Hello, and welcome to the PNC Financial Services Group's 2021 Annual Meeting of Shareholders. Please note that this webcast is being recorded. It is now my pleasure to turn today's meeting over to Bill Demchak, Chairman of the P&C Financial Services Group.
Good morning, everybody. On behalf of our Board of Directors and management team, we're pleased that you've joined us for this morning in our 2021 Annual Meeting of Shareholders. As Chairman of the P&C Financial Services Group, I will preside as the chair of this meeting. Obviously, in light of the continuing public health concerns regarding the COVID-nineteen pandemic, we are conducting our meeting solely by remote communication. To begin, let me just provide a quick overview of how the meeting is going to proceed.
1st, I'll call the meeting to order, then I'll introduce our directors, the executive committee and representatives of our independent public accounting firm, who will be available to address questions during the general Q and A portion of the meeting. Next, our corporate secretary will provide a report on procedural matters. I'll then introduce the formal business of the meeting, including the 4 items on our agenda. We will then pause for questions regarding those 4 items and open the polls for voting. After the polls are closed, the corporate secretary will report on the preliminary voting results.
And then following that, I'll adjourn the meeting and provide remarks on our 2020 and Q1 performance, the progress that we're making towards our strategic priorities as well as our to take general questions submitted by shareholders through our virtual meeting portal. I will now call this meeting to order. I'd like to introduce our Director nominees who have joined the meeting today remotely. Joseph Alvarado, Charles Bunch, Deborah Caffaro, Marjorie Rogers Cheshire, David Cohen, Andrew Feldstein, Richard Harshman, Dan Hesse, Linda Medler, Marty Finsgraf, Tony Towns Whitley and Michael Ward. Also on the line are the members of our executive committee, Carol Brown, Richard Bynum, Kieran Fallon, Debbie Geld, Vicki Henn, Greg Jordan, Stacy Yukno, Ganesh Krishnan, Karen Larimer, Mike Lyons, Bill Parsley and Rob Riley.
And finally, Tom Kelly and Sam Kennedy of PricewaterhouseCoopers LLP, our independent registered public accounting firm are on the phone and they'll be able to answer questions during the general question and answer session. Joining me today on the call and in the room here actually is Greg Jordan, our General Counsel and Chief Administrative Officer as well as Alicia Powell, our Corporate Secretary and Brian Gill, the Director of Investor Relations. This meeting is going to be conducted in accordance with the regulations for conduct in the order set forth on on the agenda. The regulations and agenda are available in the virtual meeting portal. By attending this meeting, you agree to abide by the regulations for conduct.
Because this is a meeting of our shareholders, only those who entered the meeting as a shareholder using a control number will be permitted to vote and submit questions. Shareholder questions. Shareholder questions are welcome. To vote or submit questions, please follow the instructions available on our virtual meeting portal. We will only be answering questions submitted in writing via the portal and consistent with our regulations for conduct.
You could submit questions at any time during the meeting even now. We will now turn to the formalities are necessary for our record keeping. Alicia, will you please present the Secretary's report?
Thank you, Bill. I have in my possession an affidavit from Broadridge Financial Solutions, Inc, PMC's distribution and tabulation agent. The affidavit provides that the proxy materials were mailed to shareholders commencing on March 16, 2021, the day we began providing access to our proxy materials. Certain other shareholders were mailed paper copies or received to shareholders of record as of January 29, 2021. American Election Services has been appointed as the Judge of Election for this meeting.
The Judge of Election keeps a certified listing of all shareholders of record. On behalf of American Election Services, James Rate is supervising the voting, and he has delivered his oath of office to me. The affidavit notice and oath will be filed with the records of this meeting. The Judge of Election has certified that at the beginning of this meeting, they were present in person via virtual format or by proxy 374,000,000 votes or 88.35 percent of the total voting power. Therefore, a quorum is Copies of the minutes from the 2020 Annual Meeting of Shareholders are available from me upon request.
I would also like to remind those attending the meeting that today's presentation contains forward looking information. Cautionary statements about this information are included in today's presentation, which is available on our corporate website, pnc.com, under Investor Relations. And I urge you to read the cautionary statements regarding this information. Mr. Chairman, this concludes my report.
