PNC Bank 2008 Annual Report Download - page 136

the final award payout with respect to incentive/performance
unit share awards. Restricted stock/unit awards have various
vesting periods ranging from 12 months to 60 months. There
are no financial or performance goals associated with any of
our restricted stock/unit awards.
The weighted-average grant-date fair value of incentive/
performance unit share awards and restricted stock/unit
awards granted in 2008, 2007 and 2006 was $59.25, $73.83
and $67.36 per share, respectively. We recognize
compensation expense for such awards ratably over the
corresponding vesting and/or performance periods for each
type of program. Total compensation expense recognized
related to incentive/performance unit share awards and
restricted stock/unit awards during 2008 was approximately
$51 million compared with $42 million in 2007 and $45
million in 2006.
A summary of nonvested incentive/performance unit shares
and restricted stock/unit share activity follows:
Shares in thousands
Nonvested
Incentive/
Performance
Unit Shares
Weighted-
Average
Grant
Date Fair
Value
Nonvested
Restricted
Stock/
Unit
Shares
Weighted-
Average
Grant
Date Fair
Value
Dec. 31, 2007 316 $66.28 1,869 $60.20
Granted 176 53.27 548 55.20
Vested (652) 50.92
Forfeited (30) 62.75
Dec. 31, 2008 492 $61.63 1,735 $62.07
In the chart above, the weighted-average grant-date fair value
of incentive/performance unit share awards and restricted
stock/unit awards is measured by reducing the grant date price
by the present value of dividends expected to be paid on the
underlying shares and for estimated forfeitures on restricted
stock/unit awards.
At December 31, 2008, there was $39 million of unrecognized
deferred compensation expense related to nonvested share-
based compensation arrangements granted under the Incentive
Plans. This cost is expected to be recognized as expense over a
period of no longer than five years. The total fair value of
incentive/performance unit share and restricted stock /unit
awards vested during 2008, 2007 and 2006 was approximately
$41 million, $79 million and $63 million, respectively.
L
IABILITY A WARDS
In 2008, 2007 and 2006 we granted a performance unit
incentive award each year to a senior executive. The grant is
share-denominated with an initial specified target number of
47,000 share units for 2008, 26,400 share units for 2007 and
30,000 share units for 2006. The potential award is dependent
on the achievement of certain performance criteria over a
three-year period ending December 31, 2008 for the 2006
grant, December 31, 2009 for the 2007 grant, and
December 31, 2010 for the 2008 grant. Final awarded
performance units will be paid only in cash.
Additionally, beginning in 2008, we granted other cash-
payable restricted share units to certain executives. The grants
were made primarily as part of an annual bonus incentive
deferral plan. While there are time-based, service-related
vesting criteria, there are no market or performance criteria
associated with these awards. Compensation expense
recognized related to these awards was recorded in prior
periods as part of annual cash bonus criteria. As of
December 31, 2008, there were 91,449 of these cash-payable
restricted share units outstanding.
A summary of all nonvested, cash-payable restricted share
unit activity follows:
In thousands
Nonvested
Cash-
Payable
Restricted
Unit
Shares
Aggregate
Intrinsic
Value
Outstanding, January 1, 2008 57
Granted 145
Outstanding, December 31, 2008 (a) 202 $9,878
(a) There were no share units vested and received or forfeited during 2008.
Total compensation expense recognized related to liability
awards, including market valuation adjustments recorded
during 2008 on these awards, resulted in a net reduction to
expense of approximately $1.1 million. The corresponding
amounts for 2007 and 2006 were approximately $1 million of
net expense recognized in each year.
E MPLOYEE S TOCK P URCHASE P LAN
As of December 31, 2008, our ESPP has approximately
1.2 million shares available for issuance. Full-time employees
with six months and part-time employees with 12 months of
continuous employment with us are eligible to participate in
the ESPP at the commencement of the next six-month offering
period. Eligible participants may purchase our common stock
at 95% of the fair market value on the last day of each
six-month offering period. No charge to earnings is recorded
with respect to the ESPP.
Shares issued pursuant to the ESPP were as follows:
Year ended December 31 Shares Price Per Share
2008 133,563 $54.25 and $46.55
2007 111,812 68.00 and 62.37
2006 105,041 66.66 and 70.34
B
LACK R OCK LTIP P ROGRAMS
BlackRock adopted the 2002 LTIP program to help attract and
retain qualified professionals. At that time, PNC agreed to
transfer up to four million of the shares of BlackRock
common stock then held by us to help fund the 2002 LTIP and
future programs approved by BlackRock’s board of directors,
subject to certain conditions and limitations. Prior to 2006,
BlackRock granted awards of approximately $233 million
under the 2002 LTIP program, of which approximately $208
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