subsidiaries.  It is also responsible for reviewing with management the Compensation Discussion and Analysis (“CD&A”) and providing a report recommending to the Board of Directors whether such CD&A should be included in the proxy statement.  Messrs. Baird (Chairman), Brady and Geisel served as members of the NCG Committee throughout 2018, and each currently serves as a member.  The NCG Committee held eight meetings in 2018.

The NCG Committee considers nominees for director that are recommended by various persons or entities, including, but not limited to, non-management directors, the Chief Executive Officer and other executive officers of M&T, and shareholders.  In evaluating all nominees for director, including those recommended by shareholders, the NCG Committee considers whether each nominee has all the requisite experience, attributes and qualifications for board membership and not just certain specific qualities or skills.  In addition, the NCG Committee takes into account any contractual rights that persons or entities have with respect to nominees for director.  

In considering nominees for director, including those recommended by shareholders, the NCG Committee reviews the qualifications and independence of the potential nominee in light of the composition of the current Board of Directors and its various committees.  This assessment includes, among other considerations, the potential nominee’s qualification as independent, diversity, age, skills, experience, tenure, contribution and appropriate geographic balance in the context of the needs of the Board of Directors and its committees.

The NCG Committee will consider candidates nominated by shareholders that are properly submitted in writing to M&T’s Corporate Secretary at One M&T Plaza, Buffalo, New York 14203 and received no earlier than 150 days and no later than 120 days prior to the anniversary of the date on which M&T first mailed its proxy materials for the preceding year’s Annual Meeting of Shareholders.  For the 2020 Annual Meeting of Shareholders, M&T’s Corporate Secretary must receive those nominations no earlier than October 9, 2019 and no later than November 8, 2019.

The NCG Committee is comprised solely of directors who are not officers or employees of M&T.  The Board determined that no member of the NCG Committee has any material relationship with M&T that might interfere with the exercise of the member’s independent judgment and that each member meets the standards of independence established by the SEC and the NYSE.

The NCG Committee is governed by a written charter approved by the Board of Directors.  The NCG Committee Charter is available on M&T’s website at https://ir.mtb.com/corporate-governance.

Risk Committee

The Risk Committee assists the Board of Directors in its oversight of M&T’s risk management function, including the strategies, policies, procedures and systems established by management to identify, assess, measure and manage the major risks facing M&T.  In discharging its duties of risk oversight, the Risk Committee provides input to management on risk appetite, risk profile and regulatory requirements and approves the effectiveness of M&T’s risk management framework.  Messrs. Hawke (Chairman), Cunningham and Geisel served as members of the Risk Committee throughout 2018, and each currently serves as a member and Mr. Sadler served on the Risk Committee until he voluntarily resigned therefrom effective September 14, 2018.  The Board of Directors appointed Mr. Ledgett to the Risk Committee effective February 20, 2019.  The Risk Committee held 13 meetings in 2018, including one joint meeting with the Audit Committee and one joint meeting with the Executive Committee.

 

 

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Regulation YY promulgated by the Federal Reserve Board (“FRB”) in February 2014, requires that publicly traded bank holding companies with total consolidated assets of $50 billion or more must maintain a risk committee chaired by an independent director and include at least one member meeting the FRB standards of experience in identifying, assessing and managing risk exposures of large, complex financial firms commensurate with the company’s structure, risk profile complexity, activities and size (a “risk management expert”).  The Board, based upon the recommendation of the NCG Committee, after reviewing all relevant facts and circumstances, determined that Messrs. Cunningham and Geisel each is a “risk management expert.”  

The Risk Committee is governed by a written charter approved by the Board of Directors.  The Risk Committee Charter is available on M&T’s website at https://ir.mtb.com/corporate-governance.

NOMINATION, COMPENSATION AND GOVERNANCE COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Messrs. Baird (Chairman), Brady and Geisel served as members of the NCG Committee throughout 2018, and each currently serves as a member.  No individual who served as a member of the NCG Committee during 2018 was at any time an officer or employee of M&T or any of its subsidiaries.

The Board of Directors determined that all members of the NCG Committee are independent and have no financial or personal relationships with M&T requiring disclosure pursuant to the SEC rules (other than director compensation, equity ownership and transactions made in the ordinary course of business with its banking or other operating subsidiaries as described in this proxy statement).

 

 

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STOCK OWNERSHIP INFORMATION

The tables below set forth direct and indirect ownership of common stock by each of our directors, each of the named executive officers, all directors and executive officers as a group, and by each person who is known to be the beneficial owner of more than 5% of M&T’s common stock as of February 28, 2019 together with the percentage of total shares outstanding represented by such ownership based upon 138,461,278 shares outstanding as of February 28, 2019.

For purposes of these tables, beneficial ownership has been determined in accordance with the provisions of Rule 13d-3 of the Exchange Act, where, in general, a person is deemed to be the beneficial owner of a security if such person has or shares the power to vote or to direct the voting of the security or the power to dispose or to direct the disposition of the security, or if such person has the right to acquire the beneficial ownership of the security within 60 days.

Directors and Named Executive Officers Stock Ownership

 

 

 

 

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M&T Bank Corporation Insider Trading Policy

All of M&T’s directors, officers and employees are subject to M&T’s Insider Trading Policy which prohibits short-term trading in M&T’s securities, including but not limited to, the use of such strategies as exchange-traded options and the use of puts and calls, caps and collars and short sales.  This policy effectively serves as an anti-hedging policy.

The following table sets forth certain information with respect to all persons or groups known by M&T to be the beneficial owners of more than 5% of its outstanding common stock as of February 28, 2019.

Beneficial Owners Holding More Than 5% of M&T Bank Corporation’s Common Stock

 

 

 

 

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M&T is the sponsor of a number of employee benefit plans that hold an aggregate of 3,062,065 shares of M&T common stock as of February 28, 2019.  Its principal banking subsidiary, M&T Bank, has sole voting authority over 875,423 of these shares.  The remaining 2,186,642 shares of M&T common stock are voted by the trustee of the applicable employee benefit plan pursuant to the instructions of the participants in accordance with the terms of each such plan.  Certain of the directors and executive officers of M&T hold indirect beneficial interests in the holdings of these employee benefit plans.  See also footnotes (5) and (7) to the table set forth above titled “Directors and Named Executive Officers Stock Ownership.”

Section 16(a) Beneficial Ownership Reporting Compliance

Under Section 16(a) of the Exchange Act, M&T’s directors and our Section 16 reporting officers, and persons who beneficially own more than 10% of M&T’s outstanding shares of common stock are required to report their beneficial ownership of the common stock and any changes in that beneficial ownership to the SEC and the NYSE.  M&T believes that these filing requirements were satisfied by all of its directors and Section 16 reporting officers during 2018.  In making the foregoing statement, M&T relied on copies of the reporting forms received by it or on the written representations from such reporting persons that no additional forms were required to be filed under the applicable rules of the SEC.

