Employee Benefit Plans

6 Months Ended

Jun. 30, 2013

Employee Benefit Plans [Abstract]

Employee Benefit Plans

NOTE 10 - EMPLOYEE BENEFIT PLANS

The Company sponsors various short-term incentive plans and LTIs for eligible employees, which may be delivered through various incentive programs, including stock options, RSUs, restricted stock, and LTI 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. 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. All incentive awards are subject to clawback provisions. Compensation expense for the AIP and LTI cash plans was $39 million and $40 million for the three months ended June 30, 2013 and 2012, respectively and $78 million and $77 million for the six months ended June 30, 2013 and 2012, respectively. For the three and six months ended June 30, 2013, the Company's AIP plan included a higher number of eligible participants, of which some participants previously received compensation under other incentive plans.

Stock-Based Compensation

The Company provides stock-based awards through the 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. 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 an absolute financial performance target. Under the 2009 Stock Plan, approximately 21 million shares of common stock are authorized and reserved for issuance, of which no more than 17 million shares may be issued as restricted stock or stock units. At June 30, 2013, 17 million shares were available for grant, including 9 million shares available to be issued as restricted stock.

Stock options are granted at an exercise price that is no less than the fair market value of a share of SunTrust common stock on the grant date and may be either tax-qualified incentive stock options or non-qualified stock options. Stock options typically vest pro-rata over three years and generally have a maximum contractual life of ten years. Upon exercise, shares are generally issued from treasury stock. Upon exercise, the weighted average fair value of options granted during the first six months of 2013 and 2012 were $7.37 and $7.83 per share, respectively. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model based on the following assumptions for the six months ended June 30:

	2013		2012
Dividend yield	1.28	%	0.91	%
Expected stock price volatility	30.98		39.88
Risk-free interest rate (weighted average)	1.02		1.07
Expected life of options	6 years		6 years

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

	Three Months Ended June 30				Six Months Ended June 30
(Dollars in millions)	2013		2012		2013		2012
Stock-based compensation expense:
Stock options		$1		$2		$4		$6
Restricted stock	8		8		15		15
RSUs	4		4		13		18
Total stock-based compensation expense		$13		$14		$32		$39

The recognized stock-based compensation tax benefit was $5 million and $6 million for the three months ended June 30, 2013 and 2012, respectively, and $12 million and $15 million for the six months ended June 30, 2013 and 2012, respectively.

Retirement Plans

SunTrust did not contribute to either of its noncontributory qualified retirement plans ("Retirement Benefit Plans") during the first six months of 2013. The expected long-term rate of return on plan assets for the Retirement Benefit Plans is 7% for 2013.

Anticipated employer contributions for 2013 are $8 million for the SERP. During the three and six months ended June 30, 2013, the actual contributions/benefit payments were $1 million and $4 million, respectively.

SunTrust contributed less than $1 million to the Postretirement Welfare Plan during the three and six months ended June 30, 2013. Additionally, SunTrust expects to receive a Medicare Part D Subsidy reimbursement for 2013 in the amount of $3 million. The expected pre-tax long-term rate of return on plan assets for the Postretirement Welfare Plan is 5% for 2013.

Components of net periodic benefit for the three and six months endedJune 30, were as follows:

	Three Months Ended June 30
	2013						2012
(Dollars in millions)	Pension Benefits			Other Postretirement Benefits			Pension Benefits			Other Postretirement Benefits
Interest cost		$28			$2			$31			$1
Expected return on plan assets	(47		)	(2		)	(43		)	(1		)
Recognized net actuarial loss	7			—			6			—
Net periodic benefit		($12	)		$—			($6	)		$—

	Six Months Ended June 30
	2013						2012
(Dollars in millions)	Pension Benefits			Other Postretirement Benefits			Pension Benefits			Other Postretirement Benefits
Interest cost		$56			$3			$60			$3
Expected return on plan assets	(93		)	(3		)	(86		)	(3		)
Recognized net actuarial loss	13			—			12			—
Net periodic benefit		($24	)		$—			($14	)		$—