12.  Stock-Based Compensation

Restricted Stock and RSUs.

Restricted stock and restricted stock units (“RSUs”) activity for the six months ended June 30, 2017 is summarized below.

 

 

In January 2017, the Company granted 699,991 RSUs or shares of restricted stock to employees as part of 2016 annual incentive compensation that vest ratably over three years from the date of grant and 277,313 RSUs or shares of restricted stock to employees that cliff vest 100% on January 31, 2020.  The Company values restricted stock and RSUs at their grant-date fair value as measured by BlackRock’s common stock price.  The total fair market value of RSUs/restricted stock granted to employees during the six months ended June 30, 2017 was $388 million.  

At June 30, 2017, the intrinsic value of outstanding RSUs was $1.1 billion, reflecting a closing stock price of $422.41.

At June 30, 2017, total unrecognized stock-based compensation expense related to unvested RSUs was $434 million. The unrecognized compensation cost is expected to be recognized over the remaining weighted-average period of 1.4 years.

Performance-Based RSUs.  

Performance-based RSU activity for the six months ended June 30, 2017 is summarized below.

 

 

In January 2017, the Company granted 293,385 performance-based RSUs to certain employees that cliff vest 100% on January 31, 2020. These awards are amortized over a service period of three years. The number of shares distributed at vesting could be higher or lower than the original grant based on the level of attainment of predetermined Company performance measures.

The Company values performance-based RSUs at their grant-date fair value as measured by BlackRock’s common stock price. The total grant-date fair market value of performance-based RSUs granted to employees during the six months ended June 30, 2017 was $111 million.

At June 30, 2017, the intrinsic value of outstanding performance-based RSUs was $382 million, reflecting a closing stock price of $422.41.

At June 30, 2017, total unrecognized stock-based compensation expense related to unvested performance-based awards was $157 million. The unrecognized compensation cost is expected to be recognized over the remaining weighted-average period of 1.7 years.

Market Performance-based RSUs.        

Market performance-based RSUs activity for the six months ended June 30, 2017 is summarized below.

 

 

⁽¹⁾  The market performance-based RSUs require that separate 15%, 25% and 35% share price appreciation targets be achieved during the six-year term of the awards. The awards are split into three tranches and each tranche may vest if the specified target increase in share price is met.  At June 30, 2017 approximately 0.2 million awards are expected to vest and an immaterial amount of awards have vested and have not been converted.  

See Note 14, Stock-Based Compensation, in the 2016 Form 10-K for more information on market performance-based RSUs.

At June 30, 2017, the intrinsic value of outstanding market performance-based RSUs was $121 million reflecting a closing stock price of $422.41.

At June 30, 2017, total unrecognized stock-based compensation expense related to unvested market performance-based awards was $7 million. The unrecognized compensation cost is expected to be recognized over the remaining weighted-average period of less than one year.

Long-Term Incentive Plans Funded by PNC.    Under a share surrender agreement, PNC committed to provide up to 4 million shares of BlackRock stock, held by PNC, to fund certain BlackRock long-term incentive plans (“LTIP”), including performance-based and market performance-based RSUs. The current share surrender agreement commits PNC to provide BlackRock Series C nonvoting participating preferred stock to fund the remaining committed shares. As of June 30, 2017, 3.8 million shares had been surrendered by PNC.

517,138 shares were surrendered by PNC in the first quarter of 2017.

At June 30, 2017, the remaining shares committed by PNC of 0.2 million were available to fund certain future long-term incentive awards.