PNC Bank 2013 Annual Report Download - page 205

To determine stock-based compensation expense, the grant
date fair value is applied to the options granted with a
reduction for estimated forfeitures. We recognize
compensation expense for stock options on a straight-line
basis over the specified vesting period.
At December 31, 2012 and 2011, options for 12,759,000 and
12,337,000 shares of common stock were exercisable at a
weighted-average price of $90.86 and $106.08, respectively.
The total intrinsic value of options exercised during 2013,
2012 and 2011 was $86 million, $37 million and $4 million,
respectively.
The total tax benefit recognized related to compensation
expense on all share-based payment arrangements during
2013, 2012 and 2011 was approximately $56 million,
$37 million and $38 million, respectively. Cash received from
option exercises under all Incentive Plans for 2013, 2012 and
2011 was approximately $208 million, $118 million and
$41 million, respectively. The tax benefit realized from option
exercises under all Incentive Plans for 2013, 2012 and 2011
was approximately $31 million, $14 million and $1 million,
respectively.
Shares of common stock available during the next year for the
granting of options and other awards under the Incentive Plans
were 24,535,159 at December 31, 2013. Total shares of PNC
common stock authorized for future issuance under equity
compensation plans totaled 25,712,719 shares at
December 31, 2013, which includes shares available for
issuance under the Incentive Plans and the Employee Stock
Purchase Plan (ESPP) as described below.
During 2013, we issued approximately 2.6 million shares from
treasury stock in connection with stock option exercise
activity. As with past exercise activity, we currently intend to
utilize primarily treasury stock for any future stock option
exercises.
Awards granted to non-employee directors in 2013, 2012 and
2011 include 27,076, 25,620 and 27,090 deferred stock units,
respectively, awarded under the Outside Directors Deferred
Stock Unit Plan. A deferred stock unit is a phantom share of
our common stock, which is accounted for as a liability until
such awards are paid to the participants in cash. As there are
no vesting or service requirements on these awards, total
compensation expense is recognized in full for these awards
on the date of grant.
I NCENTIVE /P ERFORMANCE U NIT S HARE A WARDS AND
R ESTRICTED S TOCK /S HARE U NIT A WARDS
The fair value of nonvested incentive/performance unit share
awards and restricted stock/share unit awards is initially
determined based on prices not less than the market value of
our common stock on the date of grant. The value of certain
incentive/performance unit share awards is subsequently
remeasured based on the achievement of one or more financial
and other performance goals, generally over a three-year
period. The Personnel and Compensation Committee
(“P&CC”) of the Board of Directors approves the final award
payout with respect to certain incentive/performance unit
share awards. Restricted stock/share unit awards have various
vesting periods generally ranging from 3 years to 5 years.
Beginning in 2013, we incorporated several enhanced risk-
related performance changes to certain long-term incentive
compensation programs. In addition to achieving certain
financial performance metrics on both an absolute basis and
relative to our peers, final payout amounts will be subject to
reduction if PNC fails to meet certain risk-related performance
metrics as specified in the award agreement. However, the
P&CC has the discretion to waive any or all of this reduction
under certain circumstances. These awards have either a three-
year or a four-year performance period and are payable in
either stock or a combination of stock and cash.
Additionally, performance-based restricted share units were
granted in 2013 to certain executives as part of annual bonus
deferral criteria. These units, payable solely in stock, vest
ratably over a four-year period and contain the same risk-
related discretionary criteria noted in the preceding paragraph.
The weighted-average grant date fair value of incentive/
performance unit share awards and restricted stock/unit
awards granted in 2013, 2012 and 2011 was $64.77, $60.68
and $63.25 per share, respectively. The total fair value of
incentive/performance unit share and restricted stock/unit
awards vested during 2013, 2012 and 2011 was approximately
$63 million, $55 million and $52 million, respectively. We
recognize compensation expense for such awards ratably over
the corresponding vesting and/or performance periods for each
type of program.
Table 124: Nonvested Incentive/Performance Unit Share Awards and Restricted Stock/Share Unit Awards – Rollforward
Shares in thousands
Nonvested
Incentive/
Performance
Unit Shares
Weighted-
Average
Grant Date
Fair Value
Nonvested
Restricted
Stock/
Share
Units
Weighted-
Average
Grant Date
Fair Value
December 31, 2012 1,119 $61.14 3,061 $60.04
Granted 926 64.36 1,288 65.06
Vested/Released (326) 58.26 (674) 55.22
Forfeited (72) 62.02 (192) 62.37
December 31, 2013 1,647 $63.49 3,483 $62.70
The PNC Financial Services Group, Inc. – Form 10-K 187