Share-Based Compensation

The Corporation's 2002, 2006 and 2011 Stock and Equity Plans (the "Plans") provide stock options and restricted stock awards to employees for up to 8,008,619 common shares of the Corporation. The Plans also provide for the granting of non-qualified stock options and nonvested (restricted) shares to certain non-employee directors of the Corporation. Outstanding options under these Plans are generally not exercisable for twelve months from date of grant. The total share-based compensation expense recognized during the years ended December 31, 2011, 2010, and 2009 was $8.0 million, $7.3 million, and $7.3 million, respectively, and the related tax benefit thereto was $2.8 million, $2.5 million, and $2.6 million, respectively. Share-based compensation expense related to awards granted to employees as well as awards granted to directors is recorded in salaries, wages, pension and employee benefits in the accompanying consolidated statements of income and comprehensive income.

Certain of the Corporation’s share-based award grants contain terms that provide for a graded vesting schedule whereby portions of the award vest in increments over the requisite service period. The Corporation has elected to recognize compensation expense for awards with graded vesting schedule on a straight-line basis over the requisite service period for the entire award. Compensation expense is recognized based on the estimated number of stock options and awards for which service is to be rendered. Upon stock option exercise or stock unit conversion, it is the policy of the Corporation to issue shares from treasury stock.

In accordance with the Corporation’s stock option and nonvested (restricted) shares plans, employee participants that are 55 or older and have 15 years of service are eligible to retire. Prior to the Plans’ amendments during 2007, which eliminated post retirement vesting, all unvested awards at the time of retirement continued to vest. The Corporation accelerates the recognition of compensation costs for share-based awards granted to retirement-eligible employees prior and employees who become retirement-eligible is granted or modified, the compensation cost of these awards is recognized over the period up to the date the employee first becomes eligible to retire.

Stock Option Awards

Options under these Plans are granted with an exercise price equal to the market price of the Corporation’s stock at the date of grant; those option awards generally vest based on 3 years of continuous service and have a 10 year contractual term. Options granted as incentive stock options must be exercised within ten years and options granted as non-qualified stock options have terms established by the Compensation Committee of the Board and approved by the non-employee directors of the Board. Upon termination, options are cancelable within defined periods based upon the reason for termination of employment.

The Black-Scholes option pricing model was used to estimate the fair market value of the options at the date of grant. This model was originally developed for use in estimating the fair value of traded options which have different characteristics from the Corporation’s employee stock options. Because of these differences, the Black-Scholes model is not a perfect indicator of value of an employee stock option, but it is commonly used for this purpose.

A summary of stock option activity under the Plans as of December 31, 2011, 2010 and 2009 and changes during the years then ended is as follows:



Options	Shares (000's)		Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term	Aggregate InstrinsicValue (000's)
Outstanding at January 1, 2009	6,109		$	25.54
Shares from stock dividend	68		—
Exercised	(156	)	18.78
Forfeited	(1	)	24.28
Expired	(1,472	)	26.15
Outstanding at December 31, 2009	4,550		$	25.35	2.92	$	402
Exercised	(48	)	17.18
Forfeited	—		—
Expired	(210	)	25.14
Outstanding at December 31, 2010	4,292		$	25.29	2.01	$	70
Exercised	—		—
Forfeited	—		—
Expired	(2,215	)	25.55
Outstanding at December 31, 2011	2,077		$	25.15	1.85	$	—
Exercisable at December 31, 2011	2,077		$	25.15	1.85	$	—

There were no options granted in the years ended December 31, 2011, 2010 and 2009. During the year ended December 31, 2011, no options were exercised. For the years ended December 31, 2010 and 2009, the total intrinsic value of stock options exercised was immaterial for both years.

The Corporation has a policy of repurchasing shares on the open market to satisfy share option exercises. The Corporation repurchased 2.6 million common shares in the first quarter of 2006 which has been adequate to cover all options exercised to date.

At December 31, 2011 there was no unrecognized compensation costs related to stock options granted to be realized under the Plans.

Nonvested Stock Awards

The market price of the Corporation’s common shares at the date of grant is used to estimate the fair value of nonvested (restricted) stock awards. A summary of the status of the Corporation’s nonvested shares as of December 31, 2011, 2010, and 2009 and changes during the years then ended, is as follows:



			Weighted-Average
			Grant Date
Nonvested (restricted) Shares	Shares (000's)		Fair Value
Nonvested at January 1, 2009	678		$	20.61
Granted	554		16.53
Vested	(328	)	21.18
Forfeited or expired	(54	)	18.34
Nonvested at December 31, 2009	850		$	17.88
Granted	451		22.85
Vested	(382	)	18.32
Forfeited or expired	(48	)	19.35
Nonvested at December 31, 2010	871		$	20.17
Granted	585		16.48
Vested	(407	)	19.75
Forfeited or expired	(23	)	19.21
Nonvested at December 31, 2011	1,026		$	18.26

At December 31, 2011 there was $5.4 million of total unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the Plans. That cost is expected to be recognized over a weighted-average period of 1.65 years. The total fair value of shares vested during the year ended December 31, 2011, 2010 and 2009 was $7.2 million, $8.1 million, and $5.7 million, respectively.