Thank you, Alicia. Based on your report, I find that proper notice has been given and a quorum is present. Therefore, this meeting has been properly convened. The purpose of this meeting is to consider and act upon 4 proposals. The 3 management proposals are: 1st, the election of 13 of the 13 nominated directors second, the ratification of the audit committee selection of PricewaterhouseCoopers LLP as PNC's independent registered public accounting firm for 2021.
And third, the advisory approval of the compensation of PNC's named executive officers. I will now ask for a single motion to introduce May I have a second to this motion?
Mr. Chairman, my name is Greg Jordan. I am a shareholder and I so move.
May I have a second to this motion?
Mr. Chairman, my name is Greg Jordan. I am a shareholder and I second the motion.
I declare that these proposals have been properly introduced and moved. The 4th proposal for shareholder consideration is a shareholder proposal regarding a report on risk management in the nuclear weapons industry submitted by the Sisters of St. Joseph of Brentwood together with cosponsors or cosponsor, the Sisters of Humility of Mary. If the proponents representative, Joyce Rothermill is available, I would ask that the operator unmute her line so that the proposal can be presented. The proposal is set forth in detail on Page 86 of our proxy.
Joyce, if you would, you have 3 or 4 minutes to present the proposal.
Joyce, your line has been open.
Name is Joyce Rothermel, and I'm a representative of the Stop Banking the Bomb campaign. I'm here to move proposal 4 on behalf of the Sisters St. Joseph of Brentwood and the Sisters of the Humility of Mary, Villa Maria, Pennsylvania. As Catholic religious congregations in a society struggling with excessive violence, the sisters assert that there is a clear moral responsibility for P&C and us investors to acknowledge the direct role that financing of nuclear weapons plays in perpetuating human rights harms in war and conflict and that all actors must contribute to appropriate remedies. The most severe human rights impacts of the nuclear weapons companies financed by P&C are irremediable and result in the loss of life.
This proposal is offered supported by strong legal and financial risks assessments to P&C and us shareholders as an invitation to deeply examine the business model in the context of its human rights responsibilities, so that leadership and vision be advanced to end the company's financing that contributes to death and destruction and instead advance a purpose to contribute to a more positive vision of society, which PNC does in so many ways already. Using the words of Irish folk singer and peacemaker Tommy Sands and refuting the words of an earlier anti war song sings, the answer is not blowing in the wind, my friends. The answer stares you in the eyes. Since 1945, the terror of nuclear weapons has been with us and the answer is not to build them, not to have them. As a resident of Pittsburgh, I'm concerned that our local bank, my local bank is complicit in financing nuclear weapons.
PNC lends over $1,600,000,000 to companies that manufacture or produce nuclear weapons. And since January 22 this year, nuclear weapons are illegal under international law. We believe the support for this proposal is warranted for three reasons. 1st, PNC's risk management screens and due diligence processes lag behind its peers and do not explicitly address the risks associated with financing nuclear weapons. 2nd, the Board's conclusion that financing nuclear weapons does not present significant enough risks to stop, fails to account for the entry into force of the Treaty on the Prohibition of Nuclear Weapons, which will likely result in increasing reputational and legal risk.
The treaty establishes a new normative framework on nuclear weapons and has inspired other financial institutions to exit financial relationships with nuclear weapons producers. Lastly, many of the companies categorized as nuclear companies that PNC finances do not have adequate systems in place to fulfill their own human rights responsibilities and present reputational and legal risks. Last week, 30% of Lockheed Martin's shareholders voted for improved human rights disclosure. In conclusion, we agree with Pope Francis that not just the use, but even the possession of nuclear weapons is immoral. We say to TNC and all financial institutions and governments who do to stop banking the bomb and encourage all shareholders to support proposal number 4, which reads, shareholders request that the Board of Directors issue a report at reasonable cost and omitting proprietary information assessing the effectiveness of PNC's environmental and social risk management systems at managing risks associating with lending, investing and financing activities within the nuclear weapons industry.
Thank you very much.
Thank you, And by the way, thank you for recognizing the good that we do in our communities and support of our communities. As an aside, our Pittsburgh team remembers you fondly from the Community Food Bank as a CEO. And I think we continue to support them in a big way at a time when it's desperately needed here in Pittsburgh. We're going to take a pause right now to allow for questions related to these four proposals. And I'll just remind you, questions unrelated to these proposals will be addressed as appropriate during the general question and answer session that will follow the adjournment of the official meeting.