TRANSACTIONS WITH DIRECTORS AND EXECUTIVE OFFICERS

Directors and executive officers of M&T and their immediate family members and affiliated entities are, and have been, customers of, and have had transactions with the banking and other operating subsidiaries of M&T, and additional transactions may be expected to take place in the future between such persons and M&T’s subsidiaries.  Any financial services provided to directors, executive officers and their immediate family members and affiliated entities are offered in the ordinary course of business, upon substantially the same terms and conditions, including price, as we provide to similarly situated customers.  M&T’s subsidiary banks also extend credit to some of the directors and their immediate family members and affiliated entities.  All such extensions of credit outstanding at any time since January 1, 2018, comply with our policies and procedures and Federal Reserve Board Regulation O.  All extensions of credit were made in the ordinary course of business on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans with persons not related to M&T or its subsidiary banks, and did not involve more than the normal risk of collectability or present other unfavorable features.  As described in “Board Independence” under the section titled “CORPORATE GOVERANCE OF M&T BANK CORPORATION,” such related party or affiliate transactions are one factor considered by the Board of Directors in its review of director independence.

M&T’s Code of Business Conduct and Ethics, which is applicable to our directors, officers, advisors and employees, as well as to our agents and representatives, including consultants, requires that individuals avoid conflicts of interest, comply with all laws and other legal requirements, conduct business in an honest and ethical manner, and otherwise act with integrity and in the best interests of M&T.  The Code of Business Conduct and Ethics expects individuals to report any observed illegal or unethical behavior and provides a retaliation-free reporting mechanism.  We use a combination of our policies and established review procedures, including adherence to NYSE standards, to ensure related party transactions are reviewed, approved and ratified, as appropriate. We do not maintain these policies and procedures under a single written policy.

 

 

 

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PROPOSAL 2

APPROVAL OF THE M&T BANK CORPORATION 2019 EQUITY INCENTIVE COMPENSATION PLAN

 

Background and Purpose

The Board of Directors is asking shareholders to approve the M&T Bank Corporation 2019 Equity Incentive Compensation Plan (the “2019 Equity Incentive Compensation Plan”).  On January 15, 2019, the Board of Directors unanimously approved the 2019 Equity Incentive Compensation Plan, subject to shareholder approval and, accordingly, the Board of Directors directed that the 2019 Equity Incentive Compensation Plan be submitted to the shareholders of M&T for approval at the 2019 Annual Meeting of Shareholders.

The 2019 Equity Incentive Compensation Plan is a new equity compensation plan for our employees, non-employee directors, and members of M&T’s (or its affiliates’) Directors Advisory Councils or any successor thereto (“Key Advisors”).  The 2019 Equity Incentive Compensation Plan replaces the 2009 Equity Incentive Compensation Plan, which by its terms expires with respect to the ability to issue new awards on April 21, 2019.  No further awards will be made under the 2009 Equity Incentive Compensation Plan if the 2019 Equity Incentive Compensation Plan is approved by shareholders and, in any event, on or after April 21, 2019.  Outstanding awards previously granted under the 2009 Equity Incentive Compensation Plan shall continue in effect in accordance with their terms.

The Board of Directors is seeking shareholder approval of the 2019 Equity Incentive Compensation Plan in order to (i) meet NYSE listing requirements, (ii) establish a limit on annual compensation of non-employee directors, (iii) allow incentive stock options awarded under the 2019 Equity Incentive Compensation Plan to meet the requirements of the Internal Revenue Code of 1986, as amended (the “Code”) and (iv) conform to good corporate governance.

The purpose of the 2019 Equity Incentive Compensation Plan is to promote the success of M&T and its affiliates by providing incentives to employees, non-employee directors, and Key Advisors that will link their personal interests (i) to the financial success of M&T and its affiliates, and (ii) to growth in shareholder value.  The Board of Directors and management believe the ability to make equity awards enhances M&T’s ability to attract and retain qualified employees, non-employee directors and Key Advisors.  The Board of Directors also believes it is in the best interest of M&T and its shareholders to recognize the contributions of its employees, non-employee directors and Key Advisors in the success of M&T by providing an incentive for those employees, non-employee directors and Key Advisors to continue their service with M&T and its affiliates.  Furthermore, as described in the CD&A section of this proxy statement as part of M&T’s compensation policy, equity-based compensation is a significant component of M&T’s total compensation program, particularly with respect to its executive officers.  

Determination of the Number of Shares Available for Awards under the 2019 Equity Incentive Compensation Plan

If this Proposal 2 is approved by our shareholders, subject to adjustments as described in the 2019 Equity Incentive Compensation Plan, the maximum aggregate number of shares of M&T common stock that may be issued under the 2019 Equity Incentive Compensation Plan will be 4,333,428.  In addition, subject to adjustments described in the 2019 Equity Incentive Compensation Plan, the

 

 

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number of shares of common stock subject to outstanding awards under the 2009 Equity Incentive Compensation Plan on the effective date of the 2019 Equity Incentive Compensation Plan that are not issued under the 2009 Equity Incentive Compensation Plan due to forfeiture, termination, surrender, cancellation or expiration of any such award after the effective date of the 2019 Equity Incentive Compensation Plan will be available for issuance under the 2019 Equity Incentive Compensation Plan (up to 956,905 shares).

In determining the number of shares to be authorized for issuance under the 2019 Equity Incentive Compensation Plan, the Board of Directors worked with McLagan, an Aon company (and the independent compensation consultant to the NCG Committee of the Board of Directors), and considered a number of factors, including the expiration of the 2009 Equity Incentive Compensation Plan as to new awards on April 21, 2019, our past share usage (referred to as “burn rate”), the number of shares needed for future awards, a dilution analysis, competitive data from relevant peer companies, the current and future accounting expenses associated with our equity award practices, and input from our shareholders.  No additional awards will be made under the 2009 Equity Incentive Compensation Plan if the 2019 Equity Incentive Compensation Plan is approved by our shareholders.  As of December 31, 2018, 2,833,428 shares remain available for awards under the 2009 Equity Incentive Compensation Plan.  The Board of Directors took such shares into account when determining the number of shares to be available under the 2019 Equity Incentive Compensation Plan.

If the M&T Bank Corporation 2019 Equity Incentive Compensation Plan is approved by shareholders, beginning in 2019, the maximum aggregate grant date value of shares of M&T common stock awarded to any non-employee director during any calendar year for services rendered as a non-employee director, taken together with any cash fees earned for services as a non-employee director during the calendar year, may not exceed $350,000 in total value.  In determining this dollar limit, the value of the awards will be calculated based on the grant date fair value of the awards for financial statement purposes.  This annual aggregate limit on compensation was established based on current and expected levels of director compensation and a review conducted by McLagan of the compensation of non-employee directors at our peer group companies.

