Comerica 2012 Annual Report Download - page 132

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
F-98
The following table summarizes unrecognized compensation expense for all share-based plans:
(dollar amounts in millions) December 31, 2012
Total unrecognized share-based compensation expense $ 55
Weighted-average expected recognition period (in years) 3.2
The Corporation has share-based compensation plans under which it awards both shares of restricted stock and restricted
stock units to key executive officers and key personnel and stock options to executive officers, directors and key personnel of the
Corporation and its subsidiaries. Restricted stock vests over periods ranging from three years to five years, restricted stock units
vest over periods ranging from three years to eight years, and stock options vest over periods ranging from one year to four years.
During the period the U.S. Treasury held equity issued under the Capital Purchase Program, restricted share grants were temporarily
prohibited from vesting in less than two years from the grant date and retirement-based acceleration was not allowed. These
temporary restrictions lengthened the requisite service period and, therefore, the amortization period for retirement eligible grantees.
Upon redemption of the preferred stock in the first quarter 2010, the temporary restrictions lapsed. The maturity of each option is
determined at the date of grant; however, no options may be exercised later than ten years from the date of grant. The options may
have restrictions regarding exercisability. The plans originally provided for a grant of up to 15.2 million common shares, plus
shares under certain plans that are forfeited, expire or are cancelled. At December 31, 2012, 5.4 million shares were available for
grant.
In 2010, the Corporation provided phantom stock units (PSUs) as a component of compensation for certain executives.
The number of PSUs awarded for each pay period was determined by dividing the amount of base salary payable in PSUs for that
pay period by the reported closing price on the New York Stock Exchange (NYSE) for a share of the Corporation’s common stock
on the pay date for the pay period. PSUs did not include any shareholder rights such as the right to vote or receive dividends, were
fully vested when awarded, and were settled in cash in the first quarter 2011. The amount paid upon settlement was equal to the
number of PSUs settled multiplied by the reported closing price on the NYSE for a share of the Corporation common stock on the
date of settlement. Salaries expense included $7 million related to PSUs for the year ended December 31, 2010.
The Corporation used a binomial model to value stock options granted in the periods presented. Option valuation models
require several inputs, including the expected stock price volatility, and changes in input assumptions can materially affect the fair
value estimates. The model used may not necessarily provide a reliable single measure of the fair value of employee and director
stock options. The risk-free interest rate assumption used in the binomial option-pricing model as outlined in the table below was
based on the federal ten-year treasury interest rate. The expected dividend yield was based on the historical and projected dividend
yield patterns of the Corporation’s common shares. Expected volatility assumptions considered both the historical volatility of the
Corporation’s common stock over a ten-year period and implied volatility based on actively traded options on the Corporation’s
common stock with pricing terms and trade dates similar to the stock options granted.
The estimated weighted-average grant-date fair value per option and the underlying binomial option-pricing model
assumptions are summarized in the following table:
Years Ended December 31 2012 2011 2010
Weighted-average grant-date fair value per option $ 8.63 $ 11.58 $ 11.07
Weighted-average assumptions:
Risk-free interest rates 2.16% 3.43% 3.73%
Expected dividend yield 3.00 3.00 3.00
Expected volatility factors of the market price of
Comerica common stock 39 38 40
Expected option life (in years) 6.1 6.1 6.1