If multiple questions are submitted on the same topic, we'll do our best to summarize them and respond collectively to allow us to address as many questions as possible. And we'll make every effort to address questions that are consistent with the regulations for conduct. We've received several questions submitted through the virtual meeting portal prior to today's meeting and we'll address those first.
Okay. Bill, we received a few questions about the size of PNC's Board of Directors and the compensation of our directors. Can you discuss why P&C's Board has 13 members and why you think this is the appropriate number of directors
Sure, Brian. So the Board's Nominating and Governance Committee reviews the size and composition of the Board annually. And at this time, it has set its size at 13 directors. When we compare the size of our Board to other financial institutions with 13 directors, we're actually below the peer median. And given the amount and complexity of the work facing the boards of financial institutions these days, we actually think that we may need to make our board a bit bigger in the near future.
With respect to compensation paid to our directors, our board is working, I'll just tell you, the board's working harder than ever. Last year, we had more than 65 board and committee meetings. We established a new special committee on equity and inclusion, engaged regularly on our pandemic response, oversaw the sale of BlackRock and our agreement to acquire BBVA and maintained a regular constructive dialogue with our regulators. And of course, those are just the meetings. All the work that goes into preparing for the meetings adds up to a pretty big job to sit on the Board of a financial institution.
The Nominating and Governance Committee reviews the director compensation program annually and it's found PNC's director pay to be reasonable and appropriate. The committee's review is performed by a benchmarking study completed by an independent third party. Thank you.
Your next question asked about the qualifications of the director nominees and whether PNC has ever considered implementing a restriction on how long board members can serve.
Thank you. So we recognize the value of a board that is diverse in perspective and experience. And we understand that diverse boards lead to better decisions and outcomes for our employees, our customers and our communities and our shareholders. In developing a slate of director nominees, the Board's nominating and governance committee evaluates potential directors for demographic, cognitive, gender and ethnic diversity as well as breadth of background skills and experience. Committee considers the company's strategy and industry trends when anticipating the skills the Board will need in the future.
As the financial services industry has evolved, so has our Board. Our slate of director nominees includes senior leaders with substantial expertise in a range of fields, including technology, risk, strategic planning and finance. Of our 13 director nominees, all 13 have valuable senior leadership age of 72. The average tenure of our directors is currently about 5 years. And the Board's commitment to refreshment is evidenced by the addition of 10 new directors and 10 director retirements since the 2015 Annual Meeting of Shareholders.
Okay. Your next question relates to proposal 2. Can you discuss the selection of the independent registered public accounting firm and why that same firm has been chosen consistently for years? Sure. So that's under the audit committee's charter.
It's responsible for selecting, appointing, compensating, retaining
and overseeing our independent auditors. The committee evaluates, monitors and reports to the Board regarding the independence, qualifications and performance of the independent auditors and approves all audit engagement fees and associated terms. The committee selected PwC as our independent auditors 2021. The committee values PwC's extensive experience auditing large financial institutions over the years and it has found PNC to be objective, challenging, candid and thoughtful. It's also important to note that PWC's audit of PNC is subject to annual PCAOB inspection.
Okay. Your next question relates to proposal number 4, the shareholder proposal regarding the report on risk management and the nuclear weapons industry. The shareholder asked why the proposal was addressed after the management proposals in the proxy statement and why the Board recommends a vote against this proposal? Sure.
First off, it's just standard practice to list shareholder proposals after management proposals. I actually have no idea why that is, but all of our peers follow a similar formatting. And the position or order in the proposals has absolutely nothing to do with their level of importance. As you've seen, the Board of Directors recommends a vote against the shareholder proposal because our lending to companies connected to the nuclear defense industry is actually quite limited. In fact, an independent third party found that there's 88 other financial organizations who out outrank us in exposure to these companies with an aggregate over 700x more exposure than P and C.
In short, we're just not critical to the financing and C. In
short, we're just not critical to the
financing operations of these companies. Further, the companies, the shareholder proponents have characterized nuclear weapons companies are in fact large and diversified companies that provide a myriad of products and services that benefit society and enhance the quality of human life. These companies make components of cancer detection tools and treatments, navigation systems and radar systems and safe drinking water management systems, just to give you a few examples. The vast, vast majority of these companies' operations and revenue bear no relationship whatsoever to nuclear weapons. Our loans to companies connected to the nuclear defense industry are subject to our environmental and social risk management framework, which includes an environmental and human rights risk assessment and we've consistently found no ESG risks would inherently exclude these loans or these loan recipients from the application of our fair and consistent lending guidelines.
