PNC Bank 2011 Annual Report Download - page 223

Note 1 – After shareholder approval of the 2006 Incentive
Award Plan at the 2006 annual meeting of PNC’s shareholders
on April 25, 2006 (see Note 2 below), no further grants were
permitted under the 1997 Long-Term Incentive Award Plan,
other than for the exercise of options still subject to a reload
feature. As of December 31, 2011, the number of remaining
shares reserved under this plan for that purpose was
1,945,317.
Note 2 – The 2006 Incentive Award Plan was adopted by the
Board on February 15, 2006 and approved by the PNC
shareholders at the 2006 annual meeting on April 25, 2006.
The plan initially authorized up to 40,000,000 shares of
common stock for issuance under the plan, subject to
adjustment in certain circumstances. If and to the extent that
stock options and stock appreciation rights (“SARs”) granted
under the plan, or granted under the prior plan and outstanding
on the approval date of the plan, terminate, expire or are
cancelled, forfeited, exchanged or surrendered after the
effective date of the plan without being exercised or if any
share awards, share units, dividend equivalents or other share-
based awards are forfeited or terminated, or otherwise not paid
in full, after the effective date of the plan, the shares subject to
such grants become available again for purposes of the plan.
Shares available for issuance under this plan are also reduced
by the number of any shares used in payment of bonuses
under the 1996 Executive Incentive Award Plan.
The plan was most recently amended and restated
incorporating amendments adopted by the Board and
approved by PNC’s shareholders at the 2011 annual meeting
of shareholders, effective as of March 11, 2011. These
amendments incorporate, among other things, an increase to
the overall limit on the number of shares that may be awarded
under the plan to 46,000,000, and a new requirement that each
award of a share (other than pursuant to a stock option or
SAR) granted after that effective date will reduce the
aggregate plan limit by 2.5 shares, while each award of a share
pursuant to a stock option or SAR will reduce the aggregate
plan limit by one share.
Note 3 – Under the 2006 Incentive Award Plan, awards or
portions of awards that, by their terms, are payable only in
cash do not reduce the number of shares that remain available
for issuance under the plan (the number in column (c)).
During 2011, a total of 560,544 cash-payable share units plus
cash-payable dividend equivalents with respect to 505,866 of
those share units were granted under the plan. This number
includes an incremental change in the cash-payable portion of
the 2010 and 2011 incentive performance unit award grants
described in Note 4 below (net of forfeitures), a separate 2011
incentive performance unit award grant payable solely in cash,
and 2011 grants of share units (some of which include rights
to cash dividend equivalents) payable solely in cash. Payments
are subject to the conditions of the individual grants,
including, where applicable, the achievement of any
performance goals or service requirement established for such
grants. The comparable amount for 2009 was 1,030,824 cash-
payable share units plus cash-payable dividend equivalents
with respect to 379,979 cash-payable restricted share units,
and the comparable amount for 2010 was 367,365 cash-
payable share units plus cash-payable dividend equivalents
with respect to 211,573 cash-payable restricted share units.
Note 4 – These incentive performance unit awards provide for
the issuance of shares of common stock (up to a target number
of shares) based on the degree to which corporate performance
goals established by the Personnel and Compensation
Committee have been achieved, subject to potential negative
adjustment based on certain risk-related performance metrics,
and, if a premium level of such performance is achieved, for
further payment in cash. The numbers in column (a) of this
table for these awards reflect the maximum number of shares
that could be issued pursuant to grants outstanding at
December 31, 2011 upon achievement of the performance
goals and other conditions of the grants. At the premium level
of performance, a further maximum payout of cash
equivalents for the same number of share units, plus the
incremental change described in Note 3, could also be payable
subject to the other conditions of the grants. Grants under the
2006 Incentive Award Plan were made in the first quarter of
2008, 2010, and 2011.
Note 5 – These stock-payable restricted stock units include
2011 grants of performance-based restricted share units (with
the units payable solely in stock and related dividend
equivalents payable solely in cash) that have a service
condition, an internal risk-related performance condition and a
market condition. The number in column (a) includes the
maximum number of shares that could be issued pursuant to
grants of this type of award outstanding at December 31, 2011
upon achievement of the performance and market conditions
and other conditions of the grants. Cash-payable dividend
equivalents were granted with respect to all of these stock-
payable restricted stock units.
Note 6 – The 1996 Executive Incentive Award Plan is a
shareholder-approved plan that enables PNC to pay annual
bonuses to its senior executive officers based upon the
achievement of specified levels of performance. The plan as
amended and restated as of January 1, 2007 was adopted by
the Board on February 14, 2007 and approved by the PNC
shareholders at the 2007 annual meeting on April 24, 2007.
The plan does not specify a fixed share amount for awards
under the plan. Rather, it provides for maximum bonus awards
for a given period (generally a year) for each individual plan
participant of 0.2% of incentive income for that period.
Incentive income is based on PNC’s consolidated pre-tax net
income as further adjusted for the impact of changes in
214 The PNC Financial Services Group, Inc. – Form 10-K