JP Morgan Chase 2012 Annual Report Download - page 232

Notes to consolidated financial statements
242 JPMorgan Chase & Co./2012 Annual Report
RSUs, employee stock options and SARs activity
Compensation expense for RSUs is measured based on the number of shares granted multiplied by the stock price at the grant
date, and for employee stock options and SARs, is measured at the grant date using the Black-Scholes valuation model.
Compensation expense for these awards is recognized in net income as described previously. The following table summarizes
JPMorgan Chase’s RSUs, employee stock options and SARs activity for 2012.
RSUs Options/SARs
Year ended December 31, 2012
Number of
shares
Weighted-
average grant
date fair
value
Number of
awards
Weighted-
average
exercise price
Weighted-
average
remaining
contractual
life (in years)
Aggregate
intrinsic
value
(in thousands, except weighted-average data, and where
otherwise stated)
Outstanding, January 1 166,631 $ 37.65 155,761 $ 40.58
Granted 59,646 35.73 14,738 35.70
Exercised or vested (79,062) 30.91 (18,675) 26.45
Forfeited (5,209) 40.22 (3,888) 38.07
Canceled NA NA (32,030) 40.10
Outstanding, December 31 142,006 $ 40.49 115,906 $ 42.44 5.5 $ 721,059
Exercisable, December 31 NA NA 70,576 45.87 4.2 420,713
The total fair value of RSUs that vested during the years ended December 31, 2012, 2011 and 2010, was $2.8 billion, $5.4
billion and $2.3 billion, respectively. The weighted-average grant date per share fair value of stock options and SARs granted
during the years ended December 31, 2012, 2011 and 2010, was $8.89, $13.04 and $12.27, respectively. The total intrinsic
value of options exercised during the years ended December 31, 2012, 2011 and 2010, was $283 million, $191 million and
$154 million, respectively.
Compensation expense
The Firm recognized the following noncash compensation
expense related to its various employee stock-based
incentive plans in its Consolidated Statements of Income.
Year ended December 31, (in millions) 2012 2011 2010
Cost of prior grants of RSUs and SARs
that are amortized over their
applicable vesting periods $ 1,810 $ 1,986 $ 2,479
Accrual of estimated costs of RSUs and
SARs to be granted in future periods
including those to full-career eligible
employees 735 689 772
Total noncash compensation expense
related to employee stock-based
incentive plans $ 2,545 $ 2,675 $ 3,251
At December 31, 2012, approximately $909 million
(pretax) of compensation cost related to unvested awards
had not yet been charged to net income. That cost is
expected to be amortized into compensation expense over a
weighted-average period of 0.9 years. The Firm does not
capitalize any compensation cost related to share-based
compensation awards to employees.
Cash flows and tax benefits
Income tax benefits related to stock-based incentive
arrangements recognized in the Firm’s Consolidated
Statements of Income for the years ended December 31,
2012, 2011 and 2010, were $1.0 billion, $1.0 billion and
$1.3 billion, respectively.
The following table sets forth the cash received from the
exercise of stock options under all stock-based incentive
arrangements, and the actual income tax benefit realized
related to tax deductions from the exercise of the stock
options.
Year ended December 31, (in millions) 2012 2011 2010
Cash received for options exercised $ 333 $ 354 $ 205
Tax benefit realized(a) 53 31 14
(a) The tax benefit realized from dividends or dividend equivalents paid on equity-
classified share-based payment awards that are charged to retained earnings are
recorded as an increase to additional paid-in capital and included in the pool of
excess tax benefits available to absorb tax deficiencies on share-based payment
awards.