Stock-based compensation plans

12 Months Ended

Dec. 31, 2011

Stock-based compensation [Abstract]

Stock-based compensation plans

11.     Stock-based compensation plans

Stock-based compensation expense was $56 million in 2011 and $54 million in each of 2010 and 2009. The Company recognized income tax benefits related to stock-based compensation of $22 million in 2011, $20 million in 2010 and $17 million in 2009.

The Company’s equity incentive compensation plan allows for the issuance of various forms of stock-based compensation, including stock options, restricted stock, restricted stock units and performance-based awards. Through December 31, 2011, only stock-based compensation awards, including stock options, restricted stock and restricted stock units, that vest with the passage of time as service is provided have been issued. At December 31, 2011 and 2010, respectively, there were 5,619,632 and 5,959,828 shares available for future grant under the Company’s equity incentive compensation plan.

Restricted stock awards

Restricted stock awards are comprised of restricted stock and restricted stock units. Restricted stock awards generally vest over four years. Unrecognized compensation expense associated with restricted stock was $28 million as of December 31, 2011 and is expected to be recognized over a weighted-average period of 1.5 years. The Company generally will issue restricted shares from treasury stock to the extent available, but may also issue new shares. During 2011, 2010 and 2009, the number of restricted shares issued was 451,248, 423,002 and 709,415, respectively, with a weighted-average grant date fair value of $38,369,000, $31,880,000 and $27,932,000, respectively. Unrecognized compensation expense associated with restricted stock units was $7 million as of December 31, 2011 and is expected to be recognized over a weighted-average period of 1.2 years. During 2011, 2010 and 2009 the number of restricted stock units issued was 242,282, 231,037 and 578,131, respectively, with a weighted-average grant date fair value of $20,921,000, $17,039,000 and $22,663,000, respectively.

A summary of restricted stock and restricted stock unit activity follows:

	Restricted Stock Units Outstanding			Weighted- Average Grant Price		Restricted Stock Outstanding			Weighted- Average Grant Price
Unvested at January 1, 2011		719,976		$	49.99		965,072		$	52.81
Granted		242,282			86.35		451,248			85.03
Vested		(148,189	)		46.17		(290,034	)		61.50
Cancelled		(12,606	)		73.73		(34,921	)		64.37
Unvested at December 31, 2011		801,463		$	61.31		1,091,365		$	63.45

Stock option awards

Stock options issued generally vest over four years and are exercisable over terms not exceeding ten years and one day. The Company used an option pricing model to estimate the grant date present value of stock options granted. Stock options granted in 2011, 2010 and 2009 were not significant.

A summary of stock option activity follows:

	Stock Options Outstanding			Weighted-Average				Aggregate Intrinsic Value (In thousands)
				Exercise Price		Life (In Years)
Outstanding at January 1, 2011		10,578,415		$	97.35
Granted		100			86.47
Exercised		(449,022	)		70.76
Cancelled		(22,483	)		91.80
Expired		(267,062	)		104.89
Outstanding at December 31, 2011		9,839,948		$	98.37		3.8	$	3,075
Exercisable at December 31, 2011		8,775,638		$	99.50		3.5	$	1,497

For 2011, 2010 and 2009, M&T received $28 million, $55 million and $15 million, respectively, in cash and realized tax benefits from the exercise of stock options of $3 million, $7 million and $3 million, respectively. The intrinsic value of stock options exercised during those periods was $7 million, $21 million and $6 million, respectively. As of December 31, 2011, the amount of unrecognized compensation cost related to non-vested stock options was not significant. The total grant date fair value of stock options vested during 2011, 2010 and 2009 was $29 million, $38 million and $37 million, respectively. Upon the exercise of stock options, the Company generally issues shares from treasury stock to the extent available, but may also issue new shares.

Stock purchase plan

The stock purchase plan provides eligible employees of the Company with the right to purchase shares of M&T common stock through accumulated payroll deductions. Shares of M&T common stock will be issued at the end of an option period, typically one year or six months. In connection with the employee stock purchase plan, 1,000,000 shares of M&T common stock were authorized for issuance, of which 568,886 shares have been issued. There were no shares issued in 2011, 170,405 shares issued in 2010 and 3,149 shares issued in 2009. For 2010 and 2009, respectively, M&T received $8,998,000 and $100,000 in cash for shares purchased through the employee stock purchase plan. The Company used an option pricing model to estimate the grant date present value of purchase rights under the stock purchase plan. Compensation expense recognized for the stock purchase plan was not significant in 2011, 2010 or 2009.

Deferred bonus plan

The Company provided a deferred bonus plan pursuant to which eligible employees could elect to defer all or a portion of their annual incentive compensation awards and allocate such awards to several investment options, including M&T common stock. Participants could elect the timing of distributions from the plan. Such distributions are payable in cash with the exception of balances allocated to M&T common stock which are distributable in the form of M&T common stock. Shares of M&T common stock distributable pursuant to the terms of the deferred bonus plan were 48,136 and 51,439 at December 31, 2011 and 2010, respectively. The obligation to issue shares is included in “common stock issuable” in the consolidated balance sheet. Through December 31, 2011, 122,151 shares have been issued in connection with the deferred bonus plan.

Directors’ stock plan

The Company maintains a compensation plan for non-employee members of the Company’s boards of directors and directors advisory councils that allows such members to receive all or a portion of their compensation in shares of M&T common stock. Through December 31, 2011, 164,961 shares had been issued in connection with the directors’ stock plan.

Through acquisitions, the Company assumed obligations to issue shares of M&T common stock related to deferred directors compensation plans. Shares of common stock issuable under such plans were 20,084 and 19,906 at December 31, 2011 and 2010, respectively. The obligation to issue shares is included in “common stock issuable” in the consolidated balance sheet.

Management stock ownership program

Through an acquisition, M&T obtained loans that were secured by M&T common stock purchased by former executives of the acquired entity. At December 31, 2009, the loan amounts owed M&T were less than the fair value of the financed stock purchased and totaled approximately $4 million. Such loans were classified as a reduction of “additional paid-in capital” in the consolidated balance sheet at that date. The amounts due to M&T were repaid in full during 2010.