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Stock-based compensation plans
12 Months Ended
Dec. 31, 2012
Stock-based compensation plans

11.     Stock-based compensation plans

Stock-based compensation expense was $57 million in 2012, $56 million in 2011 and $54 million in 2010. The Company recognized income tax benefits related to stock-based compensation of $30 million in 2012, $22 million in 2011 and $20 million in 2010.

The Company’s equity incentive compensation plan allows for the issuance of various forms of stock-based compensation, including stock options, restricted stock, restricted stock units and performance-based awards. Through December 31, 2012, only stock-based compensation awards, including stock options, restricted stock and restricted stock units, that vest with the passage of time as service is provided have been issued. At December 31, 2012 and 2011, respectively, there were 5,307,228 and 5,619,632 shares available for future grant under the Company’s equity incentive compensation plan.

Restricted stock awards

Restricted stock awards are comprised of restricted stock and restricted stock units. Restricted stock awards generally vest over four years. Unrecognized compensation expense associated with restricted stock was $28 million as of December 31, 2012 and is expected to be recognized over a weighted-average period of 1.5 years. The Company generally will issue restricted shares from treasury stock to the extent available, but may also issue new shares. During 2012, 2011 and 2010, the number of restricted shares issued was 453,908, 451,248 and 423,002, respectively, with a weighted-average grant date fair value of $36,969,000, $38,369,000 and $31,880,000, respectively. Unrecognized compensation expense associated with restricted stock units was $7 million as of December 31, 2012 and is expected to be recognized over a weighted-average period of 1.3 years. During 2012, 2011 and 2010 the number of restricted stock units issued was 278,505, 242,282 and 231,037, respectively, with a weighted-average grant date fair value of $22,139,000, $20,921,000 and $17,039,000, respectively.

A summary of restricted stock and restricted stock unit activity follows:

 

     Restricted
Stock Units
Outstanding
    Weighted-
Average
Grant Price
     Restricted
Stock
Outstanding
    Weighted-
Average
Grant Price
 

Unvested at January 1, 2012

     801,463      $ 61.31         1,091,365      $ 63.45   

Granted

     278,505        79.50         453,908        81.45   

Vested

     (276,308     53.57         (408,232     62.27   

Cancelled

     (4,165     70.00         (41,410     72.20   
  

 

 

   

 

 

    

 

 

   

 

 

 

Unvested at December 31, 2012

     799,495      $ 70.28         1,095,631      $ 71.01   
  

 

 

   

 

 

    

 

 

   

 

 

 

Stock option awards

Stock options issued generally vest over four years and are exercisable over terms not exceeding ten years and one day. The Company used an option pricing model to estimate the grant date present value of stock options granted. Stock options granted in 2012, 2011 and 2010 were not significant.

A summary of stock option activity follows:

 

     Stock
Options
Outstanding
    Weighted-Average      Aggregate
Intrinsic Value
(In thousands)
 
     Exercise
Price
     Life
(In Years)
    

Outstanding at January 1, 2012

     9,839,948      $ 98.37         

Granted

     100        79.74         

Exercised

     (2,432,316     82.65         

Cancelled

     (1,814     94.76         

Expired

     (372,559     107.93         
  

 

 

   

 

 

       

Outstanding at December 31, 2012

     7,033,359      $ 103.30         3.4       $ 26,212   
  

 

 

   

 

 

    

 

 

    

 

 

 

Exercisable at December 31, 2012

     7,007,472      $ 103.53         3.4       $ 24,761   
  

 

 

   

 

 

    

 

 

    

 

 

 

For 2012, 2011 and 2010, M&T received $153 million, $28 million and $55 million, respectively, in cash and realized tax benefits from the exercise of stock options of $8 million, $3 million and $7 million, respectively. The intrinsic value of stock options exercised during those periods was $21 million, $7 million and $21 million, respectively. As of December 31, 2012, the amount of unrecognized compensation cost related to non-vested stock options was not significant. The total grant date fair value of stock options vested during 2012, 2011 and 2010 was $17 million, $29 million and $38 million, respectively. Upon the exercise of stock options, the Company generally issues shares from treasury stock to the extent available, but may also issue new shares.

Stock purchase plan

The stock purchase plan provides eligible employees of the Company with the right to purchase shares of M&T common stock at a discount through accumulated payroll deductions. In connection with the employee stock purchase plan, 1,000,000 shares of M&T common stock were authorized for issuance, of which 719,900 shares have been issued. There were 151,014 shares issued in 2012, no shares issued in 2011 and 170,405 shares issued in 2010. For 2012 and 2010, respectively, M&T received $10,117,000 and $8,998,000 in cash for shares purchased through the employee stock purchase plan. Compensation expense recognized for the stock purchase plan was not significant in 2012, 2011 or 2010.

Deferred bonus plan

The Company provided a deferred bonus plan pursuant to which eligible employees could elect to defer all or a portion of their annual incentive compensation awards and allocate such awards to several investment options, including M&T common stock. Participants could elect the timing of distributions from the plan. Such distributions are payable in cash with the exception of balances allocated to M&T common stock which are distributable in the form of M&T common stock. Shares of M&T common stock distributable pursuant to the terms of the deferred bonus plan were 38,593 and 48,136 at December 31, 2012 and 2011, respectively. The obligation to issue shares is included in “common stock issuable” in the consolidated balance sheet. Through December 31, 2012, 133,051 shares have been issued in connection with the deferred bonus plan.

Directors’ stock plan

The Company maintains a compensation plan for non-employee members of the Company’s boards of directors and directors advisory councils that allows such members to receive all or a portion of their compensation in shares of M&T common stock. Through December 31, 2012, 182,433 shares had been issued in connection with the directors’ stock plan.

Through acquisitions, the Company assumed obligations to issue shares of M&T common stock related to deferred directors compensation plans. Shares of common stock issuable under such plans were 18,816 and 20,084 at December 31, 2012 and 2011, respectively. The obligation to issue shares is included in “common stock issuable” in the consolidated balance sheet.