Employee Benefit Plans

9 Months Ended

Sep. 30, 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. For the three and nine months ended September 30, 2012, the Company's AIP plan includes a higher number of eligible employees that previously received compensation under other incentive plans. Compensation expense for the AIP and LTI cash plans was $39 million and $32 million for the three months ended September 30, 2012 and 2011, respectively, and $116 million and $92 million for the nine months ended September 30, 2012 and 2011, respectively.

Previously, TARP prohibited the payment of any bonus, incentive compensation or stock option award to the Company's five NEOs and certain other highly-compensated executives. As a result, beginning in January 2010, 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 to key employees of the Company, of which some awards 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.

The Company granted 1,687,968 shares of restricted stock and 1,690,515 RSUs during the first nine months of 2012. The weighted average grant-date fair value of these awards was $21.84 and $20.77 per share, respectively. The Company also granted 859,390 shares of stock options with a weighted average exercise price of $21.92 during the nine months endedSeptember 30, 2012. During the first nine months of 2011, the Company granted 1,375,406 shares of restricted stock and 344,590 RSUs. The weighted average grant-date fair value of these awards was $31.44 and $37.57 per share, respectively. The Company also granted 813,265 shares of stock options with a weighted average exercise price of $29.70 during the nine months endedSeptember 30, 2011.The fair value of stock options granted during the first nine months of 2012 and 2011 was $7.83 and $10.51 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:

	Nine Months Ended September 30
	2012		2011
Dividend yield	0.91	%	0.75	%
Expected stock price volatility	39.88		34.87
Risk-free interest rate (weighted average)	1.07		2.48
Expected life of options	6 years		6 years

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

	Three Months Ended September 30				Nine Months Ended September 30
(Dollars in millions)	2012		2011		2012		2011
Stock-based compensation expense:
Stock options		$2		$4		$9		$11
Restricted stock	8		8		22		25
RSUs	6		1		24		9
Total stock-based compensation expense		$16		$13		$55		$45

The recognized stock-based compensation tax benefit was $6 million and $5 million for the three months ended September 30, 2012 and 2011, respectively, and $21 million and $17 million for the nine months ended September 30, 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 nine months 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 and nine months endedSeptember 30, 2012, the actual contributions/benefit payments were $23 million and $25 million, respectively.

SunTrust contributed less than $1 million to the Postretirement Welfare Plan during the three and nine months endedSeptember 30, 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.

Components of net periodic (benefit)/cost were as follows:

	Three Months Ended September 30
	2012						2011
(Dollars in millions)	Retirement Benefits			Other Postretirement Benefits			Retirement Benefits			Other Postretirement Benefits
Service cost		$—			$—			$18			$—
Interest cost	30			2			32			3
Expected return on plan assets	(43		)	(2		)	(47		)	(2		)
Amortization of prior service credit	—			—			(5		)	—
Recognized net actuarial loss	6			—			11			—
Settlement loss 1	2			—			—			—
Net periodic (benefit)/cost		($5	)		$—			$9			$1

	Nine Months Ended September 30
	2012						2011
(Dollars in millions)	Retirement Benefits			Other Postretirement Benefits			Retirement Benefits			Other Postretirement Benefits
Service cost		$—			$—			$53			$—
Interest cost	90			5			97			7
Expected return on plan assets	(129		)	(5		)	(142		)	(6		)
Amortization of prior service credit	—			—			(14		)	—
Recognized net actuarial loss	18			—			32			1
Settlement loss 1	2			—			—			—
Net periodic (benefit)/cost		($19	)		$—			$26			$2

¹ Interim remeasurement was required on September 15, 2012 for the SunTrust SERP to reflect settlement accounting.