Employee Benefit Plans

3 Months Ended

Mar. 31, 2012

Employee Benefit Plans [Abstract]

Employee Benefit Plans

NOTE 9 - EMPLOYEE BENEFIT PLANS

The Company sponsors various short-term incentive and LTI plans for eligible employees. The Company delivers LTIs through various incentive programs, including stock options, RSUs, restricted stock, and LTI cash. Awards under the LTI cash plan generally cliff vest over a period of three years from the date of the award and are paid in cash. AIP is the Company's short-term cash incentive plan for key employees that provides for potential annual cash awards based on the Company's performance and/or the achievement of business unit and individual performance objectives. Compensation expense for the AIP and LTI Cash plans was $36 million and $28 million for the three months ended March 31, 2012 and 2011, respectively.

Previously, TARP prohibited the payment of any bonus, incentive compensation or stock option award to our five NEOs and certain other highly compensated executives. As a result, the Company paid additional base salary amounts in the form of stock (salary shares) to the NEOs and some of the other employees who were among the next 20 most highly-compensated employees. The Company did this each pay period in the form of stock units under the SunTrust Banks, Inc. 2009 Stock Plan (the "2009 Stock Plan") until the Company repaid TARP. The Company settled the stock units in cash; for the 2010 salary shares, one half was settled on March 31, 2011 and one half was settled on March 31, 2012. The 2011 salary shares were settled on March 30, 2011, the date the Company repaid the U.S. government's TARP investment. The amount paid upon settlement of the stock units was equal to the value of a share of SunTrust common stock on the settlement date. The value of salary shares paid was $4 million and $7 million in 2012 and 2011, respectively.

Stock-Based Compensation

The Company provides stock-based awards through the SunTrust Banks Inc. 2009 Stock Plan (as amended and restated effective January 1, 2011) under which the Compensation Committee of the Board of Directors has the authority to grant stock options, restricted stock, and RSUs, of which some may have performance or other conditions such as vesting tied to the Company's total shareholder return relative to a peer group or vesting tied to the achievement of a ROA target, to key employees of the Company.

The Company granted 1,555,430 shares of restricted stock and 1,581,900 restricted stock units during the first three months of 2012. The weighted average grant-date fair value of these awards was $21.67 and $20.89, respectively. The Company also granted 754,450 shares of stock options with exercise prices of $21.67. The fair value of options granted during the first three months of 2012 and 2011 was $7.83 and $12.20 per share, respectively. The fair value of each option grant was estimated on the date of grant using the Black-Scholes option pricing model using the following assumptions:

	Three Months Ended March 31
	2012		2011
Dividend yield	0.92	%	0.12	%
Expected stock price volatility	40.41		34.54
Risk-free interest rate (weighted average)	1.07		2.72
Expected life of options	6 years		6 years

Stock-based compensation expense recognized in noninterest expense was as follows:

	Three Months Ended March 31
(Dollars in millions)	2012		2011
Stock-based compensation expense:
Stock options		$4		$3
Restricted stock	7		9
Restricted stock units	14		—
Total stock-based compensation expense		$25		$12

The recognized stock-based compensation tax benefit was $9 million and $5 million for the three months ended March 31, 2012 and 2011, respectively.

Retirement Plans

Certain Retirement Plans were amended in 2011 to cease all future benefit accruals as disclosed in Note 16, “Employee Benefit Plans,” to the Consolidated Financial Statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2011. SunTrust did not contribute to either of its noncontributory qualified retirement plans ("Retirement Benefits Plans") in the first quarter of 2012. The expected long-term rate of return on plan assets for the Retirement Benefit Plans is 7.00% for 2012.

Anticipated employer contributions/benefit payments for 2012 are $28 million for the SERP. For the three months ended March 31, 2012, the actual contributions/benefit payments were $1 million.

SunTrust contributed less than $1 million to the Postretirement Welfare Plan in the first quarter of 2012. Additionally, SunTrust expects to receive a Medicare Part D Subsidy reimbursement for 2012 in the amount of $3 million. The expected pre-tax long-term rate of return on plan assets for the Postretirement Welfare Plan is 6.25% for 2012.

	Three Months Ended March 31
	2012						2011
(Dollars in millions)	Retirement Benefits			Other Postretirement Benefits			Retirement Benefits			Other Postretirement Benefits
Service cost		$—			$—			$18			$—
Interest cost	29			2			32			3
Expected return on plan assets	(43		)	(2		)	(47		)	(2		)
Amortization of prior service credit	—			—			(5		)	—
Recognized net actuarial loss	6			—			10			—
Net periodic (benefit)/cost		($8	)		$—			$8			$1