PNC FINANCIAL SERVICES GROUP, INC.PNC

PNC FINANCIAL SERVICES GROUP, INC. Stock Compensation Disclosure

10-KFiled Feb 20, 20262 min read
STOCK BASED COMPENSATION PLANS
We have long-term incentive award plans (Incentive Plans) that provide for the granting of incentive stock options, nonqualified stock options, stock appreciation rights, performance share units, restricted share units, other share-based awards and dollar-denominated awards to executives and, other than incentive stock options, to non-employee directors. Certain Incentive Plan awards may be paid in stock, cash or a combination of stock and cash. We typically grant a substantial portion of our stock-based compensation awards during the first quarter of each year.

Performance Share Unit Awards and Restricted Share Unit Awards
PNC grants share unit awards that are based on performance, service and certain metrics tied to market conditions. The fair value of nonvested performance share unit awards and restricted share unit awards is initially determined based on prices not less than the market value of our common stock on the date of grant with a reduction for estimated forfeitures. Fair value of some performance awards are based on a Monte Carlo model, with subsequent remeasurement based on the achievement of one or more performance goals. Additionally, certain performance share unit awards could require subsequent adjustment due to certain discretionary risk review triggers.

The weighted-average grant date fair value of performance share unit awards and restricted share unit awards granted in 2025, 2024 and 2023 was $190.93, $141.75 and $154.91 per share, respectively. The total intrinsic value of performance share unit awards and restricted share unit awards vested during 2025, 2024 and 2023 was approximately $256 million, $214 million and $219 million, respectively. We recognize compensation expense for such awards ratably over the corresponding vesting and/or performance periods for each type of program.
A rollforward of the nonvested performance share unit and restricted share unit awards follows:
Table 105: Nonvested Performance Share Unit Awards and Restricted Share Unit Awards - Rollforward
Shares in thousandsNonvested Performance Share UnitsWeighted-Average Grant Date Fair ValueNonvested Restricted Share UnitsWeighted-Average Grant Date Fair Value
December 31, 2024 (a)636 $164.29 4,356 $159.34 
Granted (b)204 $193.48 1,666 $190.62 
Vested/Released (b)(154)$210.63 (1,163)$192.42 
Forfeitures (132)$163.64 (142)$164.66 
December 31, 2025554 $162.30 4,717 $165.51 
(a)Includes 101 performance share units with market conditions.
(b)Includes adjustments for achieving specific performance goals for performance share unit awards granted in prior periods.
In Table 105, the units and related weighted-average grant date fair value of the performance unit share awards exclude the effect of dividends on the underlying shares, as those dividends will be paid in cash if and when the underlying shares are issued to the participants.

About Stock Compensation Disclosures

Stock-based compensation disclosures detail the equity awards granted to employees and executives — including stock options, restricted stock units (RSUs), and performance shares — along with the valuation methods and assumptions used to expense them. This section reveals the true cost of talent retention and the alignment between management incentives and shareholder interests.

Key signals: total unrecognized compensation expense and its expected recognition period signal future earnings headwinds from already-granted awards. For stock options, examine Black-Scholes assumptions — expected volatility, risk-free rate, and expected term — as understating any of these reduces reported compensation expense. Compare stock compensation expense as a percentage of revenue against peers to assess dilution cost. Watch vesting schedules for acceleration clauses tied to change-of-control events. Performance-based awards with undemanding targets may indicate weak governance. Add back stock compensation to operating cash flow to calculate a more conservative free cash flow figure.

Other Available Disclosures

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