Dilution Analysis

As of February 28, 2019, M&T has 138,461,278 shares of common stock outstanding.  The proposed share authorization is a request for a total of 4,333,428 shares consisting of 1,500,000 new shares under the 2019 Equity Incentive Plan plus 2,833,428 shares available under the 2009 Equity Incentive Plan.  The table below shows our potential dilution levels based on common stock outstanding as of February 28, 2019, our new share request and our total equity awards outstanding as of December 31, 2018. The Board of Directors believes that the number of shares of common stock under the 2019 Equity Incentive Compensation Plan represents a reasonable amount of potential equity dilution, and will allow M&T to continue granting equity awards. Equity awards are an important component of M&T’s equity-based compensation program.

 

 

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Potential Dilutive Impact of the Share Request

 

 

Based on our historic and projected future usage patterns, the Board of Directors estimates that the shares requested under the 2019 Equity Incentive Compensation Plan will be sufficient to provide awards under the 2019 Equity Incentive Compensation Plan for approximately 4 years.  Share reserves could be used more quickly or more slowly depending on increases or decreases in the price of our common stock, award amounts provided by our competitors, hiring activity, and promotions during the next few years.

 

 

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Burn Rate

The table below sets forth the following information regarding the awards granted under the 2009 Equity Incentive Compensation Plan: (i) the burn rate for each of the last three calendar years and (ii) the average burn rate over the last three calendar years. The burn rate for a year has been calculated as follows:

Burn Rate

 

The burn rate means that M&T used an annual average of 0.32% of the weighted average shares outstanding for awards granted or earned over the past three years.

Summary of the 2019 Equity Incentive Compensation Plan

The material terms of the 2019 Equity Incentive Compensation Plan are summarized below. A copy of the full text of the 2019 Equity Incentive Compensation Plan is attached to this proxy statement as Appendix A. This summary of the 2019 Equity Incentive Compensation Plan is not intended to be a complete description of the 2019 Equity Incentive Compensation Plan and is qualified in its entirety by the actual text of the 2019 Equity Incentive Compensation Plan to which reference is made.

Purpose. The purpose of the 2019 Equity Incentive Compensation Plan is to promote the success of M&T and its affiliates by providing incentives to employees, non-employee Directors and Key Advisors that will align their personal interests to the financial success of M&T and its affiliates and to growth in shareholder value. The Board of Directors and management believe that the ability to make equity awards enhances M&T’s ability to motivate, attract and retain qualified employees and service providers.

To provide a sufficient pool of equity for M&T to attract and retain talent over the next several years, M&T has adopted the 2019 Equity Incentive Compensation Plan, subject to shareholder approval, which is intended to replace the 2009 Equity Incentive Compensation Plan. No further grants will be made under the 2009 Equity Incentive Compensation Plan, but, as described in the section entitled “Shares Available for Issuance” below, shares subject to outstanding awards under the 2009 Equity Incentive Compensation Plan on the effective date of the 2019 Equity Incentive Compensation Plan that are not issued under the 2009 Equity Incentive Compensation Plan due to forfeiture, termination, surrender, cancellation or expiration of such award after the effective date of

 

 

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the 2019 Equity Incentive Compensation Plan will be available for issuance under the 2019 Equity Incentive Compensation Plan (up to 956,905 shares).

Administration

The 2019 Equity Incentive Compensation Plan will be administered by a committee appointed by the Board of Directors consisting of three or more outside, independent members of the Board of Directors each of whom is (i) a “non-employee director” as defined in Rule 16b-3 of the Exchange Act and (ii) “independent” under the rules and regulations of the NYSE (or other stock exchange on which the M&T common stock is traded).  The Board of Directors has appointed the NCG Committee to administer the 2019 Equity Incentive Compensation Plan.

The NCG Committee will have full power to administer the 2019 Equity Incentive Compensation Plan, including the power to determine who will receive awards under the 2019 Equity Incentive Compensation Plan, the number of shares of M&T common stock that will be subject to the awards, the terms, conditions and form of the awards and to determine whether the vesting of any award will be accelerated.

The NCG Committee will have discretionary authority to interpret the 2019 Equity Incentive Compensation Plan and the award agreements evidencing the awards, prescribe, amend and rescind rules and regulations relating thereto, and make all other determinations deemed necessary or advisable for the administration of the 2019 Equity Incentive Compensation Plan and the awards granted thereunder.  To the extent permitted by the 2019 Equity Incentive Compensation Plan and subject to compliance with applicable law and applicable stock exchange requirements, the NCG Committee may also delegate its authority under the 2019 Equity Incentive Compensation Plan to our Chief Executive Officer or to other officers of M&T.  All determinations and decisions of the NCG Committee or its delegate will be final, conclusive and binding on all persons.

Shares and Other Limits

Shares Available for Issuance. The total number of shares of M&T common stock that may be issued pursuant to awards under the 2019 Equity Incentive Compensation Plan may not exceed 4,333,428, subject to adjustment as described below.  In addition, the number of shares of common stock subject to outstanding awards under the 2009 Equity Incentive Compensation Plan on the effective date of the 2019 Equity Incentive Compensation Plan that are not issued under the 2009 Equity Incentive Compensation Plan due to forfeiture, termination, surrender, cancellation or expiration of any such award after the effective date of the 2019 Equity Incentive Compensation Plan will be available for issuance under the 2019 Equity Incentive Compensation Plan (up to 956,905 shares), subject to adjustment as described below.  Similarly, to the extent that shares of M&T common stock subject to an outstanding award under the 2019 Equity Incentive Compensation Plan are not issued by reason of forfeiture, termination, surrender, cancellation, or expiration of such award or by reason of being settled in cash in lieu of shares of M&T common stock, then such shares will immediately again be available for issuance under the 2019 Equity Incentive Compensation Plan.  Shares issued under the 2019 Equity Incentive Compensation Plan may consist, in whole or in part, of authorized and unissued shares or treasury shares, including shares that have been reacquired by M&T in the open market, in private transactions, or otherwise, to fulfill its obligations under the 2019 Equity Incentive Compensation Plan.  Fractional shares will not be issued under the 2019 Equity Incentive Compensation Plan.

If stock appreciation rights are granted under the 2019 Equity Incentive Compensation Plan, the full number of shares subject to the stock appreciation rights will be considered issued under the 2019

 

 

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Equity Incentive Compensation Plan, regardless of the number of shares of M&T common stock actually issued upon exercise of the stock appreciation rights.  Shares of M&T common stock that are surrendered in payment of the exercise price of an option (including an option granted under the 2009 Equity Incentive Compensation Plan) will not be available for issuance under the 2019 Equity Incentive Compensation Plan.  Shares of M&T common stock that are withheld or surrendered in satisfaction of withholding taxes, or surrendered for the payment of taxes, with respect to awards (including awards granted under the 2009 Equity Incentive Compensation Plan) will not be available for issuance under the 2019 Equity Incentive Compensation Plan.  For the avoidance of doubt, if M&T repurchases shares of M&T common stock on the open market with the proceeds received from the exercise price of stock options, the repurchased shares will not be available for issuance under the 2019 Equity Incentive Compensation Plan.

