PNC Bank 2009 Annual Report Download - page 148

awards, total compensation expense is recognized in full on all
awarded units on the date of grant.
I NCENTIVE /P ERFORMANCE U NIT S HARE A WARDS AND
R ESTRICTED S TOCK /U NIT A WARDS
The fair value of nonvested incentive/performance unit share
awards and restricted stock/unit awards is initially determined
based on prices not less than the market value of our common
stock price on the date of grant. Incentive/performance unit
share awards are subsequently valued subject to the
achievement of one or more financial and other performance
goals over a three-year period. The Personnel and Compensa-
tion Committee of the Board of Directors approves 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 2009, 2008 and 2007 was $41.16, $59.25
and $73.83 per share, respectively. We recognize
compensation expense for such awards ratably over the
corresponding vesting and/or performance periods for each
type of program.
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
December 31, 2008 459 $67.33 1,735 $65.39
Granted 1,665 41.16
Vested (174) 69.47 (1,108) 54.66
Forfeited (79) 39.62
December 31, 2009 285 $66.02 2,213 $53.45
In the chart above, the unit shares and related weighted-
average grant-date fair value of the incentive/performance
awards exclude the effect of dividends on the underlying
shares, as those dividends will be paid in cash.
At December 31, 2009, there was $47 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 2009, 2008 and 2007 was approximately
$47 million, $41 million and $79 million, respectively.
L
IABILITY A WARDS
Beginning in 2008, we granted 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, 2009, there were 440,441 of these cash-
payable restricted share units outstanding.
During the third quarter of 2009, we entered into an agreement
with certain of our executives regarding a portion of their
salary to be payable in stock units. These units, which are
cash-payable, have no future service, market or performance
criteria and as such are fully expensed at grant date. These
units will be settled in cash on March 31, 2011. As of
December 31, 2009, there were 221,286 of these units
outstanding, with a current market value of approximately $12
million.
A summary of all nonvested, cash-payable restricted share
unit activity follows:
In thousands
Nonvested
Cash-Payable
Restricted
Unit Shares
Aggregate
Intrinsic
Value
Outstanding at December 31, 2008 202
Granted 917
Vested and released (54)
Forfeited (64)
Outstanding at December 31, 2009 1,001 $52,828
The total of all share-based liability awards paid out during
2009 was approximately $2 million. There were no share-
based liability awards paid out in 2008 or 2007.
E
MPLOYEE S TOCK P URCHASE P LAN
As of December 31, 2009, our ESPP has approximately
1.8 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
2009 158,536 $36.87 and $50.15
2008 133,563 54.25 and 46.55
2007 111,812 68.00 and 62.37
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,
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