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Stock-Based Compensation
 12 Months Ended
Dec. 31, 2021
Share-based Payment Arrangement [Abstract]  
Stock-Based Compensation Stock-Based Compensation
Stock-based awards are eligible for issuance under the Bancorp’s Incentive Compensation Plan to executives, directors and key employees of the Bancorp and its subsidiaries. The 2021 Incentive Compensation Plan was approved by shareholders on April 13, 2021 and authorized the issuance of up to 50 million shares, as equity compensation and provides for SARs, RSAs, RSUs, stock options, performance share or unit awards, dividend or dividend equivalent rights and stock awards. As of December 31, 2021, there were 48.8 million shares available for future issuance. Based on total stock-based awards outstanding (including SARs, RSUs, stock options and PSAs) and shares remaining for future grants under the 2021 Incentive Compensation Plan, the potential dilution to which the Bancorp’s common shareholders are exposed due to the potential that stock-based compensation will be awarded to executives, directors or key employees of the Bancorp and its subsidiaries is 10%. SARs, RSUs, stock options and PSAs outstanding represent 3% of the Bancorp’s issued shares at December 31, 2021.

All of the Bancorp’s stock-based awards are to be settled with stock. 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 terms up to ten years and vest and typically become exercisable ratably over a three or 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. RSAs and RSUs are typically released after three or four years or ratably over three or four years of continued employment. RSAs include dividend and voting rights while RSUs receive dividend equivalents only. Dividend equivalents are accrued and paid in cash when the underlying shares are distributed, except for certain RSUs which have the rights to receive dividend equivalents paid in cash at each dividend payment date. For PSAs that are eligible to receive dividend equivalents, the accrued cash dividends are adjusted by the payout percentage achieved on the underlying awards. Stock options were previously issued at fair value based on the closing price of the Bancorp’s common stock on the date of grant, had up to ten year terms and vested and became fully exercisable ratably over a three or four-year period of continued employment. PSAs have three-year cliff vesting terms with performance conditions as defined by the plan. All of the Bancorp’s executive stock-based awards contain an annual performance hurdle of 2% return on tangible common equity. If this threshold is not met in any one of the three years during the performance period, one-third of PSAs are forfeited. Additionally, if this threshold is not met, all SARs, RSAs and RSUs that would vest in the next year may also be forfeited at the discretion of the Human Capital and Compensation Committee of the Board of Directors. The Bancorp met this threshold as of December 31, 2021.

Under the terms of the merger agreement with MB Financial, Inc., the Bancorp granted stock-based awards to replace those awards previously granted by MB Financial, Inc. that were outstanding as of March 22, 2019. The replacement awards included RSAs, RSUs, and stock options. Approximately 1.65 replacement awards were granted to replace each outstanding MB Financial, Inc. award and the strike prices of replacement stock options were also adjusted to reflect this exchange ratio. Otherwise, the replacement awards were granted with substantially the same terms as the MB Financial, Inc. awards that were being replaced, including vesting and expiration dates.

The fair value of the awards being replaced and the replacement awards were measured as of the date of the merger. The portion of the fair value of the awards being replaced which was attributable to pre-combination service was included as a component of the consideration paid in the merger. The portion attributable to post-combination service, in addition to any increased value of the replacement awards over the awards being replaced, was recognized as stock-based compensation expense over each award’s remaining service period.

Stock-based compensation expense was $120 million, $123 million and $132 million for the years ended December 31, 2021, 2020 and 2019, respectively, and is included in compensation and benefits expense in the Consolidated Statements of Income. The total related income tax benefit recognized was $25 million, $26 million and $27 million for the years ended December 31, 2021, 2020 and 2019, respectively.
Stock Appreciation Rights
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 December 31:
202120202019
Expected life (in years)777
Expected volatility29 %24 32 
Expected dividend yield3.2 3.2 3.3 
Risk-free interest rate0.9 1.5 2.6 

The expected life is generally derived from historical exercise patterns and represents the amount of time that SARs 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 an expected 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 SARs is based on the U.S. Treasury yield curve in effect at the time of grant.

