Fifth Third Bank 2013 Annual Report Download - page 151

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
149 Fifth Third Bancorp
On March 19, 2013, the Board of Directors authorized the
Bancorp to repurchase up to 100 million common shares in the
open market or in privately negotiated transactions, and to utilize
any derivative or similar instrument to effect share repurchase
transactions. This share repurchase authorization replaced the
Board’s previous authorization from August of 2012.
On May 21, 2013, the Bancorp entered into an accelerated
share repurchase transaction with a counterparty pursuant to which
the Bancorp purchased 25,035,519 shares, or approximately $539
million, of its outstanding common stock on May 24, 2013. The
Bancorp repurchased the shares of its common stock as part of its
100 million share repurchase program previously announced on
March 19, 2013. At settlement of the forward contract on October
1, 2013, the Bancorp received an additional 4,270,250 shares which
were recorded as an adjustment to the basis in the treasury shares
purchased on the acquisition date.
On November 13, 2013, the Bancorp entered into an
accelerated share repurchase transaction with a counterparty
pursuant to which the Bancorp purchased 8,538,423 shares, or
approximately $200 million, of its outstanding common stock on
November 18, 2013. The Bancorp repurchased the shares of its
common stock as part of its Board approved 100 million share
repurchase program previously announced on March 19, 2013. The
Bancorp expects the settlement of the transaction to occur on or
before February 28, 2014.
On December 10, 2013, the Bancorp entered into an
accelerated share repurchase transaction with a counterparty
pursuant to which the Bancorp purchased 19,084,195 shares, or
approximately $456 million, of its outstanding common stock on
December 13, 2013. The Bancorp repurchased the shares of its
common stock as part of its Board approved 100 million share
repurchase program previously announced on March 19, 2013. The
Bancorp expects the settlement of the transaction to occur on or
before March 26, 2014.
On January 28, 2014, the Bancorp entered into an accelerated
share repurchase transaction with a counterparty pursuant to which
the Bancorp purchased 3,950,705 shares, or approximately $99
million, of its outstanding common stock on January 31, 2014. The
Bancorp repurchased the shares of its common stock as part of its
Board approved 100 million share repurchase program previously
announced on March 19, 2013. The Bancorp expects the settlement
of the transaction to occur on or before March 26, 2014.
During 2011, the Bancorp repurchased an immaterial amount
of common stock.
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24. STOCK-BASED COMPENSATION
The Bancorp has historically emphasized employee stock
ownership. The following table provides detail of the number of
shares to be issued upon exercise of outstanding stock-based awards
and remaining shares available for future issuance under all of the
Bancorp’s equity compensation plans as of December 31, 2013:
Plan Category (shares in thousands) Number of Shares to be Issued Upon Exercise
Weighted-Average
Exercise Price
Shares Available for
Future Issuance
Equity compensation plans approved by shareholders 5,393 (a)
SARs (b) (b) (a)
Restricted stock 6,710 N/A (a)
Stock options(c) 22 $45.82 (a)
Phantom stock units (d) N/A N/A
Performance units (e) N/A (a)
Employee stock purchase plan 8,030 (f)
Total shares 6,732 13,423
(a) Under the 2011 Incentive Compensation Plan, 39 million shares plus up to 4.5 million shares from the 2008 Incentive Compensation Plan (the Predecessor Plan) of stock were authorized for
issuance as incentive and nonqualified stock options, SARs, restricted stock and restricted stock units, performance units and performance restricted stock awards.
(b) The number of shares to be issued upon exercise will be determined at vesting based on the difference between the grant price and the market price at the date of exercise.
(c) Excludes 0.5 million outstanding options awarded under plans assumed by the Bancorp in connection with certain mergers and acquisitions. The Bancorp has not made any awards under these plans
and will make no additional awards under these plans. The weighted-average exercise price of the outstanding options is $19.69 per share.
(d) Phantom stock units are settled in cash.
(e) The number of shares to be issued is dependent upon the Bancorp achieving certain predefined performance targets and ranges from zero shares to approximately 2 million shares.
(f) Represents remaining shares of Fifth Third common stock under the Bancorp’s 1993 Stock Purchase Plan, as amended and restated, including an additional 1.5 million shares approved by
shareholders on March 28, 2007 and an additional 12 million shares approved by shareholders on April 21, 2009.
Stock-based awards are eligible for issuance under the Bancorp’s
Incentive Compensation Plan to key employees and directors of the
Bancorp and its subsidiaries. The Incentive Compensation Plan was
approved by shareholders on April 19, 2011, and authorized the
issuance of up to 39 million shares plus up to 4.5 million shares
under the Predecessor Plan for Full Value Awards as equity
compensation and provides for incentive and nonqualified stock
options, stock appreciation rights, restricted stock awards and
restricted stock units, and performance shares. Full Value Awards
are defined as awards with no cash outlay for the employee to
obtain the full value. Based on total stock-based awards outstanding
(including stock options, stock appreciation rights, restricted stock
and performance units) and shares remaining for future grants
under the 2011 Incentive Compensation Plan, the potential dilution
to which the Bancorp’s shareholders of common stock are exposed
due to the potential that stock-based compensation will be awarded
to executives, directors or key employees of the Bancorp is seven
percent. SARs, restricted stock, stock options and performance
units outstanding represent seven percent of the Bancorp’s issued
shares at December 31, 2013.
All of the Bancorp’s stock-based awards are to be settled with
stock with the exception of phantom stock units that are to be
settled in cash. The Bancorp has historically used treasury stock to
settle stock-based awards, when available. SARs, issued at fair value
based on the closing price of the Bancorp’s common stock on the
date of grant, have up to ten-year terms and vest and become
exercisable either ratably or fully over a four year period of
continued employment. The Bancorp does not grant discounted
SARs or stock options, re-price previously granted SARs or stock
options, or grant reload stock options. Restricted stock grants vest
after four years, or ratably over three or four years or ratably after
three years of continued employment and include dividend and