Finally, the Board recently reviewed our lending relationships with these companies and concluded that these relationships do not pose a material credit, legal or reputational risk to PNC and are consistent with our ESRM framework. Further detail on the Board's recommended vote against this proposal can be found in our proxy statement.
Okay. Your next question asked if the Board of Directors has ever recommended a yes vote on a shareholder proposal? And if so, did it require multiple submissions by the the shareholder?
This was a great question that actually had us all taken for a second because what actually happens is when our Board agrees with a shareholder proposals recommendation, we simply implement the recommendation. And in such cases, the proposal is withdrawn by the shareholder and it does not get voted upon by the shareholders. And this actually happens quite often. We get great suggestions coming through from shareholders and we react to them, which is our job. To put it another way, the only shareholder proposals that actually get included in the proxy statement over the years are those that the Board has already chosen not to implement.
So of course the Board has recommended voting against these particular proposals.
Okay. We have no further questions related to proposals at this time.
Thank you, Brian. All proposals are now formally before the meeting and I declare the polls to be open. Shareholders who have not voted or wish to change their vote may do so now by clicking on the Vote Here button in the virtual meeting portal and following the instructions. Shareholders who have sent in proxies or voted by phone or Internet do not need to take any further action unless they want to change their vote. We will pause briefly to allow voting to occur.
And please continue to hold just for a little bit while the final votes are cast. All right. I declare the polls to be closed, and I'd to call upon the corporate secretary to report the preliminary voting results.
Thank you, Bill. The Judge of Election has provided a preliminary report to me, which certifies that a majority of the votes cast were for the election of all 13 director nominees, for the ratification of the selection of PricewaterhouseCoopers, for the advisory approval of the compensation of P&C's named executive officers and against the shareholder proposal regarding a report on risk management in the nuclear weapons industry. I will file the preliminary report with the records of this meeting and the final vote tally will be disclosed on a Form 8 ks that we will file with the SEC.
Thanks, Alicia. Subject to certification of the final voting results by the judge of election, I declare that the slate of 13 directors has been elected. The appointment of PricewaterhouseCoopers as PNC's independent auditor for 2021 has been ratified. The advisory resolution on executive compensation has been approved and the shareholder proposal regarding a report on risk management in the nuclear weapons industry has not been approved. This concludes the formal business of the meeting.
I declare the annual meeting to be adjourned. Now with the close of the business portion of today's meeting, I thought I'd offer just a few remarks on our 2020 year and 1st year 2021 results and then address a few of the key initiatives that we're currently executing on to position our company for the future while supporting all of our constituents. When we think about last year and what we've accomplished as a company, it's actually pretty remarkable. We've experienced a pandemic, an economic crisis, widespread unrest and a contentious U. S.
Election. But notwithstanding these challenges, we continue to look out for the best interests of our constituents. We actually transferred more than 30,000 of our employees to a remote work environment. We modified our branch operations so that we could continue to serve our customers and we extended approximately $13,000,000,000 in small business loans through the 1st round of the Paycheck Protection Program. We also deployed $30,000,000 directly into communities in support coronavirus relief efforts.
In addition, we remain focused on our strategic priorities, including accelerating our national expansion with our agreement to acquire BBVA USA and a transformational step that will reflect a strategic redeployment of proceeds from the sale of our BlackRock investment. All of this is fundamental to who we are as a company. As a Main Street Bank, we have an opportunity and a responsibility to help make a difference for those we serve and this became even more important last year. It wasn't always easy and we actually learned a lot through the process, but I'm a strong believer that when we do what's right for all of our stakeholders, we win. In the face of unprecedented challenges, we did what we said we were going to do by focusing on the things that were within our control and positioning our company for long term growth, all while supporting our employees, customers and communities.
Because of this, we ended 2020 in a better place as a company than where we started. Shifting for a moment to our financials, we had a solid 2020 amidst a pretty challenging operating environment and reported full year net income from continuing operations of $3,000,000,000 or $6.36 per diluted common share. Over the course of the year, we grew loans and deposits, delivered positive operating leverage and executed well on all of our strategic priorities. Our balance sheet finished the year in a very strong position, I think the strongest ever with record levels of capital and liquidity and significant credit reserves. Moving into our Q1 results.
