2018 Guide to Effective Proxies

2.17.10 Peer groups | 467 6 TH EDITION | GUIDE TO EFFECTIVE PROXIES Compensation Discussion and Analysis How We Make Pay Decisions We seek to maintain a competitive level and mix of pay reflective of the market in which we compete for talent. We do this by reviewing the levels and types of compensation paid to executive officers in similar positions at companies in our Peer Group and the other companies with which we compete for talent. Peer Group In setting compensation for our Named Executive Officers, the Compensation Committee examines the compensation data of our peer companies provided by Compensation Advisory Partners (“CAP”), an independent executive compensation advisory firm, to better understand whether our pay practices remain appropriate when measured against the competitive landscape. While this market data is useful, the Compensation Committee does not rely only on this data for targeting compensation levels, but uses it as a basis for validating relative competitive pay for our Named Executive Officers. The Compensation Committee also considers market conditions, promotions, individual performance, and other relevant circumstances as it determines our Named Executive Officers’ compensation levels. For 2017, the Compensation Committee identified an opportunity to review the Peer Group in light of Key’s merger with First Niagara and the evolving regulatory environment. Based on a multi-dimensional review, the Compensation Committee modified the Peer Group for 2017 by adding Citizens Financial Group and removing People’s United Financial Inc. and First Horizon National Corp. These changes to our Peer Group for 2017 were made after considering a number of factors, such as asset size relative to the other institutions within the Peer Group and, in the case of People’s United Financial Inc. and First Horizon National Corp., due to the different regulatory expectations for institutions with less than $50 billion in assets. The companies in our Peer Group maintain a strong brand and reputation and actively compete with us for executive talent. The companies in our 2017 Peer Group were (listed in alphabetical order): • BB&T Corp • Citizens Financial Group • Comerica, Inc. • Fifth Third Bancorp • Huntington Bancshares Inc. • M&T Bank Corp. • PNC Financial Services Group, Inc. • Regions Financial Corp. • SunTrust Banks, Inc. • US Bancorp • Zions Bancorporation As of December 31, 2017, the median asset size, full year revenue, and market capitalization of the Peer Group compared to our asset size, total revenue, and market capitalization is set forth in the table below: U.S. Bancorp PNC Financial BB&T Corp Sun Trust Citizens Financial Group Fifth Third Bancorp KeyCorp Regions Financial M&T Bank Huntington Bancshares Comerica Incorporated Zions Bancorp Full Year Average Assets - Full Year 2017 ($) (in billions) 65.1 71.5 101.0 120.9 124.0 135.2 140.6 150.0 204.9 221.1 371.8 448.6 Full Year Revenue - Full Year 2017 ($) (in billions) 2.6 3.2 4.3 5.6 5.6 5.7 6.3 7.0 9.0 11.3 16.3 21.9 U.S. Bancorp PNC Financial BB&T Corp Sun Trust Fifth Third Bancorp KeyCorp Citizens Financial Group Regions Financial M&T Bank Huntington Bancshares Comerica Incorporated Zions Bancorp Market Capitalization - At Dec 31, 2017 ($) (in billions) 10.0 15.0 15.6 19.6 20.6 21.1 21.6 25.7 30.4 38.9 68.2 88.7 U.S. Bancorp PNC Financial BB&T Corp Sun Trust M&T Bank KeyCorp Fifth Third Bancorp Citizens Financial Group Regions Financial Huntington Bancshares Comerica Incorporated Zions Bancorp Role of the Compensation Committee The Compensation Committee sets the pay and evaluates the performance of our Chairman and Chief Executive Officer, with input from the full Board, and reviews and approves the compensation of a select group of other executives, including the Named Executive Officers. Our Chairman and Chief Executive Officer attends Compensation Committee meetings and provides information and input about the pay levels and performance of our Named Executive Officers, other than herself. The Compensation Committee regularly meets in executive session, during which no member of Management is present, to discuss the recommendations and approve pay actions for our Named Executive Officers, including our Chairman and Chief Executive Officer. 36 KEYCORP