PNC Bank 2006 Annual Report Download - page 52

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The awards were funded by approximately 17% in cash from
BlackRock and the remainder in BlackRock common stock
transferred by us and distributed to LTIP participants
(approximately 1 million shares). As permitted under the
award agreements, employees elected to put approximately
95% of the stock portion of the awards back to BlackRock.
These shares were retained by BlackRock as treasury stock.
We recognized a pretax gain of approximately $82 million in
the first quarter of 2007 from the transfer of BlackRock shares
to satisfy the majority of our 2002 LTIP obligation. The gain
reflected the excess of market value over book value of
approximately 1 million shares transferred in January 2007.
We also expect to recognize a loss in the first quarter of 2007
on the mark-to-market adjustment on our remaining 3 million
LTIP shares obligation. Each of these items will be recorded
in noninterest income.
BlackRock granted additional restricted stock unit awards in
January 2007, all of which are subject to achieving earnings
performance goals prior to the vesting date of September 29,
2011. Of the shares of BlackRock common stock that we have
agreed to transfer to fund their LTIP programs, approximately
1.6 million shares have been committed to fund the restricted
stock unit awards vesting in 2011 and the amount remaining
would then be available for future awards.
While we may continue to see volatility in earnings as we
mark to market our LTIP shares obligation each quarter-end,
we will not be able to recognize additional gains, if applicable,
for the difference between the market value and the book
value of the committed BlackRock common shares until the
shares are distributed to LTIP participants. As of January 31,
2007, when the BlackRock closing market price was $167.76
per share, the unrecognized value related to the remaining
3 million LTIP shares was approximately $225 million and the
unrecognized value of our total BlackRock investment was
approximately $3.4 billion.
42