Fifth Third Bank 2010 Annual Report Download - page 115

Download and view the complete annual report

Please find page 115 of the 2010 Fifth Third 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.

Page out of 150

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Fifth Third Bancorp 113
The Bancorp uses assumptions, which are evaluated and
revised as necessary, in estimating the grant-date fair value of each
SAR grant. The weighted-average assumptions were as follows for
the years ended:
2010 2009 2008
Expected life (in years) 6 6 6
Expected volatility 38% 73% 30%
Expected dividend yield 2.0% 1.3% 8.7%
Risk-free interest rate 3.1% 2.2% 3.3%
The expected option life is derived from historical exercise
patterns and represents the amount of time that options granted
are expected to be outstanding. The expected volatility is based on
a combination of historical and implied volatilities of the
Bancorp’s common stock. The expected dividend yield is based
on annual dividends divided by the Bancorp’s stock price. Annual
dividends are based on projected dividends, estimated using a
historical long-term dividend payout ratio, over the estimated life
of the awards. The risk-free interest rate for periods within the
contractual life of the option is based on the U.S. Treasury yield
curve in effect at the time of grant.
Stock-based compensation expense was $64 million, $51
million and $56 million for the years ended December 31, 2010,
2009 and 2008, respectively, and is included as compensation
expense in the Consolidated Statements of Income. The total
related income tax benefit recognized was $18 million, $18 million
and $20 million for the years ended December 31, 2010, 2009 and
2008, respectively.
Stock Appreciation Rights (SARs)
The weighted-average grant-date fair value of SARs granted was
$5.10, $2.41 and $2.09 per share for the years ended 2010, 2009
and 2008, respectively. The total grant-date fair value of SARs that
vested during 2010, 2009 and 2008 was $25 million, $26 million
and $61 million, respectively.
At December 31, 2010, there was $37 million of stock-based
compensation expense related to nonvested SARs not yet
recognized. The expense is expected to be recognized over a
remaining weighted-average period of approximately 2.7 years.
The following table summarizes outstanding and exercisable SARs by grant price at December 31, 2010:
Restricted Stock Awards (RSAs)
The total grant-date fair value of RSAs that vested during 2010,
2009 and 2008 was $30 million, $36 million and $24 million,
respectively. At December 31, 2010, there was $50 million of
stock-based compensation expense related to nonvested restricted
stock not yet recognized. The expense is expected to be
recognized over a remaining weighted-average period of
approximately 2.4 years.
2010 2009 2008
RSAs (shares in thousands) Shares
Weighted-
Average
Grant-Date
Fair Value Shares
Weighted-
Average
Grant-Date
Fair Value Shares
Weighted-
Average
Grant-Date
Fair Value
Nonvested at January 1 4,645 $23.85 5,584 $29.04 3,519 $40.80
Granted 1,677 14.69 751 4.72 3,157 19.27
V
ested (817) 36.96 (870) 40.84 (486) 48.62
Forfeited (347) 22.39 (820) 23.86 (606) 30.72
Nonvested at December 31 5,158 $18.89 4,645 $23.85 5,584 $29.04
2010 2009 2008
SARs (shares in thousands) Shares
Weighted-
Average
Grant Price Shares
Weighted-
Average
Grant Price Shares
Weighted-
Average
Grant Price
Outstanding at January 1 28,571 $26.82 22,508 $35.43 17,526 $41.81
Granted 5,310 14.74 8,398 4.05 6,836 19.25
Exercised (319) 3.96 - - - -
Forfeited or expired (2,410) 30.87 (2,335) 27.93 (1,854) 36.03
Outstanding at December 31 31,152 $24.67 28,571 $26.82 22,508 $35.43
Exercisable at December 31 16,347 $34.94 12,254 $40.38 8,352 $44.46
Outstanding SARs Exercisable SARs
Grant Price Per Share
Number of
SARs at
Year End
(000’s)
Weighted-
Average
Grant Price
Weighted-
Average
Remaining
Contractual
Life
(in years)
Number of
SARs at
Year End
(000’s)
Weighted-
Average
Grant Price
Weighted-
Average
Remaining
Contractual
Life
(in years)
Under $10.00 7,136 $4.03 8.3 1,300 $3.96 8.3
$10.01-$20.00 10,412 17.04 8.3 2,718 19.21 7.3
$20.01-$30.00 59 23.38 7.2 23 23.68 7.1
$30.01-$40.00 8,580 38.74 5.4 7,569 38.80 5.3
Over $40.00 4,965 46.07 3.7 4,737 46.35 3.5
A
ll SARs 31,152 $24.67 6.8 16,347 $34.94 5.4