NOTE 11 STOCK-BASED COMPENSATION:

Stock-Based Compensation Plan:

In March 2013, the Board of Directors, with subsequent approval of the Corporation’s shareholders, approved the adoption of the 2013 Incentive Compensation Plan (“2013 Plan”). Under the 2013 Plan, options are generally exercisable up to 10 years from the date of grant, have an exercise price that is equal to the closing price of the Corporation’s stock on the grant date, and vest ratably over four years, while service-based restricted stock awards vest ratably over four years and performance-based restricted stock awards vest over the three year performance period. As of December 31, 2015, approximately 11 million shares remained available for grant under the 2013 Plan.

The Corporation also issues restricted common stock and restricted common stock units to certain key employees (collectively referred to as “restricted stock awards”) under this plan. The shares of restricted stock are restricted as to transfer, but are not restricted as to dividend payment or voting rights. Restricted stock units receive dividend equivalents but do not have voting rights. The transfer restrictions lapse over three or four years, depending upon whether the awards are service-based or performance-based. Service-based awards are contingent upon continued employment or meeting the requirements for retirement, and performance-based awards are based on earnings per share performance goals, relative total shareholder return, and continued employment or meeting the requirements for retirement. The plan provides that restricted stock awards and stock options will immediately become fully vested upon retirement from the Corporation of those colleagues whose retirement meets the early retirement or normal retirement definitions under the plan (“retirement eligible colleagues”).

Accounting for Stock-Based Compensation:

The fair value of stock options granted is estimated on the date of grant using a Black-Scholes option pricing model, while the fair value of restricted stock awards is their fair market value on the date of grant. The fair values of stock options and restricted stock awards are amortized as compensation expense on a straight-line basis over the vesting period of the grants. Beginning with the 2014 grants, expenses related to stock options and restricted stock awards are fully recognized on the date the colleague meets the definition of normal or early retirement. Compensation expense recognized is included in personnel expense in the consolidated statements of income. See Note 1 for the Corporation's accounting policy on stock-based compensation.

Assumptions are used in estimating the fair value of stock options granted. The weighted average expected life of the stock option represents the period of time that stock options are expected to be outstanding and is estimated using historical data of stock option exercises and forfeitures. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant. The expected volatility is based on the implied volatility of the Corporation’s stock. The following assumptions were used in estimating the fair value for options granted in 2015, 2014 and 2013.



	2015		2014		2013
Dividend yield	2.00	%	2.00	%	2.00	%
Risk-free interest rate	2.00	%	2.00	%	0.99	%
Weighted average expected volatility	20.00	%	20.00	%	34.35	%
Weighted average expected life	6 years		6 years		6 years
Weighted average per share fair value of options	$3.08		$3.00		$3.80

The Corporation is required to estimate potential forfeitures of stock grants and adjust compensation expense recorded accordingly. The estimate of forfeitures will be adjusted over the requisite service period to the extent that actual forfeitures differ, or are expected to differ, from such estimates. Changes in estimated forfeitures will be recognized in the period of change and will also impact the amount of stock compensation expense to be recognized in future periods.

A summary of the Corporation’s stock option activity for 2015, 2014, and 2013, is presented below.



Stock Options	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value (000s)
Outstanding at December 31, 2012	8,640,558		$	18.88
Granted	1,020,979		14.02
Exercised	(642,202	)	13.43
Forfeited or expired	(985,092	)	21.49
Outstanding at December 31, 2013	8,034,243		$	18.37	6.03	$	20,838
Options Exercisable at December 31, 2013	4,923,720		$	21.48	4.62	$	8,580
Granted	1,389,452		$	17.45
Exercised	(933,143	)	13.77
Forfeited or expired	(643,214	)	23.50
Outstanding at December 31, 2014	7,847,338		$	18.34	5.79	$	23,986
Options Exercisable at December 31, 2014	5,076,676		$	19.96	4.41	$	14,953
Granted	1,348,504		$	17.95
Exercised	(1,351,646	)	13.90
Forfeited or expired	(1,215,053	)	29.13
Outstanding at December 31, 2015	6,629,143		$	17.22	6.24	$	18,730
Options Exercisable at December 31, 2015	4,190,245		$	17.25	4.93	$	14,873

The following table summarizes information about the Corporation’s nonvested stock option activity for 2015, 2014, and 2013.



