This excerpt taken from the PNC DEF 14A filed Mar 23, 2007.
Our principal policies relating to transactions of the types required to be disclosed under Item 404(a) of Regulation S-K (for the purposes of this proxy statement, related persons transactions) are our Employee Conduct Policies, which are a broad set of ethics-related policies that provide more detailed rules and guidance in support of the provisions of PNCs Code of Business Conduct and Ethics. We also have policies designed to support our compliance with banking regulations relating to the extension of credit by our subsidiary banks to insiders, including PNCs executive officers and directors and entities in which these individuals have specified control positions (the federal statutory and regulatory provisions that establish these restrictions are often referred to as Regulation O).
We believe that these policies are adequate to provide appropriate levels of control and monitoring of the types of related persons transactions that are likely to arise in the nature of our business and the associated risks. The policies in place are described in more detail below.
PNC Employee Conduct Policies. PNCs Employee Conduct Policies contain several provisions that regulate related persons transactions. These policies were revised as of the end of 2006, but not in any way that significantly impacted rules governing related party transactions.
The Employee Conduct Policies apply generally to all employees (including executive officers) and in some cases to directors. There are other policies, described below, that regulate some of the same types of transactions more specifically in the case of executive officers and directors. Under the Employee Conduct Policies
We employ several relatives of executive officers and directors, in some cases under circumstances that constitute related party transactions. See Family Relationships on pages 66-67. We have procedures in place to track the employment and compensation of relatives of executive officers and directors. Special treatment in the hiring or compensation of a relative of an executive officer or director would be restricted under the Employee Conduct Policy. For directors, our employment of a relative would be a factor in the determination of the directors independence under New York Stock Exchange rules and our categorical standards for director independence. See x-reference to director independence disclosure.
Under the Employee Conduct Policies, employees may generally request exemptions from the above-described restrictions from the Corporate Ethics Office. The Corporate Ethics Office may refer specific requests to the Ethics Policy Committee (a committee of senior managers that provides management oversight of ethics-related issues), which in turn may refer such requests to the Audit Committee (which provides Board-level oversight of ethics-related issues), another appropriate Board committee or the entire Board of Directors. Significant requests under the Employee Conduct Policies, including any that arose under the provisions described above, relating to executive management would normally be referred at least to the Ethics Policy Committee for review. There were no requests for exemptions under any of the provisions described above by executive officers or directors in 2006.
Regulation O Policies. PNCs policies that control extensions of credit to officers and directors covered by Regulation O in essence are designed to achieve conduct that would result in compliance with Regulation O. In general, these policies require
Each of PNCs banks has a Regulation O Credit Officer responsible for reviewing extensions of credit for compliance with these policies. Extensions of credit that would result in more than $500,000 in the aggregate of credit extended to any director or executive officer and all of his or her covered entities require approval by the board of directors of the lending bank. All extensions of credit subject to these policies made to executive officers of the lending bank (which may not include all of PNCs executive officers) are reported to the board of directors of the lending bank. An extension of credit in compliance with these policies would satisfy the requirements of the Employee Conduct Policies.