8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): March 24, 2011

(Exact name of registrant as specified in charter)

001-11302
(Commission File Number)

OHIO
(State or other jurisdiction of incorporation) 34-6542451
(I.R.S. Employer Identification No.)

127 Public Square
Cleveland, Ohio 44114-1306
(Address of principal executive offices and zip code)

(216) 689-3000
(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o      Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o      Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o      Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o      Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Section 5 — Corporate Governance and Management

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

On March 25, 2011, KeyCorp announced that Beth Mooney, who will become Chief Executive Officer on May 1, 2011, had asked KeyCorp’s current Chief Executive Officer, Henry Meyer, to remain as a non-executive employee of KeyCorp for up to one additional year to help facilitate the transition of important industry and community relationships. Mr. Meyer will be neither a corporate officer nor a member of the KeyCorp board of directors.

The letter agreement entered into between Mr. Meyer and KeyCorp concerning these arrangements (the “Letter Agreement”) provides that during the period in which he serves as a non-executive employee of KeyCorp, Mr. Meyer will be paid an annualized salary of $240,000 with no equity components, and will be eligible to participate in Key’s various employee benefit plans, including the continued vesting of outstanding equity awards. Mr. Meyer will not begin receiving payments from Key’s pension or other retirement plans while he serves as an employee during this special assignment.

As part of Mr. Meyer’s employment arrangement, all of Key’s obligations under Mr. Meyer’s employment agreement will terminate effective May 1, 2011 other than the provisions outlined in Sections 11, 12, 14, and 15 of the agreement, and Mr. Meyer will continue to remain subject to the non-compete requirements outlined in Section 10.1 and Section 10.3 of the agreement.

Mr. Meyer’s employment arrangement provides that when KeyCorp repays its TARP obligations, if the Board subsequently adopts any long-term equity compensation program, Mr. Meyer will not be eligible to participate in such program. Mr. Meyer will be eligible to be considered by the Compensation & Organization Committee for a cash incentive compensation award based on both his performance and the performance of KeyCorp (determined and/or adjusted to take into account the portion of the 2011 year during which Key is subject to the restrictions on compensation under TARP.) Any cash incentive compensation award payable to Mr. Meyer would be determined after the end of 2011, but would not exceed $500,000. In addition, the exercise period for options granted to Mr. Meyer with an effective date of June 12, 2009 and expiration date of June 12, 2019 will be shortened to expire on April 30, 2015.

The description of the Letter Agreement set forth in this report is qualified in its entirety by reference to the actual terms of the Letter Agreement, which is attached as Exhibit 10.1 to this Form 8-K and incorporated herein by reference. The press release issued by KeyCorp announcing Mr. Meyer’s non-executive role is attached as Exhibit 99.1 to this Form 8-K and is incorporated herein by reference.

Section 9 — Financial Statements and Exhibits

Item 9.01 Financial Statements and Exhibits

(d) Exhibits.

10.1	Letter Agreement between Henry L. Meyer and KeyCorp dated March 24, 2011.
99.1.	Press Release dated March 25, 2011.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	KEYCORP (Registrant)
Date: March 25, 2011	By:	/s/ Paul N. Harris
		Paul N. Harris
		Executive Vice President, General Counsel and Secretary

EX-10.1

Exhibit 10.1

Beth E. Mooney
President and Chief Operating Officer

Tel: (216) 689-0301

March 24, 2011

Mr. Henry L. Meyer III
Chairman and CEO
KeyCorp
127 Public Square
Cleveland, OH 44114

Dear Henry:

First of all, I want to thank you for all your guidance and support as I transition into becoming Chair and CEO of KeyCorp (“Key”). I very much appreciate the customer, industry and governmental introductions you have made for me and your counsel as I have become a Key Board member.

As I have discussed with you, my number one priority over my initial year as CEO is “focused execution.” I intend to devote almost all my efforts on that single priority. I believe that we have the right strategy and foundational elements in place — we just need relentless and flawless execution.

Under your leadership, Key has had an outstanding leadership role in Cleveland, the State of Ohio and the other communities and States that we serve. Also, in your 39 years at Key, you have developed a deep network of customer, industry, and community contacts. We do not want those important Key assets to diminish and I would like you to work with me to assure an orderly transition over the coming year as I devote my full attention to running the business.

Consequently, I would ask that you continue as a Key employee for an additional year from May 1, 2011 until April 30, 2012. You will not be an executive officer, but, as we have discussed, I would expect you to continue to represent Key as “Retired Chairman and CEO”. Your compensation for the period from May 1, 2011 to April 30, 2012 will be at the rate of $20,000 per month payable per Key’s normal payroll schedule.

Your responsibilities will include representing Key at community, civic and governmental organizations. You and I have agreed on the list of organizations where you will continue to be actively involved and represent Key for the coming year. Also, you will, at mutually convenient times, continue to assist in transitioning important customer and industry relationships. You will have flexibility in your schedule.

Henry L. Meyer III
Page 2

I expect that you and I will work together as you transition these relationships over the coming year. However, for administrative purposes, you should work with Tom Stevens and his office. In that regard, because you will not have an office in Key Tower, should you need an office in downtown Cleveland as you perform your duties under this letter, please coordinate with Tom to arrange to use a visitor’s office.