The grant-date fair value of SARs is measured using the Black-Scholes option-pricing model. The weighted-average grant-date fair value of SARs granted was $7.84, $6.82 and $7.38 per share for the years ended December 31, 2021, 2020 and 2019, respectively. The total grant-date
fair value of SARs that vested during the years ended December 31, 2021, 2020 and 2019 was $8 million, $15 million and $20 million, respectively.

At December 31, 2021, there was $1 million of stock-based compensation expense related to outstanding SARs not yet recognized. The expense is expected to be recognized over an estimated remaining weighted-average period at December 31, 2021 of 1.8 years.

The following table summarizes SARs activity for the years ended December 31:
202120202019
SARs (in thousands, except per share data)Number of
SARs		Weighted-
Average Grant
Price Per Share		Number of
SARs		Weighted-
Average Grant
Price Per Share		Number of
SARs		Weighted-
Average Grant
Price Per Share 
Outstanding at January 119,258 $18.83 21,449 $18.38 26,196 $17.30 
Granted322 33.53 365 29.64 399 26.72 
Exercised(8,367)17.20 (2,420)16.10 (4,829)13.34 
Forfeited or expired(28)23.01 (136)25.50 (317)23.47 
Outstanding at December 3111,185 $20.47 19,258 $18.83 21,449 $18.38 
Exercisable at December 3110,515 $19.80 17,979 $18.19 18,249 $17.50 

The following table summarizes outstanding and exercisable SARs by grant price per share at December 31, 2021.
Outstanding SARsExercisable SARs
SARs (in thousands, except per share data)Number of
SARs		Weighted-Average Grant Price Per ShareWeighted-
Average Remaining
Contractual Life
(in years)		Number of
SARs		Weighted-Average Grant Price Per ShareWeighted-
Average Remaining
Contractual Life
(in years)
$10.01-$20.00
6,874 $17.02 2.66,874 $17.02 2.6
$20.01-$30.00
3,761 24.90 4.43,414 24.51 4.1
$30.01-$40.00
550 33.37 7.9227 33.15 6.1
All SARs11,185 $20.47 3.510,515 $19.80 3.2

Restricted Stock Awards
The total grant-date fair value of RSAs that were released was immaterial during both the years ended December 31, 2021 and 2020, and $16 million for the year ended December 31, 2019. The Bancorp has not granted any RSAs in the years ended December 31, 2021, 2020 or 2019 and the number of RSAs outstanding was zero and immaterial at December 31, 2021 and 2020, respectively.

The following table summarizes RSAs activity for the year ended December 31:
2019
RSAs (in thousands, except per share data)Shares Weighted-Average Grant-Date Fair Value Per Share
Outstanding at January 1868 $19.18 
Assumed11 25.48 
Released(867)18.91 
Forfeited(12)19.01 
Outstanding at December 31— $25.48 

Restricted Stock Units
The total grant-date fair value of RSUs that were released during the years ended December 31, 2021, 2020 and 2019 was $99 million, $107 million and $73 million, respectively. At December 31, 2021, there was $134 million of stock-based compensation expense related to outstanding RSUs not yet recognized. The expense is expected to be recognized over an estimated remaining weighted-average period at December 31, 2021 of 2.4 years.
The following table summarizes RSUs activity for the years ended December 31:
202120202019
RSUs (in thousands, except per unit data)Units Weighted-Average Grant-Date Fair Value Per UnitUnits Weighted-Average Grant-Date Fair Value Per UnitUnits Weighted-Average Grant-Date Fair Value Per Unit
Outstanding at January 19,466 $28.38 10,006 $27.30 8,020 $27.04 
Granted4,186 34.25 4,177 28.75 4,375 26.68 
Assumed— — — — 1,476 25.48 
Released(3,432)28.87 (4,076)26.19 (2,951)24.76 
Forfeited(733)29.80 (641)27.70 (914)27.41 
Outstanding at December 319,487 $30.67 9,466 $28.38 10,006 $27.30 

The following table summarizes outstanding RSUs by grant-date fair value per unit at December 31, 2021.
Outstanding RSUs
RSUs (in thousands)Units       Weighted-Average Remaining Contractual Life (in years)
Under $15.00
36 1.0
$15.01-$20.00
231 0.2
$20.01-$25.00
235 0.6
$25.01-$30.00
4,376 0.8
$30.01-$35.00
3,835 1.3
$35.01 and over
774 1.9
All RSUs9,487 1.1