Stock Options	Shares		Weighted Average Grant Date Fair Value
Nonvested at December 31, 2012	4,036,595		$	5.11
Granted	1,020,979		3.80
Vested	(1,680,981	)	5.10
Forfeited	(266,070	)	5.05
Nonvested at December 31, 2013	3,110,523		$	4.69
Granted	1,389,452		3.00
Vested	(1,522,152	)	4.92
Forfeited	(207,161	)	4.38
Nonvested at December 31, 2014	2,770,662		$	3.74
Granted	1,348,504		3.08
Vested	(1,459,709	)	4.19
Forfeited	(220,559	)	3.28
Nonvested at December 31, 2015	2,438,898		$	3.15

Intrinsic value represents the amount by which the fair market value of the underlying stock exceeds the exercise price of the stock option. For the years ended December 31, 2015, 2014, and 2013 the intrinsic value of stock options exercised was $7 million, $4 million, and $2 million, respectively. The total fair value of stock options that vested was $6 million, $7 million and $9 million, respectively, for the years ended December 31, 2015, 2014, and 2013. For the years ended December 31, 2015, 2014, and 2013, the Corporation recognized compensation expense of $4 million, $6 million, and $8 million respectively, for the vesting of stock options. Included in compensation expense for 2015 was approximately $710,000 of expense for the accelerated vesting of stock options granted to retirement eligible colleagues. At December 31, 2015, the Corporation had $5 million of unrecognized compensation expense related to stock options that is expected to be recognized over the remaining requisite service periods that extend predominantly through the fourth quarter 2018.

The following table summarizes information about the Corporation’s restricted stock activity for 2015, 2014, and 2013.



Restricted Stock	Shares		Weighted Average Grant Date Fair Value
Outstanding at December 31, 2012	932,425		$	13.60
Granted	1,276,868		14.03
Vested	(626,480	)	13.68
Forfeited	(71,048	)	13.92
Outstanding at December 31, 2013	1,511,765		$	13.92
Granted	1,177,168		17.35
Vested	(538,877	)	14.12
Forfeited	(167,930	)	15.26
Outstanding at December 31, 2014	1,982,126		$	15.79
Granted	1,173,847		18.09
Vested	(709,582	)	15.62
Forfeited	(196,363	)	16.87
Outstanding at December 31, 2015	2,250,028		$	17.03

The Corporation amortizes the expense related to restricted stock awards as compensation expense over the vesting period specified in the grant. Restricted stock awards granted during 2013 to executive officers will vest ratably over a three year period, while restricted stock awards granted during 2014 and 2015 will vest ratably over a four year period. Restricted stock awards granted to non-executives during 2013, 2014 and 2015 will vest ratably over a four year period. Expense for restricted stock awards of approximately $15 million, $10 million, and $7 million was recorded for the years ended December 31, 2015, 2014, and 2013, respectively. Included in compensation expense for 2015 was approximately $2 million of expense for the accelerated vesting of restricted stock awards granted to retirement eligible colleagues. The Corporation had $23 million of unrecognized compensation costs related to restricted stock awards at December 31, 2015, that is expected to be recognized over the remaining requisite service periods that extend predominantly through fourth quarter 2018.

The Corporation has the ability to issue shares from treasury or new shares upon the exercise of stock options or the granting of restricted stock awards. As described in Note 10, the Board of Directors has authorized management to repurchase shares of the Corporation’s common stock each quarter in the market, to be made available for issuance in connection with the Corporation’s employee incentive plans and for other corporate purposes. The repurchase of shares will be based on market and investment opportunities, capital levels, growth prospects, and regulatory constraints. Such repurchases may occur from time to time in open market purchases, block transactions, private transactions, accelerated share repurchase programs, or similar facilities.