Award Limits.  The maximum number of shares of common stock that may be issued under the 2019 Equity Incentive Compensation Plan pursuant to the exercise of “incentive stock options” as defined in Section 422 of the Code, is 4,333,428 shares of common stock, subject to adjustment as described below.  The maximum number of shares of common stock that may be subject to awards granted to any employee or Key Advisor under the 2019 Equity Incentive Compensation Plan in any calendar year will not exceed 300,000 shares of common stock in the aggregate, subject to adjustment as described below.

Non-Employee Director Compensation Limits.  The maximum aggregate grant date value of shares of common stock subject to awards made to any non-employee director during any calendar year for services rendered as a non-employee director, including any cash fees earned for services rendered as a non-employee director during the calendar year, will not exceed $350,000 in total value.  In determining this dollar limit, the value of awards will be calculated based on the grant date fair value of the awards for financial reporting purposes.

Eligibility

Awards may be granted under the 2019 Equity Incentive Compensation Plan to employees of M&T and its affiliates, non-employee directors and Key Advisors.  As of December 31, 2018, approximately 16,413 full time and 854 part time employees of M&T and its affiliates, and none of its non-employee directors or Key Advisors, were eligible to receive awards under the 2009 Equity Incentive Compensation Plan.  Non-employee directors and Key Advisors are eligible for awards under the 2019 Equity Incentive Compensation Plan.  Accordingly, if the 2019 Equity Incentive Compensation Plan were in effect on December 31, 2018, approximately 16,413 full time and 854 part time employees of M&T Bank and its affiliates, 15 non-employee directors and 190 Key Advisors would be eligible to receive awards under the 2019 Equity Incentive Compensation Plan.  As of December 31, 2018, 2,712 employees, and none of its non-employee directors or Key Advisors, held outstanding equity awards under the 2009 Equity Incentive Compensation Plan.

Subject to the provisions of the 2019 Equity Incentive Compensation Plan, the NCG Committee may select eligible participants and the nature and amount of each award granted under the 2019 Equity Incentive Compensation Plan.  For this reason, it is not possible to determine the benefits or amounts that will be received by any particular person in the future.  Because our executives and non-employee directors are eligible to receive awards under the 2019 Equity Incentive Compensation Plan, they may be deemed to have a personal interest in the approval of this Proposal 2.

 

 

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Types of Awards

Awards granted under the 2019 Equity Incentive Compensation Plan may be in the form of stock options, stock appreciation rights, stock awards, restricted stock units, and performance shares. The following is a brief description of the types of awards that may be granted under the 2019 Equity Incentive Compensation Plan:

Stock Options.  The NCG Committee may grant options to purchase shares of common stock in such amounts as it determines, and each option granted under the 2019 Equity Incentive Compensation Plan will be pursuant to an award agreement that contains the terms and conditions of the option, including the right to exercise the option following termination of employment or service, if any.  The NCG Committee may condition the grant or vesting of an option on the achievement of one or more performance goals.  Dividends or dividend equivalent payments will not be payable on the shares underlying an option.

The NCG Committee may grant options that are intended to qualify as incentive stock options under Section 422 of the Code, or non-qualified stock options, which are not intended to so qualify.  Incentive stock options may only be granted to our employees.  Anyone eligible to participate in the 2019 Equity Incentive Compensation Plan may receive a grant of non-qualified stock options.  The NCG Committee may determine the exercise price of options granted under the 2019 Equity Incentive Compensation Plan, but the exercise price cannot be less than the fair market value of a share of our common stock on the date the option is granted.  If an incentive stock option is granted to an employee owning more than ten percent of M&T common stock or stock of our subsidiaries as determined under Section 424 of the Code, the exercise price of the incentive stock option cannot be less than 110% of the fair market value of a share of our common stock on the date such option is granted.  The fair market value of our common stock is generally equal to the closing price for the common stock on the date the option is granted (or if there was no closing price on that date, on the next preceding date on which there were sales).

To the extent an option is exercisable, the option may be exercised by the delivery of a written notice to us setting forth the number of shares with respect to which the option will be exercised and accompanied by the full payment of the exercise price for the options.  The exercise price for any option may be paid in cash, broker-assisted cashless exercise, or by delivering shares of our common stock with a fair market value at the time of exercise equal to the aggregate exercise price of the option, or any combination of the foregoing.  If permitted by the NCG Committee, the exercise price may be paid by withholding shares of common stock subject to the exercisable option which have a fair market value on the date of exercise equal to the aggregate exercise price of the option, or by such other method as the NCG Committee approves.

The term of an option cannot exceed ten years from the date of grant, except that if an incentive stock option is granted to an employee owning more than ten percent of our common stock or stock of our subsidiaries, the term cannot exceed five years from the date of grant.  Stock options are nontransferable, other than by will or the laws of descent and distribution, except that in the case of a non-qualified stock option, the NCG Committee may permit the transfer of such stock option in accordance with the applicable securities rules.  Except as otherwise provided in an award agreement, any portion of a stock option that is not vested and exercisable at the time of a participant’s termination of employment or service will be forfeited upon the participant’s termination of employment or service for any reason.

 

 

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Stock Appreciation Rights.  The NCG Committee may grant stock appreciation rights in such amounts as the NCG Committee determines to anyone eligible to participate in the 2019 Equity Incentive Compensation Plan.  Stock appreciation rights will be granted pursuant to an award agreement that contains the terms and conditions of the grant, including the right to exercise the exercisable stock appreciation rights following termination of employment or service, if any, and may be granted separately or in tandem with any option.  The NCG Committee may condition the grant or vesting of stock appreciation rights on the achievement of one or more performance goals.  Dividends or dividend equivalent payments will not be payable on the shares underlying stock appreciation rights.

Stock appreciation rights granted with a non-qualified stock option may be granted either at the time the non-qualified stock option is granted or any time thereafter while the option remains outstanding.  Stock appreciation rights granted with an incentive stock option must be granted only at the date of the grant of the incentive stock option.  The NCG Committee may determine the base amount of stock appreciation rights granted under the 2019 Equity Incentive Compensation Plan, but the base amount cannot be less than the fair market value of a share of the common stock on the date the stock appreciation right is granted.

If a stock appreciation right is granted in tandem with an option, the stock appreciation right is only exercisable during the period in which the related option is also exercisable.  When a participant exercises a stock appreciation right, the participant will receive the excess of the fair market value of the underlying common stock on the date the stock appreciation right is exercised, over the base amount of the stock appreciation right.  The appreciation of a stock appreciation right will be paid in shares of our common stock, cash, or both, as determined by the NCG Committee.  The term of a stock appreciation right cannot exceed ten years from the date of grant. Stock appreciation rights are nontransferable, other than by will or the laws of descent and distribution.  Except as otherwise provided in an award agreement, any portion of a stock appreciation right that is not exercisable at the time of a participant’s termination of employment or service will be forfeited upon the participant’s termination of employment or service for any reason.

