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PNC » Topics » Incentive/Performance Unit Share and Restricted Stock/Unit Awards

This excerpt taken from the PNC 10-Q filed May 9, 2007.

Incentive/Performance Unit Share and Restricted Stock/Unit Awards

The fair value of nonvested incentive/performance unit shares and restricted stock/unit awards is initially determined based on prices not less than the market value of our common stock price on the date of grant. Incentive/performance unit shares are subsequently valued subject to the achievement of one or more financial and other performance goals over a three-year period. The Personnel and Compensation Committee of the Board of Directors approves the final award payout with respect to incentive/performance unit shares. Restricted stock/unit awards have various vesting periods ranging from 24 months to 60 months. There are no financial or performance goals associated with any of our restricted stock/unit awards.

We recognize compensation expense for incentive/performance unit shares and restricted stock/unit awards ratably over the corresponding vesting and/or performance periods for each type of program. Total compensation expense recognized related to PNC incentive/performance unit share and restricted stock/unit awards during the first quarter of 2007 was approximately $10 million, compared with $12 million during the first quarter of 2006.


 

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Table of Contents

The following table summarizes PNC nonvested incentive/performance unit shares and restricted stock/unit awards as of and for the three month period ending March 31, 2007:

 

Shares in thousands   

Nonvested
Incentive/

Performance
Unit Shares

    Weighted-
Average
Grant
Date Fair
Value		   

Nonvested
Restricted
Stock/

Units

     Weighted-
Average
Grant
Date Fair
Value

Dec. 31, 2006

    186    $64.15    2,425     $57.45

Granted

    130    68.91    512     69.86

Vested

    —      —      (761 )   59.94

Forfeited

    —      —      (12 )   55.46

March 31, 2007

    316    $66.11    2,164     $59.52

The weighted-average grant-date fair value of incentive/performance unit shares and restricted stock/unit awards is measured by reducing the grant date price by the present value of dividends expected to be paid on the underlying shares and for estimated forfeitures on restricted stock/unit awards.

At March 31, 2007, there was $64 million of unrecognized deferred compensation expense related to nonvested share-based compensation arrangements granted under the Incentive Plans. This cost is expected to be recognized as expense over a period of no longer than 5 years.

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