The Company maintains various long-term incentive compensation plans for the benefit of its employees. The two principal forms of long-term incentive compensation are granted under several stock-based compensation and deferred cash-based compensation plans.

Stock-Based Compensation Plans. The accounting guidance for stock-based compensation requires measurement of compensation cost for equity-based awards at fair value and recognition of compensation cost over the service period, net of estimated forfeitures (see Note 2).

The components of the Company's stock-based compensation expense (net of cancellations) are presented below:

			2012		2011		2010

			(dollars in millions)
Deferred restricted stock units		$	864	$	1,057	$	1,075
Stock options			4		24		1
Performance-based stock units			29		32		39
	Total(1)	$	897	$	1,113	$	1,115

(1) Amounts for 2012, 2011 and 2010 include $31 million, $186 million and $222 million, respectively, related to equity awards that were granted in 2013, 2012 and 2011, respectively, to employees who satisfied retirement-eligible requirements under the award terms that do not contain a future service period. The decrease in 2012 is due to the introduction of a new vesting requirement in certain 2012 performance year award terms for employees who satisfied the existing retirement eligible provisions to provide a one-year advance notice of their intention to retire from the Company. As such, these awards will begin to be expensed in 2013 after the grant date over the appropriate service period (see Note 2).

The table above excludes stock-based compensation expense recorded in discontinued operations, which was approximately $3 million in 2012 and $3 million for 2010. See Notes 1 and 25 for additional information on discontinued operations.

The tax benefit related to stock-based compensation expense was $306 million, $383 million and $382 million for 2012, 2011 and 2010, respectively. The tax benefit for stock-based compensation expense included in discontinued operations was $1 million in both 2012 and 2010.

At December 31, 2012, the Company had $709 million of unrecognized compensation cost related to unvested stock-based awards. Absent estimated or actual forfeitures or cancellations, this amount of unrecognized compensation cost will be recognized as $446 million in 2013, $175 million in 2014 and $88 million thereafter. These amounts do not include 2012 performance year awards granted in January 2013 which will begin to be amortized in 2013.

In connection with awards under its stock-based compensation plans, the Company is authorized to issue shares of its common stock held in treasury or newly issued shares. At December 31, 2012, approximately 118 million shares were available for future grant under these plans.

The Company generally uses treasury shares, if available, to deliver shares to employees and has an ongoing repurchase authorization that includes repurchases in connection with awards granted under its stock-based compensation plans. Share repurchases by the Company are subject to regulatory approval. See Note 15 for additional information on the Company's share repurchase program.

Deferred Restricted Stock Units. The Company has granted deferred stock awards pursuant to several stock-based compensation plans. The plans provide for the deferral of a portion of certain employees' long-term incentive compensation with awards made in the form of restricted common stock or in the right to receive unrestricted shares of common stock in the future. Awards under these plans are generally subject to vesting over time contingent upon continued employment and to restrictions on sale, transfer or assignment until the end of a specified period, generally two to three years from date of grant. All or a portion of an award may be canceled if employment is terminated before the end of the relevant restriction period. All or a portion of a vested award also may be canceled in certain limited situations, including termination for cause during the relevant restriction period. Recipients of deferred stock awards may have voting rights, at the Company's discretion, and generally receive dividend equivalents.

The following table sets forth activity relating to the Company's vested and unvested RSUs (share data in millions):

	2012
	Number of Shares		Weighted Average Grant Date Fair Value
RSUs at beginning of period	111	$	28.82
Granted	54		18.09
Conversions to common stock	(38)		28.69
Canceled	(5)		24.77
RSUs at end of period(1)	122	$	24.29

(1) At December 31, 2012, approximately 112 million RSUs with a weighted average grant date fair value of $24.44 were vested or expected to vest.

The weighted average price for RSUs granted during 2011 and 2010 was $28.94 and $28.95, respectively. At December 31, 2012, the weighted average remaining term until delivery for the Company's outstanding RSUs was approximately 1.5 years.

At December 31, 2012, the intrinsic value of outstanding RSUs was $2,304 million.

The total fair market value of RSUs converted to common stock during 2012, 2011 and 2010 was $660 million, $935 million and $971 million, respectively.