Stock Awards.  The NCG Committee may grant stock awards to anyone eligible to participate in the 2019 Equity Incentive Compensation Plan.  A stock award is an award of our common stock that may be subject to restrictions or no restrictions as the NCG Committee determines.  The shares of our common stock underlying a stock award will be evidenced in a manner determined by the NCG Committee, including book-entry registration or issuance of one or more stock certificates.  Any stock certificate issued in respect of a stock award will be issued in the participant’s name and contain the terms, conditions, and any restrictions applicable to the stock award, as the NCG Committee will determine.

Each stock award will be subject to an award agreement that will specify the terms and conditions of the stock award.  The terms and conditions of a stock award may, in the discretion of the NCG Committee, provide for the lapse of transfer restrictions, forfeiture provisions, or vesting and settlement conditions, as applicable, and may be contingent upon the participant’s continued employment or service, or on the achievement of one or more performance goals as determined by the NCG Committee.  Participants may not sell, transfer, pledge, or assign a stock award until the termination of any applicable restrictions.

Except as provided under an award agreement, participants holding stock awards will have all of the voting rights of a shareholder as to the shares underlying the stock award during the period under which such stock award is subject to any applicable restrictions.  Unless otherwise determined by the NCG Committee, participants holding stock awards will be entitled to receive dividends and distributions on the shares underlying the stock award, provided that dividends with respect to stock awards that are

 

 

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subject to vesting restrictions will vest only if and to the extent that the underlying stock award vests.  Except as otherwise provided in an award agreement, all unvested stock awards are forfeited if the participant’s employment or service is terminated for any reason.

Restricted Stock Units.  The NCG Committee may grant restricted stock units to anyone eligible to participate in the 2019 Equity Incentive Compensation Plan.  Restricted stock units are awards denominated in shares of our common stock that will be settled, subject to the terms and conditions of the restricted stock unit grant, in an amount in cash, shares of our common stock, or a combination thereof, based on the fair market value of a specified number of shares.

Each restricted stock unit award will be subject to an award agreement that will specify the terms and conditions of the stock award.  The terms and conditions of a restricted stock unit award may, in the discretion of the NCG Committee, provide for the lapse of transfer restrictions, forfeiture provisions, or vesting and settlement conditions, as applicable, and may be contingent upon the participant’s continued employment or service or on the achievement of one or more performance goals as determined by the NCG Committee.  Participants may not sell, transfer, pledge, or assign a restricted stock unit award until the termination of any applicable restrictions.

Holders of restricted stock unit awards are not entitled to any voting rights, but the award agreement granting the restricted stock unit award will specify whether, and to what extent, the participant will be entitled to receive amounts equal to dividends payable on the shares of our common stock underlying the award.  Such dividend equivalents, if any, will be paid in cash, shares of our common stock, or other property, as provided for in the applicable award agreement, and will be payable only if and to the extent that the restricted stock unit award vests and is paid.

Except as otherwise provided in an award agreement, all unvested restricted stock unit awards are forfeited if the participant’s employment or service is terminated for any reason.

Performance Units.  The NCG Committee may grant performance units to anyone eligible to participate in the 2019 Equity Incentive Compensation Plan.  Performance units will be subject to terms and conditions and earned by the achievement of performance goals over designated performance periods, as established by the NCG Committee.  Like restricted stock units, performance units are not actual shares of common stock but instead are awards that are denominated in shares of common stock.

After a performance period has ended, the holder of a performance unit may be entitled to receive a distribution of shares of our common stock, cash, or a combination thereof, in each case at the achievement level and on the terms and conditions as determined by the NCG Committee.  Until the end of the applicable performance period, performance units granted under the 2019 Equity Incentive Compensation Plan may not be sold, transferred, pledged, or assigned, other than by will or by laws of decent and distribution.  Any dividends or dividend equivalents related to performance units will not vest or be paid unless and until the underlying award vests and is paid.  Except as otherwise provided in an award agreement, all unvested performance unit awards are forfeited if the participant’s employment or service is terminated for any reason.

Performance Goals.  The NCG Committee may establish performance goals in connection with the grant of awards under the 2019 Equity Incentive Compensation Plan, including performance units, stock awards, stock options, stock appreciation rights and restricted stock units that are conditioned or subject to the satisfaction of performance goals.  The performance goals will be based on attainment of specific levels of performance of M&T (or may be particular to a participant or the department, branch, affiliate or division of the business in which the participant works) with reference to one or more of the following

 

 

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criteria, or such other criteria as the NCG Committee determines: earnings, earnings growth, earnings per share, stock price (including growth measures and total shareholder return), improvement of financial ratings, internal rate of return, market share, cash flow, operating income, operating margin, net profit after tax, earnings before interest and taxes (EBIT), earnings before interest and taxes and amortization (EBITA), earnings before interest, taxes, depreciation and amortization (EBITDA), operating income before interest and taxes (OBIT), operating income before interest, taxes, depreciation and amortization (OBITDA), gross profit, operating profit, cash generation, revenues, asset quality, return on equity, return on tangible common equity, return on assets, return on operating assets, cost saving levels, efficiency ratio, net income, marketing-spending efficiency, core non-interest income, change in working capital, return on capital, or shareholder return.  These performance goals may be measured for achievement or satisfaction during the performance period established by the NCG Committee.  The performance goals may include or exclude extraordinary charges, losses from discontinued operations, restatements and accounting changes and other unplanned special charges, or any other items that the Committee deems appropriate.

Effect of Change in Control.  Unless otherwise provided in the applicable award agreement or otherwise determined by the NCG Committee, upon a “change in control” of M&T, any outstanding options and stock appreciation rights that are not then vested and exercisable will become fully vested and exercisable, and the restrictions applicable to any stock award or restricted stock unit award will lapse and the award will become fully vested and transferrable or settled, as applicable.  The NCG Committee may require that participants surrender any outstanding options or stock appreciation rights in exchange for a payment in cash or common stock, as determined by the NCG Committee, in an amount equal to the amount, if any, that the fair market value of the shares subject to the options or stock appreciation rights exceeds the exercise price or base price, as applicable, or, after giving participants an opportunity to exercise their outstanding stock options or stock appreciation rights, the NCG Committee may terminate any or all unexercised stock options or stock appreciation rights.

In addition, unless otherwise provided in the applicable award agreement, or otherwise determined by the NCG Committee, in the event of a change in control, all awards that are subject to performance goals will immediately be settled and paid out in an amount based upon the extent, as determined by the NCG Committee, to which the performance goals for the performance period then in progress have been met.  A change in control is defined in the 2019 Equity Incentive Compensation Plan, which is attached to this proxy statement as Appendix A.  The settlement and payment of awards, including restricted stock units and performance units, will be in accordance with applicable requirements of the Code.

