PNC Financial Services (PNC)

Change in Control Arrangements

Change in Control Severance Agreements. We have entered into change in control severance agreements with each of our named executive officers and certain other executive officers. These agreements have been a valuable component of our executive compensation program for several years. We believe that these arrangements assist in ensuring the impartial and dedicated service of our executive officers, notwithstanding concerns that they might have regarding their continued employment following a change in control. Potential payments under these arrangements do not directly impact the yearly decisions made regarding other elements of our executive compensation.

Change in control severance protections are common at large public companies, including financial institutions, and we believe that these arrangements help us recruit and retain executive talent for which we are competing with other financial institutions. For each of the named executive officers, as for most other executive officers, if his or her employment is terminated by the surviving company without cause, or by him or her for good reason, during a period of three years following a change in control of PNC, he or she will receive severance benefits. The principal benefits include:

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Each agreement prohibits the executive from using or disclosing any of our confidential business or technical information or trade secrets. The executive may also not employ or solicit any of our officers during the year following termination. Each agreement terminates when the executive reaches age 65 (with a gradual reduction of benefits during the three prior years). With one year’s advance notice, we may terminate all change in control severance agreements.

We have also entered into change in control severance agreements with certain other officers under which they will receive severance benefits similar to those described above. In some cases, however, these benefits have a lower level of payment and a shorter coverage period.

For a discussion of potential payments to our named executive officers upon a change in control or other events resulting in termination please see Potential Payments Upon Termination of Employment and Change in Control, beginning on page 68.

Change in Control Provisions in Other Grants. We also typically include provisions in our stock option, restricted stock, and incentive share and incentive performance unit grants providing certain protections to our officers. Upon a change in control of PNC, all of the outstanding unvested employee stock options, restricted stock, and restricted share unit grants will vest, whether or not the employee has a qualifying termination of employment. As described above, there is a provision in our incentive performance unit programs entitling the officer to receive a payment if a change in control occurs. In addition, if an officer is terminated by the surviving company without cause or by the employee for good reason after a change in control, the officer will have a period of three years to exercise his or her options but not extending past the original option termination date.

Our displaced employee assistance plans for employees generally provide for an increase in severance benefits following a change in control under certain circumstances. These plans do not apply to our executive officers, as they have change in control agreements as described above. If an employee’s employment is terminated by the surviving corporation within two years following consummation of a change in control, the employee will receive a lump sum payment equal to twice the benefits to which such employee otherwise would be entitled under the applicable plan. In addition

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to that lump sum payment, selected officers and employees will become eligible for an additional severance benefit under similar circumstances, based on their annual variable cash compensation.

Change of Control Arrangements

Change of Control Severance Agreements. We are party to change of control employment agreements with each of our named executive officers and certain other executive officers, which agreements have been a component of our executive compensation program for many years. We believe that these change in control arrangements serve a valuable purpose and assist in ensuring the impartial and dedicated service of our executive officers, notwithstanding concerns that they might have regarding their continued employment following a change of control. Change of control severance protections are common at financial institutions like ours and we believe that these arrangements help us in the recruitment and retention of the executive talent for which we are competing with other financial institutions. For each of the named executive officers, as for most other executive officers, if his or her employment is terminated by the surviving company without cause, or

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by him or her for good reason, during a period of three years following a change of control of PNC, he or she will receive severance benefits. These benefits include:

Each agreement requires the executive officer not to use or disclose any of our confidential business or technical information or trade secrets and, if the executive officer receives the above severance benefits, not to employ or solicit any of our officers during the year following his or her termination. Each agreement terminates when the executive officer reaches age 65 (with a gradual reduction of benefits during the three prior years), and we may, upon one year’s advance notice, simultaneously terminate all of such change of control severance agreements.

We have also entered into change of control severance agreements with certain other officers under which they will receive severance benefits similar to those described above. In some cases, however, these benefits have a lower level of payment and a shorter coverage period. For a discussion of potential payments to our named executive officers upon a change of control or other events resulting in termination please see “Potential Payments Upon Termination of Employment and Change of Control,” beginning on page 56.

Change of Control Provisions in Other Grants. We also typically include provisions in our stock option, restricted stock and incentive share opportunity grants providing certain protections to our officers, such as accelerated vesting. Upon a change of control of PNC, 100% of the outstanding unvested equity-based (or phantom equity-based) employee grants will be subject to accelerated vesting, whether or not the employee has a qualifying termination of employment. As described on page 37, there is a provision in our incentive share opportunity programs entitling the officer to receive a payment upon a change of control of PNC. In addition, if an officer is terminated without cause or for good reason after a change of control, the officer will have a period of three years to exercise his or her options but not extending past the original option termination date.

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Our displaced employee assistance plans for employees generally provide for an increase in severance benefits following a change of control under certain circumstances. These plans do not apply to our executive officers, as they have change of control agreements as described above. If an employee’s employment is terminated by the surviving corporation within two years following consummation of a change of control, the employee will receive a lump sum payment equal to twice the benefits to which such employee otherwise would be entitled under the applicable plan. In addition to that lump sum payment, selected officers and employees will become eligible for an additional severance benefit under similar circumstances, based on their annual variable cash compensation.