We had a solid start to the year as we grew revenue and controlled our expenses, again generating positive operating leverage. Our first quarter results also benefited from a significant provision recapture driven largely by an improving economic outlook. In addition, we maintained record high capital and liquidity levels. Consistent with the industry, the quarter was impacted by continued weak loan demand. But based on the strength of the U.
S. Economy, we expect to see this improve over time. We continue to execute well on our strategic priorities, expanding our leading banking franchise, deepening customer relationships and leveraging technology to innovate. One of the best examples of this is our pending acquisition of BBVA USA. Subject to regulatory approval, this acquisition will significantly accelerate our national expansion and position us in 29 of the 30 largest markets in the country.
Complete, this transaction will reflect a strategic redeployment of proceeds from the sale of our BlackRock investment and elevate us to the 5th largest U. S. Bank in terms of assets. We're making significant progress in our integration planning and are on track to close mid year pending regulatory approval. We're collaborating with our BBVA counterparts to convert technology, map business segments and develop integration strategies and we haven't found any surprises regarding the type or quality of BBVA's business.
Another example of our progress in executing on our priorities is the recent launch of low cash mode. This groundbreaking digital tool fundamentally changes the banking experience for our virtual wallet customers by allowing them to avoid overdraft fees through unprecedented account transparency and control. Low Cash Mode allows our virtual wallet customers to see and control what's happening in their checking accounts in real time. If a customer's balance is negative, we give them at least 24 hours to decide whether to process certain debits that otherwise might result in overdrafts. And if the customer chooses to return a payment, we do not assess a fee.
This payment control a significant differentiator that we believe will help our customer avoid overdraft fees of approximately $125,000,000 to $150,000,000 annually. Loc Cash Mode represents a shift away from the industry's widely used overdraft approach, which drives customer which we believe is unsustainable. We firmly believe this differentiated approach will drive significant growth in new and existing customer relationships over time as we execute our national expansion strategy. This is the right move for our customers in the bank. And as I said earlier, when we do right by our customers, we win.
We also win by doing what's right for our communities. And you may have seen that earlier today, we announced a 4 year $88,000,000,000 community benefits plan to expand economic opportunities for minorities, low and moderate income individuals and communities and other underserved populations. This plan was developed in connection with our pending acquisition of BBVA USA and it covers PNC's expanded footprint pending regulatory approval of the acquisition. It also includes and builds on PNC's and BBVA's previous pledges to help meet community needs, advance economic empowerment and address systemic racism. Through this plan, we have a significant opportunity to make a difference in several key areas, including supporting homeownership among minority and low and moderate income borrowers, increasing access to credit for small businesses in low and moderate income communities and bringing unbanked and underbanked individuals who have suffered disproportionately through the pandemic into the mainstream financial system.
Through targeted loans, grants and investments as well as products that serve individuals outside the mainstream financial system, we expect to have a significant impact across all three of these areas among others. This plan reflects our Main Street Bank approach and our strong belief that when our communities thrive, we thrive. We have seen time and time again that an investment in our community is an investment in our company. We are confident that by deploying traditional bank products in a better and more equitable way, we will increase long term shareholder value. Not only is this the right thing to do, but it's good business and it will make our company more competitive.
As I mentioned earlier, our community benefits plan includes and builds on our previous corporate responsibility commitments, including the $1,000,000,000 to help fight systemic racism and support economic empowerment among low and moderate income communities. Last summer, we appointed Richard Bynum as the company's 1st corporate 1st corporate responsibility officer to lead our work in this space. In addition, in June of last year, our Board formed a special committee on equity and inclusion to oversee important matters. This oversight work will include our work executing on the community benefits plan. Internally, we're taking steps to better recruit, retain and develop diverse talent.
I'm proud to share that we have the most diverse board and executive committee in P&C's history. 33% of our independent board members are gender diverse, while 25 percent are racially diverse. In addition, a majority of our executive committee members are gender and racially diverse. And as our efforts and as part of our efforts to be even more transparent around our workforce demographic data, we will begin publishing our equal employment opportunity data later this year. Finally, I want to take a moment to address our management of environmental issues, which has become increasingly critical to our ability to compete.