Capital Adjustments.  In the event there is a (1) change in the capital structure of M&T as a result of any stock dividend or split, reverse stock split, share combination, recapitalization or similar event affecting the capital structure of M&T, or (2) a merger, consolidation, acquisition of property or shares, separation, spin-off, reorganization, stock rights offering, liquidation, disaffiliation, or other corporate change affecting M&T or any of its subsidiaries, the NCG Committee or the Board of Directors will make an equitable and proportionate substitution or adjustment as it deems appropriate to (i) the aggregate number and kind of shares of our common stock or other securities reserved for issuance under the 2019 Equity Incentive Compensation Plan, (ii) the award limitations set forth in the 2019 Equity Incentive Compensation Plan and described above under “Award Limitations,” (iii) the number and kind of shares of our common stock or other securities subject to outstanding awards under the 2019 Equity Incentive Compensation Plan, and (iv) the exercise price of stock options or base price of stock appreciation rights outstanding under the 2019 Equity Incentive Compensation Plan, in order to preserve the value of awards under the 2019 Equity Incentive Compensation Plan as a result of any such corporate change.  In

 

 

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addition, in the event of any such corporate change, the NCG Committee will adjust in any manner it deems appropriate the performance goals applicable to awards.

No Repricing.  Notwithstanding anything in the 2019 Equity Incentive Compensation Plan to the contrary, after a stock option or a stock appreciation right is granted, neither the Board of Directors nor the NCG Committee may, without obtaining shareholder approval, (i) amend the terms of outstanding stock options or stock appreciation rights to reduce the exercise price of such outstanding stock options or base price of such stock appreciation rights, (ii) cancel outstanding stock options or stock appreciation rights in exchange for stock options or stock appreciation rights with an exercise price or base price, as applicable, that is less than the exercise price or base price, as applicable, of the original stock options or stock appreciation rights or (iii) cancel outstanding stock options or stock appreciation rights with an exercise price or base price, as applicable, above the current stock price in exchange for cash or other securities, except pursuant to a corporate change described above under “Capital Adjustments.”

Tax Withholding.  M&T’s obligation to issue or deliver shares or pay any amount pursuant to an award is subject to the satisfaction of applicable federal, state, local and foreign tax withholding requirements and M&T and its affiliates have the power to deduct or withhold, or require a participant to remit, an amount sufficient to satisfy such taxes required by law to be withheld.  To the extent permitted by the NCG Committee, a participant may satisfy any withholding tax requirements by paying cash, authorizing us to withhold shares otherwise issuable pursuant to the award or by delivering shares.  The NCG Committee may establish such procedures as it deems appropriate for the settlement of withholding obligations with common stock having a fair market value on the date of withholding up to the maximum amount permitted to be withheld for tax purposes in the applicable jurisdiction.

Term, Amendment and Termination, and Company Policies

Term.  If approved by shareholders, the 2019 Equity Incentive Compensation Plan will become effective as of the date of such approval and remain in effect until all shares subject to it have been issued according to its provisions. However, no awards may be granted on or after the tenth anniversary of the effective date.

Amendment and Termination. The Board of Directors or the NCG Committee may terminate the 2019 Equity Incentive Compensation Plan, or any portion of the 2019 Equity Incentive Compensation Plan, at any time and may amend or modify it from time to time in such respects as the Board of Directors or NCG Committee deem advisable.  However, after our shareholders approve the 2019 Equity Incentive Compensation Plan, the Board of Directors or the NCG Committee may not amend the plan without approval of our shareholders to the extent shareholder approval is required by the Code or other applicable law or the requirements of the NYSE (or other stock exchange on which the M&T common stock is traded).  In addition, no amendment may be adopted without approval by a participant if the amendment would materially and adversely affect the participant’s rights and obligations under any award granted prior to the date of such amendment.

Company Policies. All awards under the 2019 Equity Incentive Compensation Plan will be subject to any applicable clawback or recoupment policies, including without limitation M&T’s Forfeiture Policy, share trading policies and other policies that may be implemented by the Board of Directors from time to time.

 

 

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Summary of Certain Federal Income Tax Consequences

The following is a summary of certain U.S. federal income tax consequences of certain awards made under the 2019 Equity Incentive Compensation Plan, based upon the federal income tax laws currently in effect.  The discussion is general in nature and does not take into account a number of considerations which may apply in light of the individual circumstances of a participant under the 2019 Equity Incentive Compensation Plan.  The income tax consequences under applicable state and local tax laws, and under any foreign tax laws, may not be the same as under U.S. federal income tax laws.

Stock Options. A participant does not realize ordinary income on the grant of a stock option.  Upon exercise of a non-qualified stock option, the participant will realize ordinary income equal to the excess of the fair market value of the shares of common stock over the option exercise price.  The cost basis of the shares acquired for capital gain treatment is their fair market value at the time of exercise.  Upon exercise of an incentive stock option, the excess of the fair market value of the shares of common stock acquired over the option exercise price will be an item of tax preference to the participant, which may be subject to an alternative minimum tax for the year of exercise.  If no disposition of the shares is made within two years from the date of granting of the incentive stock option or within one year after the transfer of the shares to the participant, the participant does not realize taxable income as a result of exercising the incentive stock option; the tax basis of the shares received for capital gain treatment is the option exercise price; any gain or loss realized on the sale of the shares is long-term capital gain or loss.  If the participant disposes of the shares within the two-year or one-year periods referred to above, the participant will realize ordinary income at that time in an amount equal to the excess of the fair market value of the shares at the time of exercise (or the net proceeds of disposition, if less) over the option exercise price.  For capital gain treatment on such a disposition, the tax basis of the shares will be their fair market value at the time of exercise.

Stock Appreciation Rights.  No ordinary income will be realized by a participant in connection with the grant of a stock appreciation right.  When the stock appreciation right is exercised, the participant will realize ordinary income in an amount equal to the sum of the amount of any cash received and the fair market value of the shares of common stock or other property received upon the exercise.

Stock Awards.  A participant will not realize ordinary income on the grant of a stock award that is subject to vesting (or a performance award if the shares of common stock are issued on grant), but will realize ordinary income when the shares subject to the award become vested in an amount equal to the excess of (i) the fair market value of the shares on the vesting date over (ii) the purchase price, if any, paid for the shares.  The participant may, however, elect under Section 83(b) of the Code to include as ordinary income in the year the shares are granted an amount equal to the excess of (i) the fair market value of the shares on the date of issuance, over (ii) the purchase price, if any, paid for the shares.  If the Section 83(b) election is made, the participant will not realize any additional taxable income when the shares become vested.  A participant will realize ordinary income on the grant of a stock award that is fully vested at grant equal to the excess of (i) the fair market value of the shares on the grant date over (ii) the purchase price, if any, paid for the shares.  

Upon disposition of shares of common stock acquired under a stock award, the participant will realize a capital gain or loss equal to the difference between the selling price and the sum of the amount paid for the shares plus any amount realized as ordinary income upon grant (or vesting) of the shares.