The following table sets forth activity relating to the Company's unvested RSUs (share data in millions):

	2012
	Number of Shares		Weighted Average Grant Date Fair Value
Unvested RSUs at beginning of period	78	$	28.32
Granted	54		18.09
Vested	(44)		24.64
Canceled	(5)		24.74
Unvested RSUs at end of period(1)	83	$	23.83

(1) Unvested RSUs represent awards where recipients have yet to satisfy either the explicit vesting terms or retirement-eligible requirements. At December 31, 2012, approximately 73 million unvested RSUs with a weighted average grant date fair value of $24.00 were expected to vest.

The aggregate fair value of awards that vested during 2012, 2011 and 2010 was $753 million, $870 million and $776 million, respectively.

Stock Options. The Company has granted stock option awards pursuant to several stock-based compensation plans. The plans provide for the deferral of a portion of certain key employees' discretionary compensation with awards made in the form of stock options generally having an exercise price not less than the fair value of the Company's common stock on the date of grant. Such stock option awards generally become exercisable over a three-year period and expire seven to 10 years from the date of grant, subject to accelerated expiration upon termination of employment. Stock option awards have vesting, restriction and cancellation provisions that are generally similar to those in deferred restricted stock units. The weighted average fair value of the Company's options granted during 2011 was $8.24, utilizing the following weighted average assumptions:

Grant Year		Risk-Free Interest Rate		Expected Life		Expected Stock Price Volatility		Expected Dividend Yield
2011		2.1%		5.0 years		32.7%		1.5%

The Company's expected option life has been determined based upon historical experience. The expected stock price volatility assumption was determined using the implied volatility of exchange-traded options, in accordance with accounting guidance for share-based payments. The risk-free interest rate was determined based on the yields available on U.S. Treasury zero-coupon issues.

The following table sets forth activity relating to the Company's stock options (option data in millions):

	2012
	Number of Options		Weighted Average Exercise Price
Options outstanding at beginning of period	57	$	48.15
Canceled	(15)		47.49
Options outstanding at end of period(1)	42		48.37
Options exercisable at end of period	39		49.93

(1) At December 31, 2012, approximately 42 million options with a weighted average exercise price of $48.58 were vested.

There were no stock options exercised during 2012, 2011 or 2010. At December 31, 2012, the intrinsic value of in-the-money exercisable stock options was not material.

The following table presents information relating to the Company's stock options outstanding at December 31, 2012 (number of options data in millions):

At December 31, 2012	Options Outstanding				Options Exercisable
Range of Exercise Prices	Number Outstanding		Weighted Average Exercise Price	Average Remaining Life (Years)	Number Exercisable		Weighted Average Exercise Price	Average Remaining Life (Years)

$28.00 - $39.99	12	$	34.50	1.4	9	$	36.15	0.1
$40.00 - $49.99	18		46.57	1.1	18		46.57	1.1
$50.00 - $59.99	1		52.05	3.0	1		52.05	3.0
$60.00 - $76.99	11		66.75	3.9	11		66.75	3.9
Total	42				39

Performance-Based Stock Units. The Company has granted PSUs to certain senior executives. These PSUs will vest and convert to shares of common stock at the end of the performance period only if the Company satisfies predetermined performance and market goals over the three-year performance period that began on January 1 of the grant year and ends three years later on December 31. Under the terms of the grant, the number of PSUs that will actually vest and convert to shares will be based on the extent to which the Company achieves the specified performance goals during the performance period. Performance-based stock unit awards have vesting, restriction and cancellation provisions that are generally similar to those in deferred stock awards.

One-half of the award will be earned based on the Company's return on average common shareholders' equity, excluding the impact of the fluctuation in the Company's credit spreads and other credit factors for certain of the Company's long-term and short-term borrowings, primarily structured notes, that are accounted for at fair value (“Average ROE”). For PSUs granted in 2012, the Average ROE also excludes gains or losses associated with the sale of specified business, specified goodwill impairments, any gain or loss associated with specified legal settlements related to business activities conducted prior to January 1, 2011 and specified cumulative catch-up adjustments resulting from changes in accounting principles that are not applied on a full retrospective basis. The number of PSUs ultimately earned for this portion of the awards will be applied by a multiplier as follows:

	Minimum		Maximum
Year	Average ROE	Multiplier	Average ROE	Multiplier
2012	Less than 6%	0.0	12% or more	1.5
2011	Less than 7.5%	0.0	18% or more	2.0
2010	Less than 7.5%	0.0	18% or more	2.0

The fair value per share of this portion of the award for 2012, 2011 and 2010 was $18.16, $29.89 and $29.32, respectively.

