PNC Bank 2012 Annual Report Download - page 223

L IABILITY A WARDS
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 and other 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, 2012, there were 804,389 of these cash-
payable restricted share units outstanding.
A summary of all nonvested, cash-payable restricted share
unit activity follows:
Table 131: Nonvested Cash-Payable Restricted Share Unit –
Rollforward
In thousands
Nonvested
Cash-
Payable
Restricted
Share
Units
Aggregate
Intrinsic
Value
Outstanding at December 31, 2011 1,052
Granted 543
Vested (652)
Forfeited (23)
Outstanding at December 31, 2012 920 $53,631
The total of all share-based liability awards paid out during
2012, 2011 and 2010 was approximately $39 million,
$34 million and $9 million, respectively.
E
MPLOYEE S TOCK P URCHASE P LAN
As of December 31, 2012, our ESPP had approximately
1.3 million shares available for issuance. Full-time employees
with six months and part-time employees with 12 months of
continuous employment with a participating PNC entity 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.
Table 132: Employee Stock Purchase Plan – Summary
Year ended December 31 Shares Issued Purchase Price Per Share
2012 183,892 $58.05 and $55.39
2011 165,408 56.63 and 54.79
2010 147,177 53.68 and 57.68
B
LACKROCK LTIP AND E XCHANGE A GREEMENTS
BlackRock adopted the 2002 LTIP program to help attract and
retain qualified professionals. At that time, PNC agreed to
transfer up to 4 million shares of BlackRock common stock to
fund a portion of the 2002 LTIP program and future LTIP
programs approved by BlackRock’s board of directors, subject
to certain conditions and limitations. Approximately
1.1 million shares of BlackRock common stock were
transferred by PNC and distributed to LTIP participants in
connection with the 2002 LTIP program.
As previously reported, PNC entered into an Exchange
Agreement with BlackRock on December 26, 2008. On that
same date, BlackRock entered into an Exchange Agreement
with Merrill Lynch in anticipation of the consummation of the
merger of Bank of America Corporation and Merrill Lynch
that occurred on January 1, 2009. The PNC and Merrill Lynch
Exchange Agreements restructured PNC’s and Merrill
Lynch’s respective ownership of BlackRock common and
preferred equity. The transactions that resulted from our
agreement restructured PNC’s ownership of BlackRock equity
without altering, to any meaningful extent, PNC’s economic
interest in BlackRock. PNC continues to be subject to the
limitations on its voting rights in its existing agreements with
BlackRock.
The exchange contemplated by these agreements was
completed on February 27, 2009. On that date, PNC’s
obligation to deliver its BlackRock common shares to
BlackRock under LTIP programs was also replaced with an
obligation to deliver shares of BlackRock’s Series C Preferred
Stock as part of the exchange agreement. PNC acquired
2.9 million shares of Series C Preferred Stock from
BlackRock in exchange for common shares.
For the 2007 LTIP programs, BlackRock achieved the
earnings performance goals as required and the awards vested
on September 29, 2011. On that date, PNC transferred
approximately 1.3 million shares of BlackRock Series C
Preferred Stock to BlackRock. Upon transfer, Other assets and
Other liabilities on our Consolidated Balance Sheet were
reduced by $172 million, representing the fair value of the
shares transferred.
On January 31, 2013, we transferred an additional 205,350
shares to BlackRock in connection with our obligation. After
this transfer, we hold approximately 1.3 million shares of
BlackRock Series C Preferred Stock which are available to
fund our obligation in connection with the BlackRock LTIP
programs.
PNC accounts for its BlackRock Series C Preferred Stock at
fair value, which offsets the impact of marking-to-market the
obligation to deliver these shares to BlackRock. The fair value
of the BlackRock Series C Preferred Stock is included on our
Consolidated Balance Sheet in the caption Other assets.
Additional information regarding the valuation of the
BlackRock Series C Preferred Stock is included in Note 9 Fair
Value.
204 The PNC Financial Services Group, Inc. – Form 10-K