NOTE 10 - EMPLOYEE BENEFIT PLANS

The Company sponsors various short-term incentive plans and LTI plans for eligible employees, which may be delivered through various incentive programs, such as 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 incentive plans with cash payouts was $45 million and $39 million for the three months ended March 31, 2014 and 2013, respectively.

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 March 31, 2014, approximately 17 million shares were available for grant, including approximately 6 million shares available to be issued as restricted stock or RSUs.

On February 10 and 11, 2014, the Compensation Committee and Board of Directors approved, subject to shareholder approval, an amendment to the Plan to remove the sub-limit on full value shares. On April 22, 2014, the shareholders approved the amendment to the Plan. The shares, which are already in the Plan (and available for grant as stock options) and were previously approved by the shareholders, are now available for grant as full value shares. After giving effect to the amendment, all 17 million shares available for grant under the Plan may be granted as stock options, restricted stock, or RSUs.

Stock options were granted at an exercise price that was no less than the fair market value of a share of SunTrust common stock on the grant date and were 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. No stock options were issued during the three months ended March 31, 2014, consistent with the Company's decision to discontinue the issuance of stock options in 2014. The weighted average fair value of options granted during the three months ended March 31, 2013 was $7.37 per share. The fair value of each option grant was estimated on the date of grant using the Black-Scholes option pricing model based on the following assumptions for the three months ended March 31, 2013:



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

Stock-based compensation expense recognized in noninterest expense for the three months ended March 31 was as follows:



(Dollars in millions)	2014		2013
Stock-based compensation expense:
Stock options		$1		$3
Restricted stock	8		7
RSUs	14		9
Total stock-based compensation expense		$23		$19

The recognized stock-based compensation tax benefit was $9 million and $8 million for the three months ended March 31, 2014 and 2013, respectively.

Retirement Plans

SunTrust did not contribute to either of its noncontributory qualified retirement plans ("Retirement Benefit Plans") during the three months ended March 31, 2014. The expected long-term rate of return on plan assets for the Retirement Benefit Plans is 7.0% for the SunTrust Retirement Plan and 6.5% for the NCF Retirement Plan for 2014.

Anticipated employer contributions/benefit payments for 2014 are $7 million for the SERP. During the three months ended March 31, 2014, the actual contributions/benefit payments were $1 million.

SunTrust contributed less than $1 million to the Postretirement Welfare Plan during the three months ended March 31, 2014. Additionally, SunTrust expects to receive a Medicare Part D Subsidy reimbursement for 2014 of less than $1 million. The expected pre-tax long-term rate of return on plan assets for the Postretirement Welfare Plan is 5.25% for 2014.

Components of net periodic benefit for the three months ended March 31 were as follows:



	Pension Benefits						Other Postretirement Benefits
(Dollars in millions)	2014			2013			2014			2013
Interest cost		$31			$28			$1			$1
Expected return on plan assets	(49		)	(46		)	(2		)	(1		)
Recognized net actuarial loss/(gain)	4			6			(1		)	—
Net periodic benefit		($14	)		($12	)		($2	)		$—