While our stakeholders' expectation for transparency, dialogue and action may be greater than we've ever seen, we've made significant progress. We're engaging with our stakeholders, investing in our sustainable finance capabilities and enhancing our reporting. Over the next few months, we'll be publishing our 1st task force on climate related financial disclosures report. This report will accompany our annual corporate responsibility report, which aligns with the GRI and SASB frameworks and focuses on risk management strategy related to climate change. Notwithstanding massive challenges over the past year, our company has continued to move forward, making the next right decision and fulfilling our obligations to our colleagues, our customers, our communities and all of you.
I want to thank our employees who have made all of this possible during one of the most challenging times in our history and whose dedication and hard work that position us to deliver for all of our stakeholders this and beyond. I also want to thank all of you for your support and trust, which has never been more important. I'm now going to pause and allow for questions from our shareholders in the remaining time. Person to respond to questions we receive that are appropriate for discussion. As a reminder, if multiple questions are submitted on the same topic, we'll summarize them and respond collectively.
And we'll make every effort to address questions and comments that are consistent with the regulations for conduct. And and not of general concern to our shareholders, please contact our Investor Relations team through our website at pnc.com. We've allocated 1 hour for the meeting, including all questions and comments. So please keep your questions and comments brief in order to give us the opportunity to address as many questions as possible. And again, we received several questions submitted to our virtual meeting portal prior to today's meeting.
So we're going to kind of hit on those first.
Okay. So we received a question asking if we are considering a stock split, why or why not? And if yes, what timing or conditions would you like to see before taking that action?
Thanks, Brian. No, we're not considering a stock split. There's not really a compelling case to be made for a stock split. At one time, the conventional thinking was that when a company share price got to a certain level, the company would split the stock as a way of foreshadowing expectations of growth and in order to make it more affordable for increase costs because it doubles the cost of the mechanics that go into servicing every share. The split might result in some positive short term public relations that brings about maybe a short term bump.
But long term, it would appear that the cost is more than it's worth.
Okay. Your next question asks you to discuss P and C's ongoing efforts to promote diversity and inclusive representation within the organization, specifically within the executive leadership team?
Sure. First of all, we've been at this for a long period of time. We recognize the importance of a diverse team to PNC's long term success. It starts with our Board and we're pleased, as I said before, that the independent directors elected today by our shareholders are 1 third women and a quarter of them bring racial diversity to the Board. We've also assembled our most diverse executive team in our history with 5 women and 3 people of color on my team with 12 for developing diverse teams and we provide them tools to be able to do that.
For many years now, I actually don't know how many years this goes back, but call it 5 or 10, at least 50% of our hires in our early career development program have been made up of diverse candidates ensuring that we have a strong and diverse talent pipeline for years to come. We have a program in place where basically we recruit diverse teams into the company. We have managers who are accountable to develop our team members. We have process for tracking it. It's incredibly important to us as ultimately our talent is our most precious resource.
Moving to the next question. Could you discuss P&C strategies for competing with online consumer banks and the general migration to a more digital based consumer banking experience.
So the influx of new entrants into the digital banking space has made it clear that ease and simplicity are paramount paramount to customers when using banking products and services. We are embracing and championing ease and simplicity throughout our product offerings, with low cash mode being the most recent example, while always maintaining our focus on security and preserving customer trust. However, we also know that having a physical presence still really matters our customers and that's why we continue to build brick and mortar solution centers as we continue our national retail expansion.
And next, could you provide an update on the progress of P&C's acquisition of BBVA USA? Sure. So the process has actually been going really well and we've achieved
a good deal of progress today, including filing all the major regulatory applications. We formed an enterprise integration working group comprised of businesses and functional leads across both P and C and BBVA. We've held almost continuous meetings with BBVA team members and conducted numerous listening sessions with community organizations across our combined footprint. We've confirmed system and application mapping with a vast majority is inside migrating to PNC technology, which complexity substantially. At this time, we're still expecting to close the deal sometime in mid 21 and we'll continue to work and we will continue working diligently on the various work streams under our control ahead of closing and in preparation for integration.
Your next question asks, could you please discuss the rationale for the Tempest acquisition and how it fits into P and C strategy? And then secondly, did it affect the pay ratio calculations?