Restricted Stock Unit Awards; Performance Unit Awards.  A participant will not realize ordinary income on the grant of a restricted stock unit award, or performance unit award.  The participant will

 

 

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realize ordinary income when the shares subject to the award are issued (or cash is paid) to the participant after the units become vested.  The amount of ordinary income will be equal to the fair market value of the shares on the date they are issued, or the amount of cash paid.

Upon disposition of shares of common stock acquired under a restricted stock unit award or performance unit award, the participant will realize a capital gain or loss equal to the difference between the selling price and the amount realized as ordinary income upon payment of the shares.

Awards subject to Section 409A of the Code. Certain awards, particularly restricted stock units and performance units may constitute a “nonqualified deferred compensation plan” within the meaning of Section 409A of the Code and be subject to the restrictions by that Code Section.  Awards subject to Section 409A of the Code may be designed to provide for exercise, payment or settlement that are intended to comply with the requirements of Section 409A of the Code.

The foregoing general tax discussion is solely intended for the information of shareholders considering how to vote with respect to this Proposal 2 and not as tax guidance to participants in the 2019 Equity Incentive Compensation Plan.  Participants should consult their own tax advisors regarding the federal, state, local, foreign and other tax consequences to them of participating in the 2019 Equity Incentive Compensation Plan.

Company Tax Deduction 

Generally, M&T is entitled to a deduction based on the amount of ordinary income a participant recognizes with respect to an award.  However, Section 162(m) of the Code imposes a $1 million limit on the amount a public company may deduct for compensation paid in a year to a company’s principal executive officer, principal financial officer, or any of the company’s three other most highly compensated executive officers who are employed in such role at any time during the year (each, a “covered employee”).  Once an individual is a covered employee after 2016, the individual remains a covered employee, even after termination of employment.

New Plan Benefits

Future benefits under the 2019 Equity Incentive Compensation Plan generally will be granted at the discretion of the NCG Committee and are therefore not currently determinable.  The closing price of a share of M&T common stock on December 31, 2018 was $143.13.

 

 

 

 

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Equity Compensation Plan Information

The following table provides information as of December 31, 2018 with respect to shares of common stock that may be issued under M&T’s existing equity compensation plans.  M&T’s existing equity compensation plans include the M&T Bank Corporation 2001 Stock Option Plan, the 2005 Incentive Compensation Plan, which replaced the 2001 Stock Option Plan, and the 2009 Equity Incentive Compensation Plan, each of which has been previously approved by shareholders, and the Directors’ Stock Plan and the M&T Bank Corporation Deferred Bonus Plan, each of which did not require shareholder approval.

The table does not include information with respect to shares of common stock subject to outstanding options and rights assumed by M&T in connection with mergers and acquisitions of the companies that originally granted those options and rights.  Footnote (1) to the table sets forth the total number of shares of common stock issuable upon the exercise of such assumed options and rights as of December 31, 2018, and their weighted-average exercise price.

 

 

Equity compensation plans adopted without the approval of shareholders are described below:

Directors’ Stock Plan.  M&T maintains a plan for non-employee members of the Board of Directors of M&T and the members of its Directors Advisory Council, and the non-employee members of the Board of Directors of M&T Bank and the members of its regional Directors Advisory Councils, which allows such directors, advisory directors and members of regional Directors Advisory Councils to receive all or a portion of their directorial compensation in shares of M&T common stock.

Deferred Bonus Plan.  M&T maintains a deferred bonus plan which was frozen effective January 1, 2010 and did not allow any additional deferrals after that date.  Prior to January 1, 2010, the plan allowed eligible officers of M&T and its subsidiaries to elect to defer all or a portion of their annual incentive compensation awards and allocate such awards to several investment options, including M&T common stock.  At the time of the deferral election, participants also elected the timing of distributions from the plan.  Such distributions are payable in cash, with the exception of balances allocated to M&T common stock which are distributable in the form of shares of common stock.

 

 

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PROPOSAL 3

ADVISORY, NON-BINDING PROPOSAL TO APPROVE THE 2018 COMPENSATION OF M&T BANK CORPORATION’S NAMED EXECUTIVE OFFICERS

M&T Bank Corporation believes that its 2018 compensation policies and practices are centered on a pay-for-performance culture and are strongly aligned with the long-term interests of its shareholders, while reducing incentives for unnecessary and excessive risk taking.  Our executive compensation programs are described in detail in the sections titled “COMPENSATION DISCUSSION AND ANALYSIS” and “EXECUTIVE COMPENSATION.”

Section 951 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”), enacted on July 21, 2010, requires that all U.S. public companies provide their shareholders with an advisory vote on the compensation of their named executive officers.  On January 25, 2011, the SEC adopted final rules implementing this requirement.  At each Annual Meeting of Shareholders since M&T’s 2011 Annual Meeting of Shareholders, the Board of Directors has provided shareholders with the ability to vote, on an advisory basis, on the compensation of M&T’s NEOs.

This proposal, commonly known as a “say-on-pay” proposal, gives shareholders the opportunity to vote on the overall compensation program of M&T and specifically as it applies to the NEOs through the following resolution:

“RESOLVED, that the 2018 compensation paid to M&T Bank Corporation’s Named Executive Officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion is hereby approved.”

The shareholder vote on this matter is advisory, meaning that it will serve as a recommendation to the Board of Directors, but will not be binding.  The NCG Committee will consider the outcome of this vote when determining future executive compensation arrangements.

 

 

 

 

 

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

Named Executive Officers

This Compensation Discussion and Analysis provides information regarding the 2018 compensation of M&T’s Chief Executive Officer (“CEO”), M&T’s Chief Financial Officer (“CFO”) and the three most highly compensated executive officers other than the CEO and CFO (collectively, the “NEOs”).  For 2018, our NEOs were the following individuals:

 

 

 

 

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Executive Summary

Overview of M&T Bank Corporation

 

2018 Financial Performance Highlights

M&T’s 2018 financial performance met its business plan on several key metrics including net income, earnings per common share (“EPS”), and return on assets.  M&T’s financial performance in 2018 reflected elevated expenses associated with pre-merger Wilmington Trust Corporation litigation matters.  Excluding these legal-related expenses, operating expenses were well controlled. M&T’s total shareholder return (“TSR”) remains in the top quartile of its peer group over the long term (10-, 15- and 20-year periods).  Specific 2018 performance highlights are noted below: ⁽¹⁾

 

 

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Compensation Philosophy and Objectives

The objectives of M&T’s executive compensation programs are to attract and retain executives capable of maximizing performance for the benefit of M&T and its shareholders.  Our long-standing compensation philosophy is to emphasize long-term equity-based compensation for our NEOs.  This philosophy allows us to align our compensation with performance in the following important ways:

Components of Executive Compensation

The components of executive compensation, described below, align with M&T’s philosophy to emphasize long-term equity-based compensation while providing executive compensation that will attract and retain executive officers capable of achieving M&T’s performance objectives.

