PNC Financial Services (PNC)

Change in Control Benefits

Unvested Equity. An executive officer’s equity vests upon a change in control. It does not matter whether the officer’s employment is terminated.

Upon a change in control, any unvested restricted stock will vest. Any unvested options will also vest. Following a termination without cause or resignation for good reason, the executive will have three years after termination to exercise options. This option exercise period will not extend beyond the original option termination date, however.

With respect to the vesting and payment of incentive performance units, the following occurs upon a change in control:

Incentive Performance Unit Grants. First, a share amount is determined by multiplying the following components:

This share amount is then multiplied by the fair market value on the date of the change in control. Fair market value is defined as the average of the high and low stock prices. The final amount will be paid in cash, if no PNC common stock exists after the change in control.

Special Incentive Performance Unit Grants. The calculation for Mr. Demchak’s additional special incentive performance unit grants is the same as for the regular incentive performance unit grants, with the following exceptions:

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Cash Severance. If a named executive officer resigns for good reason or the surviving company terminates the officer without cause, the officer is entitled to severance benefits under change in control employment agreements. We describe these agreements below.

These agreements pay cash to our executives, as calculated under various compensation components. The agreements also continue benefits under (or compute cash payments by reference to) some of our retirement and health and welfare benefit plans. The agreements also require a payment to the named executive officer to reimburse for any excise taxes on severance or other benefits that are considered “excess parachute payments” under the Internal Revenue Code.

Change in Control Benefits

Unvested Equity. An executive officer’s equity vests upon a change in control. It does not matter whether the officer’s employment is terminated.

Upon a change in control, any unvested restricted stock will vest. Any unvested options will also vest. Following a termination without cause or resignation for good reason, the executive will have three years after termination to exercise options. This option exercise period will not go beyond the original option termination date, however.

With respect to the vesting and payment of incentive performance units, the following occurs upon a change in control:

Incentive Performance Unit Grants. First, a share amount is determined by multiplying the following four components:

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This share amount is then multiplied by the fair market value on the date of the change in control. Fair market value is defined as the average of the high and low stock prices. The final amount will be paid in cash, if no PNC common stock exists after the change in control.

The transition factor described above reflected the transition that began in 2006 with the committee’s decision to grant incentive performance units every three years, with the amounts of the annual grants being relatively smaller as a result. The transition factor only applies in connection with changes in control and not in connection with any other potential accelerated vesting situation (such as those resulting from death or retirement).

Special Incentive Performance Unit Grants. The calculation for Mr. Demchak’s additional special incentive performance unit grants is the same as for the regular incentive performance unit grants, with the following exceptions:

Cash Severance. If a named executive officer resigns for good reason or the surviving company terminates the officer without cause, the officer is entitled to severance benefits under change in control severance agreements. We describe these agreements in the CD&A on pages 49 and 50.

These agreements pay cash to our executives, as calculated under various compensation components. The agreements also continue benefits under (or compute cash payments by reference to) some of our retirement and health and welfare benefit plans. The agreements also require a payment to the named executive officer to reimburse for any excise taxes on severance or other benefits that are considered “excess parachute payments” under the Internal Revenue Code.

We also provide payouts based on the incentive performance units under our change in control severance agreements. Unlike the payout under the incentive performance unit agreement, there is no dividend adjustment. For this cash payment to occur, there must be a change in control and a termination without cause or for good reason. The payment is determined by multiplying the target share units by the closing price on the date of the change in control. There is no separate change in control cash payment for Mr. Demchak’s additional special incentive performance units.