2018 Guide to Effective Proxies

6 TH EDITION | GUIDE TO EFFECTIVE PROXIES 310 COMPENSATION DISCUSSION AND ANALYSIS At meetings held during the first quarter of 2018, the Committee reviewed PNC’s performance for 2017. The Committee noted that PNC delivered a successful year in 2017, with record net income, record fee income, and growth in loans and deposits. PNC added customers across the businesses, expanded into new markets, and continued to focus on expense management. Compared to the peer group, net interest income, noninterest income and return on assets were at or above the 75 th percentile, while EPS growth, efficiency ratio, and return on common equity without goodwill were all near or above the median. One- and three-year TSR were above the 75 th percentile for our peer group, and we ranked first in our peer group for five-year TSR. The Committee reviewed these and other metrics and concluded that in the aggregate, they reflected PNC’s strong performance in 2017, on both an absolute basis and against peers. The Committee took into account that PNC achieved strong growth in its loan portfolio and net interest income while staying within its desire risk appetite and by maintaining an asset-sensitive balance sheet that benefited from a rising interest rate environment. In the Committee’s opinion, these outcomes reflected management’s patient execution of a prudent, risk- balanced, long-term strategy. At these meetings held in early 2018, the Committee also reviewed PNC’s performance against the strategic priorities listed below, which had previously been reviewed with the Board in 2017. Despite the challenging environment, management continued to drive growth across the franchise and make strategic investments to position PNC for long-term success. 2017 STRATEGIC PRIORITIES Building a leading banking franchise in our underpenetrated markets We achieved year-over-year growth across most of our lines of business in the Southeast, with increases in average loans, discretionary assets under management, average household demand deposit accounts, and new primary Corporate Banking clients. We expanded our middle market franchise into new markets. Redefining the retail banking experience We earned the #1 rank in the J.D. Power national bank satisfaction survey. We continued to focus on transaction migration, branch network and home lending transformations, and enhancing digital capabilities for multi-channel engagement and service strategies. 62% of consumer checking relationship customers used non-teller channels for the majority of their transactions in 2017 (up from 58% in 2016). Deposit transactions via ATM and mobile channels increased to 53% of total deposit transactions in 2017 (up from 49% in 2016). Capturing more investable assets Discretionary assets under management were $151 billion as of year-end, a $14 billion increase year-over-year. Brokerage fees were $312 million in 2017 (up 6% from 2016). Brokerage account client assets were $49 billion at year end (up $5 million from 2016). Bolstering critical infrastructure and streamlining core processes Efficiency ratio was 64% for 2017, and expenses continued to be well- managed while making critical investments in our businesses and technology. Achieved our $350 million 2017 Continuous Improvement Program target. In addition to evaluating our corporate performance based on these financial and strategic metrics, the Committee also reviewed the individual performance of each NEO. The CEO discussed the individual performance of the NEOs with the Committee, and, where appropriate, discussed the performance of the lines of business or functions managed by the NEOs. The Committee approved compensation awards for each NEO based on an evaluation of corporate, business and individual performance. The Committee discussed compensation recommendations for our CEO with Meridian, the Committee’s independent compensation consultant for 2017. Following this discussion, the Committee approved the compensation amounts for our CEO in an executive session. The Committee also reviewed the CEO compensation decisions in an executive session of the independent members of the board of directors of PNC, with no members of management present. In that executive session, the Committee allowed time for the independent directors to provide comments or questions about the CEO’s performance or compensation. Based on the overall evaluation of PNC’s 2017 performance, the Committee determined that it was appropriate to award incentive compensation for each NEO that was significantly above the target amount, and significantly above last year’s awards. The Committee believed that PNC’s strong absolute and relative performance in 2017, achieving growth while staying within the desired risk appetite, and the continued execution against strategic objectives, particularly in bolstering the technology and risk THE PNC FINANCIAL SERVICES GROUP, INC. - 2018 Proxy Statement 45 PNC FINANCIAL SERVICES GROUP