PNC Bank 2010 Annual Report Download - page 164
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Please find page 164 of the 2010 PNC Bank annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.review this assumption at each measurement date and adjust it
if warranted. This assumption will be decreased from 8.00%
to 7.75% for determining 2011 net periodic cost.
The health care cost trend rate assumptions shown in the
preceding tables relate only to the postretirement benefit
plans. A one-percentage-point change in assumed health care
cost trend rates would have the following effects:
Effect of One Percent Change in Assumed Health Care Cost
Year ended December 31, 2010
In millions Increase Decrease
Effect on total service and interest cost $1 $(1)
Effect on year-end benefit obligation $14 $(13)
Unamortized actuarial gains and losses and prior service costs
and credits are recognized in AOCI each December 31, with
amortization of these amounts through net periodic benefit
cost. The estimated amounts that will be amortized in 2011 are
as follows:
Estimated Amortization of Unamortized Actuarial Gains and
Losses—2011
2011 Estimate
Year ended December 31
In millions
Qualified
Pension
Nonqualified
Pension
Postretirement
Benefits
Prior service cost (credit) $ (8) $0 $(3)
Net actuarial loss 16 4 2
Total $ 8 $4 $(1)
D
EFINED
C
ONTRIBUTION
P
LANS
We have a qualified defined contribution plan that covers all
eligible PNC employees, which includes both legacy PNC and
legacy National City employees. Effective December 31,
2009, the National City Savings and Investment Plan was
merged into the PNC Incentive Savings Plan. In addition,
effective January 1, 2010, the employer matching contribution
under the PNC Incentive Savings Plan was reduced from a
maximum of 6% to 4% of a participant’s eligible
compensation. Certain changes to the plan’s eligibility and
vesting requirements also became effective January 1, 2010.
Employee benefits expense related to defined contribution
plans was $90 million in 2010, $136 million in 2009 and $57
million in 2008. We measure employee benefits expense as
the fair value of the shares and cash contributed to the plan by
PNC.
Under the PNC Incentive Savings Plan, employee
contributions up to 4% of eligible compensation as defined by
the plan are matched 100%, subject to Code limitations. The
plan is a 401(k) Plan and includes a stock ownership (ESOP)
feature. Employee contributions are invested in a number of
mutual fund investment options available under the plan at the
direction of the employee. Although employees were also
historically permitted to direct the investment of their
contributions into the PNC common stock fund, this fund was
frozen to future investments of such contributions effective
January 1, 2010. All shares of PNC common stock held by the
plan are part of the ESOP. Employee contributions to the plan
for 2010, 2009, and 2008 were matched primarily by shares of
PNC common stock held in treasury or reserve, except in the
case of those participants who have exercised their
diversification election rights to have their matching portion in
other investments available within the plan. Effective January
2011, employer matching contributions will no longer be
made in PNC common stock, but rather made in cash.
Prior to July 1, 2010, PNC sponsored a separate qualified
defined contribution plan that covered substantially all
US-based GIS employees not covered by our plan. The plan
was a 401(k) plan and included an ESOP feature. Under this
plan, employee contributions of up to 6% of eligible
compensation as defined by the plan were eligible to be
matched annually based on GIS performance levels. Employee
benefits expense for this plan was $6 million in 2010, $8
million in 2009, and $11 million in 2008. We measured
employee benefits expense as the fair value of the shares and
cash contributed to the plan. As described in Note 2
Divestiture, on July 1, 2010 we sold GIS. Plan assets of $239
million were transferred to The Bank of New York Mellon
Corporation 401(k) Savings Plan on that date. Prior to July 1,
2010, the Plan continued to operate under the provisions of the
original plan document, as amended.
We also maintain a nonqualified supplemental savings plan
for certain employees, known as The PNC Supplemental
Incentive Savings Plan. Effective January 1, 2010, the
employer match was discontinued in that plan.
N
OTE
15 S
TOCK
-B
ASED
C
OMPENSATION
P
LANS
We have long-term incentive award plans (Incentive Plans)
that provide for the granting of incentive stock options,
nonqualified stock options, stock appreciation rights, incentive
shares/performance units, restricted stock, restricted share
units, other share-based awards and dollar-denominated
awards to executives and, other than incentive stock options,
to non-employee directors. Certain Incentive Plan awards may
be paid in stock, cash or a combination of stock and cash. We
typically grant a substantial portion of our stock-based
compensation awards during the first quarter of the year. As of
December 31, 2010, no stock appreciation rights were
outstanding. Total compensation expense recognized related
to all share-based payment arrangements during 2010, 2009
and 2008 was approximately $107 million, $93 million and
$71 million, respectively.
N
ONQUALIFIED
S
TOCK
O
PTIONS
Options are granted at exercise prices not less than the market
value of common stock on the grant date. Generally, options
become exercisable in installments after the grant date. No
option may be exercisable after 10 years from its grant date.
156