Sure. For those of you who are unfamiliar with it, Tempus is an industry leading player in the payment sector and it's been around for 30 plus years. In particular, Tempus has an industry leading gateway solution allowing for significant optionality in deciding method of payments for both the company's receivables and their payables. P and C historically has had a strong partnership with Tempus. We've actually gone to market with them for years and collaborated with them on products the past.
Our acquisition of Tempus is just kind of a next step in that partnership and it's going to result in some powerful solutions that will help our clients meet their cash handling needs. Tempus Technology closed in 2021 and it would have no bearing on the 2020 compensation. And as a practical matter, no bearing going forward. It's a fairly small organization.
We have a question from Tim Chesley of the EAS Carpenters Union. I'll read it verbatim. As long term investors, we believe the executive compensation plan should be designed to drive the successful execution of the company's long term strategic business plan. We support the company's executive compensation plan as it includes a variety of financial and stock performance metrics, includes peer related performance targets and uses a variety of equity instruments. Could you or the compensation committee chair speak to the performance metrics considered in determining the level of performance share units and restricted share units awarded named executive officers in the Q1?
Sure. Thanks for the question, Tim. In your question, you referenced we have 2 different share counts or types that we give out. 1 are restricted units that are 40% of the total and they invest in annual installments over 3 years. There's also 60% of the total that has a 3 year performance period, driven off of a relative EPS rank and a performance against a return on equity target that in its simplest form kind of comes from our strategic plan assumptions.
On the payout range on the restricted share units are 0% to 100% and they're 0% to 150% on the performance shares. The amount that give out in a given year is determined as a portion of total compensation for each named executive officer. And you might have seen that this year, we purposely chose to pay a higher percentage in equity than we traditionally do across our higher paid executives, including myself.
We have another question. Mr. Chairman, the topic of stakeholder capitalism as an alternative to shareholder capitalism has received considerable attention recently. As long term pension fund investors, the Carpenters funds appreciates the sentiments embodied and stakeholder capitalism perspective, but feel that execution could be complicated. Could you discuss the Board's perspective on the concept of stakeholder capitalism and what principles the Board could use to balance the interest of varied stakeholders as it develops and implements the long term business strategy?
Yes. That's a great question. And it's a question that my guess is boards of every type of company are struggling with today. And I would tell you it's actually a pretty easy question to answer at P&C. As a practical matter, if you think about the constituencies that would make up stakeholder capitalism, it's our employees, our communities, our shareholders and our clients.
We're a service organization that is driven by the talent we have in our company, the degree to which they like their job and they're proud of their job, the opportunities we have to allow them to learn and take on new assignments. You hear me talk earlier about we thrive when our communities thrive. We're part of the community. We're part of the network. Being part of that network actually gets us business.
And it doesn't work when the network doesn't work. It doesn't work when part of the network is left out. So support of our communities as part of our brand has been something that we've just done forever and it's good for business. And then just always do it right by the client. We're in a business where there's 5,000 banks in the country.
We compete with everybody. Client service, the best client service with the best products, it's table stakes for us to provide long term return to our shareholders. So I don't think there's maybe it's just a case with a bank because we're kind of based in communities and we're service oriented. But frankly, stakeholder activism or shareholder activism, capitalism are kind of the same thing. We'll maximize long term shareholder value by basically being part of the fabric of our communities and serving clients and taking care of our employees.
It's a great question.
Her next question is short and to the point. Any plan to increase the quarterly dividend?
So we have as part of our application to purchase BBVA, we basically put capital actions on hold. You'll know last year we had restrictions, not just us, but the whole industry from the Fed on the amount of capital could return either in dividend or share buybacks. We basically publicly said that we're going to stay where we are until we close the BBVA acquisition and then take a look. It would be our intention to or you should expect that you would see capital return from us both in terms of dividend and share repurchases that those will come back as we get through the close and integration of BBVA. So no specific time on that.
That obviously takes regulatory approval, but it's in our game plan that we'll get back to sort of normal course as soon as we close and integrate.
Hey, looks like we have no further questions.
Thanks, Brian, for reading those out. And thank you, everybody, for your questions. Again, if you have additional questions or your question wasn't answered, you can reach out to our Investor Relations group through our corporate website. Thank you all for attending. Thank you for your interest in PNC.