Certain Employee Benefit and Stock Based Compensation Plans

3 Months Ended

Mar. 31, 2016

Certain Employee Benefit and Stock Based Compensation Plans

Note 9 Certain Employee Benefit And Stock Based Compensation Plans

Pension And Postretirement Plans

As described in Note 12 Employee Benefit Plans in our 2015 Form 10-K, we have a noncontributory, qualified defined benefit pension plan covering eligible employees. Benefits are determined using a cash balance formula where earnings credits are a percentage of eligible compensation. Any pension contributions to the plan are based on an actuarially determined amount necessary to fund total benefits payable to plan participants.

We also maintain nonqualified supplemental retirement plans for certain employees and provide certain health care and life insurance benefits for qualifying retired employees (postretirement benefits) through various plans. PNC reserves the right to terminate or make changes to these plans at any time. The nonqualified pension is unfunded.

The components of our net periodic pension and postretirement benefit cost for the first three months of 2016 and 2015, respectively, were as follows:

Table 77: Net Periodic Pension and Postretirement Benefit Costs


	Qualified Pension Plan				Nonqualified Retirement Plans					Postretirement Benefit
Three months ended March 31
In millions	2016		2015			2016		2015			2016		2015
Net periodic cost consists of:
Service cost	$	26	$	27							$	1	$	1
Interest cost		46		44		$	3	$	3			4		4
Expected return on plan assets		(70)		(74)								(1)
Amortization of prior service credit		(2)		(2)
Amortization of actuarial losses		11		7			1		2
Net periodic cost/(benefit)	$	11	$	2		$	4	$	5		$	4	$	5

Stock Based Compensation Plans

As more fully described in Note 13 Stock Based Compensation Plans in our 2015 Form 10-K, we have long-term incentive award plans (Incentive Plans) that provide for the granting of incentive stock options, nonqualified stock options, stock appreciation rights, incentive shares/performance units, restricted shares, restricted share units, other share-based awards and dollar-denominated awards to executives and, other than incentive stock options, to non-employee directors. Certain Incentive Plan awards may be paid in stock, cash or a combination of stock and cash. We typically grant a substantial portion of our stock-based compensation awards during the first quarter of the year. As of March 31, 2016, no stock appreciation rights were outstanding.

Total compensation expense recognized related to all share-based payment arrangements during the first three months of 2016 and 2015 was $13 million and $40 million, respectively. At March 31, 2016, there was $314 million of unamortized share-based compensation expense related to nonvested equity compensation arrangements granted under the Incentive Plans. This unamortized cost is expected to be recognized as expense over a period of no longer than five years.

Nonqualified Stock Options

Additional information regarding PNC stock options is more fully described in Note 13 Stock Based Compensation Plans in our 2015 Form 10-K.

The following table represents the stock option activity for the first three months of 2016.

Table 78: Stock Options - Rollforward

					PNC Options
					Converted From
					National City
		PNC			Options			Total
			Weighted-Average			Weighted-Average			Weighted-Average
In thousands, except weighted-average data		Shares	Exercise Price		Shares	Exercise Price		Shares	Exercise Price
Outstanding at December 31, 2015		4,931	$	55.50	243	$	522.54	5,174	$	77.47
	Granted (a)
	Exercised	(49)		63.82				(49)		63.82
	Cancelled				(3)		372.30	(3)		372.30
Outstanding and Exercisable at March 31, 2016		4,882	$	55.42	240	$	524.27	5,122	$	77.44
(a) PNC did not grant any stock options in the first three months of 2016.

Incentive/Performance Unit Awards and Restricted Share/Restricted Share Unit Awards

Information on incentive/performance unit share awards and restricted share/restricted share unit awards is more fully described in Note 13 Stock Based Compensation Plans in our 2015 Form 10-K.

Table 79: Nonvested Incentive/Performance Unit Awards and Restricted Share/Restricted Share Unit Awards - Rollforward

					Nonvested
		Nonvested	Weighted-		Restricted	Weighted-
		Incentive/	Average		Share/	Average
		Performance	Grant Date		Restricted Share	Grant Date
Shares in thousands		Unit Shares	Fair Value		Units	Fair Value
December 31, 2015		1,830	$	79.27	3,333	$	79.26
	Granted (a)	776		77.71	1,264		78.22
	Vested/Released (a)	(691)		71.55	(897)		64.00
	Forfeited				(30)		79.65
March 31, 2016		1,915	$	81.42	3,670	$	82.63
(a) Includes adjustments for achieving specific performance goals for Incentive/Performance Unit Share awards granted in prior periods.

In the preceding table, the units and related weighted-average grant date fair value of the incentive/performance unit share awards exclude the effect of dividends on the underlying shares, as those dividends will be paid in cash if and when the underlying shares are issued to the participants.

Liability Awards

A summary of all nonvested, cash-payable incentive/performance units and restricted share unit activity follows:

Table 80: Nonvested Cash-Payable Incentive/Performance Units and Restricted Share Units – Rollforward

		Cash-Payable
		Incentive/	Cash-Payable
		Performance	Restricted
In thousands		Units	Share Units	Total
Outstanding at December 31, 2015		117	664	781
	Granted (a)	85	395	480
	Vested and Released (a)	(94)	(327)	(421)
	Forfeited		(4)	(4)
Outstanding at March 31, 2016		108	728	836
(a) Includes adjustments for achieving specific performance goals for Cash-Payable Incentive/Performance Units granted in prior periods.

Included in the preceding table are cash-payable restricted share units granted to certain executives. These grants were made primarily as part of an annual bonus incentive deferral plan. While there are time-based and other vesting criteria, there are generally no market or performance criteria associated with these awards. Prior to the 2015 grant, compensation expense recognized related to these awards was recorded in prior periods as part of the annual cash bonus process. Due to certain requisite service period changes in the award agreements starting with the 2015 grant (for the 2014 performance year), compensation expense is recognized ratably over a four-year period commensurate with the performance year plus the three years of service-based vesting requirements. As of March 31, 2016, the aggregate intrinsic value of all outstanding nonvested cash-payable incentive/performance units and restricted share units was approximately $71 million.