Stock-Based Compensation

12 Months Ended

Dec. 31, 2011

Stock-Based Compensation [Abstract]

Stock-Based Compensation

NOTE 10  STOCK-BASED COMPENSATION:

At December 31, 2011, the Corporation had one stock-based compensation plan (discussed below). All stock awards granted under this plan have an exercise price that is established at the closing price of the Corporation's stock on the date the awards were granted.

The Corporation may issue common stock with restrictions to certain key employees. The shares are restricted as to transfer, but are not restricted as to dividend payment or voting rights. The transfer restrictions lapse over one, two, three, or five years, depending upon whether the awards are salary shares, service-based or performance-based. Service-based awards are contingent upon continued employment, and performance-based awards are based on earnings per share performance goals and continued employment.

Stock-Based Compensation Plan:

In March 2010, the Board of Directors, with subsequent approval of the Corporation's shareholders, approved the adoption of the 2010 Incentive Compensation Plan (“2010 Plan”). Options are generally exercisable up to 10 years from the date of grant and vest ratably over three years. As of December 31, 2011, approximately 9 million shares remain available for grants.

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 and salary shares is their fair market value on the date of grant. The fair value of stock options and restricted stock is amortized as compensation expense on a straight-line basis over the vesting period of the grants and the fair value of salary shares is recognized as compensation expense on the date of grant. Compensation expense recognized is included in personnel expense in the consolidated statements of income (loss).

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 historical volatility of the Corporation's stock. The following assumptions were used in estimating the fair value for options granted in 2011, 2010 and 2009.

	2011			2010			2009
Dividend yield		2.00	%		3.00	%		4.95	%
Risk-free interest rate		2.27	%		2.70	%		1.87	%
Expected volatility		47.24	%		45.38	%		36.00	%
Weighted average expected life		6 years			6 years			6 years
Weighted average per share fair value of options	$	5.56		$	4.60		$	3.60

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 2011, 2010, and 2009, is presented below.

				Weighted Average	Aggregate
		Weighted Average		Remaining	Intrinsic
Stock Options	Shares	Exercise Price		Contractual Term	Value (000s)
Outstanding at December 31, 2008	6,581,702	$	27.45
Granted	975,548		17.05
Exercised	(945)		16.70
Forfeited or expired	(847,687)		25.73
Outstanding at December 31, 2009	6,708,618	$	26.16	5.61	$	-
Options exercisable at December 31, 2009	4,811,626	$	27.73	4.50	$	-
Outstanding at December 31, 2009	6,708,618		26.16
Granted	1,348,474		13.24
Exercised	(14,868)		12.71
Forfeited or expired	(740,766)		20.95
Outstanding at December 31, 2010	7,301,458	$	24.33	5.01	$	2,460
Options exercisable at December 31, 2010	5,275,738	$	27.60	3.63	$	63
Outstanding at December 31, 2010	7,301,458		24.33
Granted	1,624,369		14.20
Exercised	(23,437)		12.66
Forfeited or expired	(1,847,116)		24.51
Outstanding at December 31, 2011	7,055,274	$	21.99	5.61	$	27
Options exercisable at December 31, 2011	4,623,935	$	26.10	4.01	$	7

The following table summarizes information about the Corporation’s stock options outstanding at December 31, 2011.
	Options	Weighted Average		Remaining	Options	Weighted Average
	Outstanding	Exercise Price		Life (Years)	Exercisable	Exercise Price
Range of Exercise Prices:
$0.00 — $10.00	4,000	$	9.26	7.56	2,680	$	9.26
$10.01 — $15.00	2,592,027		13.77	8.65	384,122		13.20
$15.01 — $20.00	761,217		17.40	6.87	539,103		17.54
$20.01 — $25.00	1,504,303		23.40	2.98	1,504,303		23.40
$25.01 — $30.00	452,037		29.04	2.05	452,037		29.04
Over $30.00	1,741,690		33.19	3.72	1,741,690		33.19
Total	7,055,274	$	21.99	5.61	4,623,935	$	26.10