Stock Options
There were no stock options granted during the years ended December 31, 2021, 2020 and 2019, except for replacement stock option awards assumed in conjunction with the MB Financial, Inc. acquisition. While the Bancorp has historically utilized the Black-Scholes option pricing model to measure the fair value of stock option grants, the fair value of these grants were measured using the Hull-White option pricing model as it was expected to provide a more precise estimate of fair value in a business combination scenario. The assumptions used in the valuation model varied for each grant tranche, but included expected volatility of 23%-29%, no expected dividend yield, risk-free interest rates of 2.34%-2.51%, a departure rate of 10% and exercise ratios of 2.2-2.8. The replacement stock option awards had a weighted-average time to maturity of 5.4 years as of March 22, 2019.

The total intrinsic value of stock options exercised was $7 million, $3 million and $7 million for the years ended December 31, 2021, 2020 and 2019, respectively. Cash received from stock options exercised was $6 million, $5 million and $11 million for the years ended December 31, 2021, 2020 and 2019, respectively. The tax benefit realized from exercised stock options was $1 million for the years ended December 31, 2021, 2020 and 2019. An immaterial amount of stock options vested during the years ended December 31, 2021, 2020 and 2019. As of December 31, 2021, the aggregate intrinsic value of both outstanding stock options and exercisable stock options was $9 million.

The following table summarizes stock options activity for the years ended December 31:
202120202019
Stock Options (in thousands, except per share data)  Number of OptionsWeighted-Average Exercise Price Per ShareNumber of OptionsWeighted-Average Exercise Price Per ShareNumber of OptionsWeighted-Average Exercise Price Per Share
Outstanding at January 1793 $20.81 1,381 $20.15 — $— 
Assumed— — — — 2,120 19.34 
Exercised(384)20.06 (440)17.48 (660)17.36 
Forfeited or expired— — (148)23.99 (79)22.18 
Outstanding at December 31409 $21.51 793 $20.81 1,381 $20.15 
Exercisable at December 31386 $21.31 725 $20.34 1,162 $19.17 
The following table summarizes outstanding and exercisable stock options by exercise price per share at December 31, 2021.
Outstanding Stock OptionsExercisable Stock Options
Stock Options (in thousands, except per share data)Number of OptionsWeighted-Exercise Price Per ShareWeighted-Average Remaining Contractual Life (in years)Number of OptionsWeighted-Exercise Price Per ShareWeighted-Average Remaining Contractual Life (in years)
Under $10.00
3 $8.70 4.63 $8.70 4.6
$10.01-$20.00
222 17.83 3.0222 17.83 3.0
$20.01-$30.00
184 26.13 3.8161 26.31 3.5
All stock options409 $21.51 3.4386 $21.31 3.2

Other Stock-Based Compensation
PSAs are payable contingent upon the Bancorp achieving certain predefined performance targets over a three-year measurement period. Depending on performance, between zero and 1.2 million shares may be released to settle the PSAs outstanding at December 31, 2021 once the applicable performance periods are completed. Awards granted during the years ended December 31, 2021, 2020 and 2019 will be entirely settled in stock. The performance targets are based on the Bancorp’s performance relative to a defined peer group. PSAs use a performance-based metric based on return on tangible common equity in relation to peers. During the years ended December 31, 2021, 2020 and 2019, approximately 251 thousand, 280 thousand and 328 thousand PSAs, respectively, were granted by the Bancorp. These awards were granted at a weighted-average grant-date fair value of $33.53, $29.64 and $26.72 per unit during the years ended December 31, 2021, 2020 and 2019, respectively.

The Bancorp sponsors an employee stock purchase plan that allows qualifying employees to purchase shares of the Bancorp’s common stock with a 15% match. During the years ended December 31, 2021, 2020 and 2019, there were approximately 470 thousand, 884 thousand and 564 thousand shares, respectively, purchased by participants and the Bancorp recognized stock-based compensation expense of $2 million in each of the respective years. As of December 31, 2021, there were 3.3 million shares available for future issuance, which represents the 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.