One-half of the award will be earned based on the Company's total shareholder return (“TSR”), relative to the S&P Financial Sectors Index (for the 2012 award) and to members of a comparison peer group (for the 2011 and 2010 awards). The number of PSUs ultimately earned for this portion of the awards will be applied by a multiplier as follows:

		Minimum		Maximum
Year	Metrics	TSR	Multiplier	TSR	Multiplier

2012	Comparison of TSR	Below	Down to 0.0	Above	Up to 1.5
2011	Ranking within the comparison group	Rank 9 or 10	0.0	Rank 1	2.0
2010	Ranking within the comparison group	Rank 9 or 10	0.0	Rank 1	2.0

The fair value per share of this portion of the award for 2012, 2011 and 2010 was $20.42, $43.14 and $41.52, respectively, estimated on the date of grant using a Monte Carlo simulation and the following assumptions.

Grant Year	Risk-Free Interest Rate	Expected Stock Price Volatility	Expected Dividend Yield
2012	0.4%	56.0%	1.1%
2011	1.0%	89.0%	1.5%
2010	1.5%	89.9%	0.7%

Because the payout depends on the Company's total shareholder return relative to a comparison group, the valuation also depended on the performance of the stocks in the comparison group as well as estimates of the correlations among their performance. The expected stock price volatility assumption was determined using historical volatility because correlation coefficients can only be developed through historical volatility. The expected dividend yield was based on historical dividend payments. The risk-free interest rate was determined based on the yields available on U.S. Treasury zero-coupon issues.

			2012
			Number of Shares
			(in millions)
PSUs at beginning of period			4
Granted			1
PSUs at end of period			5

Deferred Cash-based Compensation Plans. The Company maintains various deferred cash-based compensation plans for the benefit of certain current and former employees that provide a return to the plan participants employees based upon the performance of various referenced investments. The Company often invests directly, as a principal, in investments or other financial instruments to economically hedge its obligations under its deferred cash-based compensation plans. Changes in value of such investments made by the Company are recorded in Principal transactions—Trading and Principal transactions—Investments.

Compensation expense associated with the deferred cash-based compensation plans is calculated based on the notional value of the award granted, adjusted for upward and downward changes in fair value of the referenced investment. For unvested awards, the expense is recognized over the service period using the graded vesting attribution method. Generally, changes in compensation expense resulting from changes in fair value of the referenced investment will be offset by changes in fair value of investments made by the Company. However, there may be a timing difference between the immediate revenue recognition of gains and losses on the Company's investments and the deferred recognition of the related compensation expense over the vesting period. For vested awards with only notional earnings on the referenced investments, the expense is fully recognized in the current period.

The components of the Company's deferred compensation expense (net of cancellations) are presented below:

			2012		2011		2010

			(dollars in millions)
Deferred cash-based awards(1)		$	1,815	$	1,809	$	771
Return on referenced investments			435		132		465
	Total	$	2,250	$	1,941	$	1,236

(1) Amounts for 2012, 2011 and 2010 include $93 million, $113 million and $80 million, respectively, related to deferred awards that were granted in 2013, 2012 and 2011, respectively, to employees who satisfied retirement-eligible requirements under the award terms that do not contain a service period.

The table above excludes deferred cash-based compensation expense recorded in discontinued operations, which was approximately $7 million in 2012, $7 million in 2011 and $9 million for 2010. See Notes 1 and 25 for additional information on discontinued operations.

At December 31, 2012, the Company had approximately $782 million of unrecognized compensation cost related to unvested deferred cash-based awards (excluding unrecognized expense for returns on referenced investments). Absent actual cancellations and any future return on referenced investments, this amount of unrecognized compensation cost will be recognized as $540 million in 2013, $104 million in 2014 and $138 million thereafter. These amounts do not include 2012 performance year awards granted in January 2013 which will begin to be amortized in 2013.