2.2.0.7falseStock-Based Compensation0208 - Disclosure - Stock-Based Compensationtruefalsefalsefalse1USDfalsefalseUSDStandardhttp://www.xbrl.org/2003/iso4217USDiso42170USDEPSDividehttp://www.xbrl.org/2003/iso4217USDiso4217http://www.xbrl.org/2003/instancesharesxbrli0SharesStandardhttp://www.xbrl.org/2003/instancesharesxbrli0$20us-gaap_ShareBasedCompensationAbstractus-gaaptruenadurationNo definition available.falsefalsefalsefalsefalsetruefalsefalsefalsefalsefalsefalse1falsefalsefalsefalse00falsefalsefalsexbrli:stringItemTypestringNo definition available.false31us-gaap_DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlockus-gaaptruenadurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalsefalseverboselabelfalse1falsefalsefalsefalse00<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 8 - us-gaap:DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>8. Stock-Based Compensation</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt"><i>Stock Option Plans</i>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">A summary of the changes in outstanding stock options is as follows:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="52%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="14" style="border-bottom: 1px solid #000000"><b>For the Nine Months Ended September 30,</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Number of</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Weighted</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Number of</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Weighted</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Stock</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Average</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Stock</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Average</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Options</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Exercise Price</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Options</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Exercise Price</b></td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Outstanding at beginning of period
</div></td>
<td> </td>
<td> </td>
<td align="right">24,262,692</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">12.51</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">26,728,119</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">10.35</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Granted
</div></td>
<td> </td>
<td> </td>
<td align="right">4,232,500</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">13.13</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">3,375,000</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">12.11</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Exercised
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(154,829</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">6.18</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(4,240,913</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">2.33</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Forfeited
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(122,500</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">14.06</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Outstanding at end of period
</div></td>
<td> </td>
<td> </td>
<td align="right">28,217,863</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">12.65</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">25,862,206</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">11.89</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 6pt">In June 2006, our shareholders approved the Hudson City Bancorp, Inc. 2006 Stock Incentive
Plan (the “SIP Plan”) authorizing us to grant up to 30,000,000 shares of common stock. In July
2006, the Compensation Committee of the Board of Directors of Hudson City Bancorp (the
“Committee”), authorized grants to each non-employee director, executive officers and other
employees to purchase shares of the Company’s common stock, pursuant to the SIP Plan. Grants of
stock options made through December 31, 2009 pursuant to the SIP Plan amounted to 18,887,500
options at an exercise price equal to the fair value of our common stock on the grant date, based
on quoted market prices. Of these options, 5,535,000 have vesting periods ranging from one to five
years and an expiration period of ten years. The remaining 13,352,500 shares have vesting periods
ranging from two to three years if certain financial performance measures are met. Subject to
review and verification by the Committee, we believe we attained these performance measures and
have therefore recorded compensation expense for these grants.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">During 2010, the Committee authorized stock option grants (the “2010 grants”) pursuant to the SIP
Plan for 4,232,500 options at an exercise price equal to the fair value of our common stock on the
grant date, based on quoted market prices. Of these options, 3,700,000 will vest in January 2013 if
certain financial performance measures are met and employment continues through the vesting date
(the “2010 Performance Options”). The remaining 532,500 options will vest between January 2011
(the “2010 Retention Options”) and July 2011. The 2010 grants have an expiration period of ten
years. We have determined that it is probable these performance measures will be met and have
therefore recorded compensation expense for the 2010 grants in 2010.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The fair value of the 2010 grants was estimated on the date of grant using the Black-Scholes
option-pricing model with the following weighted average assumptions<i>. </i>The dividend yield
assumption for the 2010 grants was based on our current declared dividend as a percentage of the
stock price on the grant date. The expected volatility assumption was calculated based on the
weighting of our historical and rolling volatility for the expected term of the option grants. The
risk-free interest rate was determined by reference to the continuously compounded yield on
Treasury obligations for the expected term. The expected option life was based on historic optionee
behavior for prior option grant awards.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">As a result of low employee turnover, the assumption regarding the forfeiture rate of option grants
had no effect on the fair value estimate.
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="76%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>2010</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>2010</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Retention Options</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Performance Options</b></td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Expected dividend yield
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">4.57</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">4.57</td>
<td nowrap="nowrap">%</td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Expected volatility
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">41.30</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">34.58</td>
<td nowrap="nowrap">%</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Risk-free interest rate
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">1.65</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">2.55</td>
<td nowrap="nowrap">%</td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Expected option life
</div></td>
<td> </td>
<td colspan="2" nowrap="nowrap" align="right">3.6 years</td>
<td> </td>
<td> </td>
<td colspan="2" nowrap="nowrap" align="right">5.6 years</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Fair value of options granted
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">3.00</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">2.87</td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Compensation expense related to our outstanding stock options amounted to $3.0 million for both the
three months ended September 30, 2010 and 2009, respectively, and $8.2 million and $9.9 million,
for the nine months ended September 30, 2010 and 2009, respectively.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><i>Stock Awards</i>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">During 2009, the Committee granted performance-based stock awards (the “2009 stock awards”)
pursuant to the SIP Plan for 847,750 shares of our common stock. These shares were issued from
treasury stock and will vest in annual installments over a three-year period if certain performance
measures are met and employment continues through the vesting date. None of these shares may be
sold or transferred before their January 2012 vesting date. We have determined that it is probable
these performance measures will
be met and have therefore recorded compensation expense for the 2009 stock awards in 2010.
Expense for the 2009 stock awards is recognized over the vesting period and is based on the fair
value of the shares on the grant date which was $12.03. In addition to the 2009 stock awards,
grants were made in 2010 (the “2010 stock awards”) pursuant to the SIP Plan for 18,000 shares of
our common stock. Expense for the 2010 stock awards is recognized over the vesting period of three
years and is based on the fair value of the shares on the grant date which was $13.12. Total
compensation expense for stock awards amounted to $890,000 and $1.2 million for the three months
ended September 30, 2010 and 2009, respectively, and $3.0 million and $3.5 million, for the nine
months ended September 30, 2010 and 2009, respectively.
</div>
</div>
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<!-- Begin Block Tagged Notefalsefalsefalseus-types:textBlockItemTypetextblockDisclosure of compensation-related costs for share-based compensation which may include disclosure of policies, compensation plan details, allocation of stock compensation, incentive distributions, share-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 123R
-Paragraph 64, 65, A240
Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Statement of Position (SOP)
-Number 93-6
-Paragraph 53
Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Staff Accounting Bulletin (SAB)
-Number Topic 14
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