The following table summarizes information about the Corporation’s nonvested stock option activity for 2011, 2010, and 2009.
		Weighted Average
Stock Options	Shares	Grant Date Fair Value
Nonvested at December 31, 2008	1,811,165	$	3.85
Granted	975,548		3.60
Vested	(650,629)		4.07
Forfeited	(239,092)		4.26
Nonvested at December 31, 2009	1,896,992	$	3.60
Nonvested at December 31, 2009	1,896,992	$	3.60
Granted	1,348,474		4.60
Vested	(920,969)		3.93
Forfeited	(298,777)		3.78
Nonvested at December 31, 2010	2,025,720	$	4.09
Nonvested at December 31, 2010	2,025,720	$	4.09
Granted	1,624,369		5.56
Vested	(955,454)		3.77
Forfeited	(263,296)		4.85
Nonvested at December 31, 2011	2,431,339	$	5.11

For the years ended December 31, 2011, 2010, and 2009, the intrinsic value of stock options exercised was immaterial. (Intrinsic value represents the amount by which the fair market value of the underlying stock exceeds the exercise price of the stock option.) During 2011, less than $0.3 million was received for the exercise of stock options. The total fair value of stock options that vested was $4million, $4million and $3million, respectively, for the years ended December 31, 2011, 2010, and 2009. The Corporation recognized compensation expense of $5 million, $3million, and $4million for 2011, 2010, and 2009, respectively, for the vesting of stock options. At December 31, 2011, the Corporation had $8million of unrecognized compensation expense related to stock options that is expected to be recognized over the remaining requisite service periods that extend predominantly through 2013.

The following table summarizes information about the Corporation’s restricted stock activity for 2011, 2010, and 2009.
		Weighted Average
Restricted Stock	Shares	Grant Date Fair Value
Outstanding at December 31, 2008	354,327	$	26.75
Granted	371,643		16.48
Vested	(146,320)		27.96
Forfeited	(52,519)		21.80
Outstanding at December 31, 2009	527,131	$	19.67
Outstanding at December 31, 2009	527,131	$	19.67
Granted	604,343		12.38
Vested	(205,239)		21.68
Forfeited	(153,973)		17.12
Outstanding at December 31, 2010	772,262	$	13.94
Outstanding at December 31, 2010	772,262	$	13.94
Granted	593,437		14.27
Vested	(169,499)		17.74
Forfeited	(182,435)		13.86
Outstanding at December 31, 2011	1,013,765	$	13.79

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 2011 to the senior executive officers and the next 20 most highly compensated employees will vest ratably over a three year period, subject to the full repayment of the funds received under the Capital Purchase Program (“CPP”), and the restricted stock award recipient must continue to perform substantial services for the Corporation for at least two years after the date of grant. Restricted stock awards granted during 2010 to the senior executive officers and the next 20 most highly compensated employees will vest in 25% increments as the funds received under the CPP are repaidand the restricted stock award recipients must continue to perform substantial services for the Corporation for at least two years after the date of grant. The Corporation repaid the CPP funds during 2011. Expense for restricted stock awards of approximately 6 million, $6million, and $4million was recorded for the years ended December 31, 2011, 2010, and 2009, respectively. At December 31, 2011, the Corporation had $6 million of unrecognized compensation expense related to restricted stock awards that is expected to be recognized over the remaining requisite service periods that extend predominantly through 2013.

The Corporation recognizes expense related to salary shares as compensation expense. Each share is fully vested as of the date of grant and is subject to restrictions on transfer that lapse over a period of 9 to 28 months based on the month of grant. The Corporation recognized compensation expense of 4 million on the granting of 317,450 salary shares (or an average cost per share of $12.41) during 2011. The Corporation recognized compensation expense of $3 million on the granting of 244,062 salary shares (or an average cost per share of $13.43) during 2010 and an immaterial amount on the granting of 5,841 salary shares (or an average cost per share of $11.06) for the year ended December 31, 2009.

The Corporation issues shares from treasury, when available, or new shares upon the exercise of stock options, granting of restricted stock awards, and the granting of salary shares. 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 opportunities, capital levels, growth prospects, and other investment opportunities, and is subject to restrictions under the Memorandum of Understanding with the Federal Reserve Bank of Chicago.