 

 

 

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Roles and Responsibilities

M&T’s executive compensation programs are administered through the joint efforts of various constituents to ensure sound holistic governance over compensation determinations.

Role of the NCG Committee

The NCG Committee is responsible for determining the compensation of the executive officers (including the NEOs) and then reviews such determinations with the full Board of Directors.  As discussed below, in determining the amount and mix of compensation to be paid to each NEO, the NCG Committee reviews the compensation levels of the NEOs relative to a group of commercial banking peers (“peer group”).  As part of this review, the NCG Committee considers the financial performance of M&T relative to the peer group, as well as certain other factors, including M&T’s stock price performance and relative shareholder return, compensation mix strategy, risk management, and individual/corporate performance.

The NCG Committee’s responsibilities include:

The NCG Committee receives reports from the CFO and Chief Risk Officer (“CRO”) regarding M&T’s financial performance and risk management performance, respectively, prior to finalizing TDC for the NEOs.  Additionally, the NCG Committee’s independent compensation consultant participates in meetings throughout the year, as requested.

Role of Independent Compensation Consultant

In 2018, the NCG Committee continued to retain the services of McLagan, an Aon company, as its independent compensation consultant. McLagan’s role is to provide analysis and advice to the NCG Committee relative to the amount and form of executive compensation, attend NCG Committee meetings, as requested, and advise the NCG Committee on executive compensation levels, market trends, regulatory issues and other developments that may impact M&T’s executive compensation programs.  In 2018, McLagan performed the following services for the NCG Committee:

 

 

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The fees for these services totaled $259,098. McLagan also provided $155,150 in additional compensation consulting services to management during 2018.  Management engaged McLagan for these services after consultation with the NCG Committee.  The NCG Committee determined that, based on an assessment of NYSE factors, McLagan was independent and that engagement of McLagan did not present any conflicts of interest.  McLagan also determined that it was independent from our management and confirmed this in a written statement delivered to the NCG Committee.

Role of the Office of the Chairman

The Office of the Chairman consists of Messrs. Jones, Gold and Pearson.  The Office of the Chair provided the performance assessments for the executive officers (including with respect to Mr. King and Ms. Meister) and made compensation recommendations to the NCG Committee in this regard.  Ultimate decision-making authority for the compensation determinations for all NEOs, including the Office of the Chairman, however, lies solely with the NCG Committee.

Peer Group

On an annual basis, the NCG Committee, with the assistance of McLagan, benchmarks compensation levels for each of the NEOs and M&T’s financial performance to a group of commercial banking institutions of similar business makeup, size and geographic reach.  M&T selected the ten commercial banking companies listed below using the group of U.S. based commercial bank holding companies having assets between $50 billion and $250 billion as of December 31, 2017, and removing those that had a significantly dissimilar business mix, or had a substantial international presence:

The 2018 peer group continues to include PNC Financial Services Group, Inc., despite it being outside the asset size criterion, due to its similar business makeup and presence in many of the markets where M&T Bank conducts commercial banking activities.  

Consideration of Shareholder Advisory Vote on Executive Compensation

The NCG Committee views the shareholder vote on executive compensation as evidence of shareholders’ support of the NCG Committee’s compensation philosophy and decisions.  The compensation of the NEOs received an approval of 97.38% of votes cast at the 2018 Annual Meeting of Shareholders.  The NCG Committee considered this to be a strong indication that our shareholders believe that the NEOs’ compensation is aligned with the performance of M&T and, accordingly, the NCG Committee has not made any significant changes to NEO compensation based on the vote outcome.

 

 

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2018 Compensation Determinations

Factors Considered in Making Determinations

The NCG Committee uses a balanced approach to compensation decisions by incorporating quantitative and qualitative measures (both absolute and relative to our peer group), including:

 

The NCG Committee, in consultation with McLagan, determines the compensation for the CEO based upon its review of various corporate goals and objectives, consisting primarily of management’s annual business plan, which is approved by the Board of Directors.

The NCG Committee assessed the performance of each NEO based on the factors listed above and as reflected in the following section.

 

 

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Individual Performance Assessments

 

 

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Base Salary

The NCG Committee made 2018 base salary determinations for the NEOs in January 2018.  At that time, given M&T’s performance in 2017 compared to the peer group and its business plan, and the individual performance of each of the NEOs and their respective positioning against competitive market data for their roles, the NCG Committee determined that the base salaries for the NEOs should be as follows:

 

 

 

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Cash Incentives (STI)

The NEOs’ annual STI plan provides for discretionary grants of cash awards to the NEOs as determined by the NCG Committee. Due to the discretionary structure of the STI plan, the NEOs do not have, and historically have not had, target levels of awards or stated goals and payout levels under those plans.  Consequently, the NCG Committee considered the following factors in making the award determinations in January 2019 for 2018 performance:  

 

 

Based upon these factors, the NCG Committee determined that it was appropriate to award each of the NEOs a cash incentive for 2018 performance as follows:  

 

 

 

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Equity-Based Incentives (LTI)

Consistent with our philosophy of linking compensation to M&T’s performance for the benefit of M&T’s shareholders, M&T provides LTI opportunities to the NEOs through discretionary grants of equity-based compensation under the Equity Incentive Compensation Plan.  The NCG Committee determines the dollar value of LTI awards to be made to the NEOs at its meeting in January of each year.  Following that meeting, the equity awards are granted on the last business day of January.  In granting of LTI awards, the NCG Committee generally assesses the following factors:

M&T reintroduced stock options for executive officers, including the NEOs, in 2018 and gave a portion of 2018 LTI awards in the form of stock options.  Vesting of the stock option awards granted to the NEOs in 2018 are scheduled to occur on a graduated basis with 33% vesting on January 31, 2019, an additional 33% vesting on January 31, 2020 and the remaining 34% vesting on January 31, 2021.  Stock options create close alignment with shareholder experience, and due to their ten-year term, support M&T’s business strategy and compensation philosophy by providing a link to long-term business objectives and sustained long-term value creation.

In addition, an objective of our LTI program is to balance growth with prudent risk taking, through the use of PSUs that vest in alignment with levels of performance.  M&T believes PSUs align executives’ performance with the goal of sustained long-term shareholder value, while at the same time serving as a retention tool.  Performance hurdled PSUs (“PHSUs”) were granted in 2018, consistent with prior years.  PHSUs will vest ratably at target over three years based on absolute ROTCE performance.  If the performance requirement is not satisfied for a given period, the portion of the stock award that is scheduled to vest on the vesting date immediately following that performance period will not vest and will be forfeited unless otherwise determined by the NCG Committee.

 

In summary, the LTI awards granted to the NEOs on January 31, 2018 were in the form of stock options (25%) and PHSUs (75%). The LTI awards granted on January 31, 2017 were exclusively in the form of PHSUs.

 

 

 

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