Reference is hereby made to the Amended Employment Agreement, dated as of September 1, 2009, between Key and you (said Agreement, as amended, being herein the “Employment Agreement”). Effective May 1, 2011, all of Key’s obligations remaining to be performed or observed by it under the Employment Agreement shall be terminated except (i) to pay Base Salary (as defined in the Employment Agreement) to you through April 30, 2011, and (ii) for the obligations of Key under Sections 11, 12, 14 and 15. No termination of Key’s obligations under the Employment Agreement shall affect your rights under any plan or benefit of Key, all of which shall be governed by their respective terms except as otherwise expressly provided in this letter. While you are employed under this letter, Key will provide you the use of office space and secretarial facilities in the greater Cleveland area and reimburse you for business expenses you incur in performing your duties under this letter. Please coordinate with Tom Stevens and his office in this regard. With respect to Section 15 of the Employment Agreement, the fifth anniversary of the “Termination Date” shall be deemed to be April 30, 2016. With respect to Section 14 of the Employment Agreement, the “Termination Date” shall be the date you cease to be an employee of Key under this letter for any reason (whether voluntary or involuntary). For all purposes of the Employment Agreement, upon your employment ceasing under this letter for any reason (whether voluntary or involuntary), your employment shall not be treated as having been terminated for Cause or by a Non-approved Retirement/Resignation (with all defined terms being used as defined in the Employment Agreement). For purposes of Section 10 of the Employment Agreement, Section 10.1 shall continue to apply until April 20, 2012 and thereafter Section 10.3 shall apply until April 30, 2015.

Reference is hereby made to the stock option grant, dated June 12, 2009, made by Key to you in the amount of 900,000 Common Shares (the “Option”). Notwithstanding any contrary provision of the award instrument evidencing the Option, the plan under which the Option was granted, or the Employment Agreement (including Section 14 thereof as amended by this letter), the expiration date of the Option is hereby shortened to April 30, 2015 and, to the extent the Option has not been exercised in full before April 30, 2015, the unexercised portion of the Option shall terminate on April 30, 2015.

As an employee of Key, you will participate in the 401(k) plan and continue to be covered by all health and benefit plans to the same extent as any other employee of Key, provided, however, you will not be granted a new award of stock options or restricted stock for the 2011 Plan year. In the event that Key repays its TARP obligations and the Board subsequently adopts any long-term equity compensation program, you also will not be eligible to participate in such program. After December 31, 2011 but prior to the expiration of the term of your employment under this letter, you will be eligible to be considered by the Compensation & Organization Committee of the Key Board of Directors for a cash incentive compensation award, provided, however, that the award, if any, shall be based on your performance and the performance of Key subsequent to the repayment of TARP.

Henry, I am very excited about Key’s prospects as I assume the Chair/CEO position. Thank you for the solid foundation that you have left for me to build upon. I look forward to working with you through the continuing transition over the next year.

Henry L. Meyer III
Page 3

Please indicate your agreement to this letter by signing and returning the enclosed copy.

Very truly yours,
 

/s/ Beth E. Mooney  

Beth E. Mooney 

I agree to the foregoing letter.
 

/s/ Henry L. Meyer III  

Henry L. Meyer III 

March 24, 2011 

EX-99.1

Exhibit 99.1

News

CONTACTS:	ANALYSTS Vernon L. Patterson 216.689.0520 Vernon_Patterson@KeyBank.com	MEDIA William C. Murschel 216.471.2885 William_C_Murschel@KeyBank.com
	Christopher F. Sikora 216.689.3133 Chris_F_Sikora@KeyBank.com

INVESTOR	KEY MEDIA
RELATIONS: www.key.com/ir	NEWSROOM: www.key.com/newsroom
FOR IMMEDIATE RELEASE

KEY’S RETIRING CHAIRMAN AND CEO HENRY MEYER WILL ASSUME
ONE-YEAR NON-EXECUTIVE ROLE

CLEVELAND, Mar. 25, 2011 — KeyCorp’s CEO-elect, Beth E. Mooney announced that retiring Chairman and CEO Henry L. Meyer III has agreed to remain with KeyCorp as a non-executive employee for up to one additional year to help facilitate the transition of his industry and community relationships.

     Meyer will focus on maintaining those relationships and will represent KeyCorp on important community projects and in the not-for-profit community. During this period, he will not be a corporate officer or a member of the KeyCorp Board of Directors.

     KeyCorp announced on November 18, 2010, that Meyer will be stepping down from those positions on May 1, 2011, and Mooney will become Chairman and Chief Executive Officer.

     Mooney has asked Meyer to continue as a non-executive employee of KeyCorp for up to one year. “In my first year as CEO, my top priority will be the focused execution of the strategies that will provide growth opportunities and generate significant value for our shareholders. Over his 39 years at Key, Henry has developed a deep network of community and industry contacts, and he will facilitate their transition to the management team. Additionally, Henry’s continued presence will assure strong representation by Key at important organizations,” said Mooney.

     Additional information on the terms of Meyer’s employment after May 1, 2011 is described in a Form 8-K filing with the Securities and Exchange Commission.

     Cleveland-based KeyCorp (NYSE: KEY) is one of the nation’s largest bank-based financial service companies, with assets of approximately $92 billion. Key companies provide investment management, retail and commercial banking, consumer finance, and investment banking products and services to individuals and companies throughout the United States and, for certain businesses, internationally. For more information, visit https://www.key.com/about key.

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