Quarterly report pursuant to Section 13 or 15(d)

Shareholders' Equity

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Shareholders' Equity
 6 Months Ended
Jun. 30, 2014
Equity [Abstract]  
Shareholders' Equity
NOTE 11 – Shareholders' Equity
 
Common Stock

The table below presents the declared quarterly cash dividends on common stock in 2014 and through July 29, 2014.

Declaration Date
Record Date
Payment Date
Dividend Per Share
June 18, 2014
June 24, 2014
June 30, 2014
$
0.01

 
February 11, 2014
March 7, 2014
March 28, 2014
0.01

 


During the three months ended June 30, 2014, prior to the suspension of the 2014 common stock repurchase program, the Corporation repurchased and retired 14.4 million shares of common stock, which reduced shareholders' equity by $233 million. During the three months ended March 31, 2014, under the 2013 common stock repurchase program, the Corporation repurchased and retired 86.7 million shares of common stock, which reduced shareholders' equity by $1.4 billion.

During the six months ended June 30, 2014, in connection with employee stock plans, the Corporation issued approximately 41 million shares and repurchased approximately 16 million shares of its common stock to satisfy tax withholding obligations. At June 30, 2014, the Corporation had reserved 1.8 billion unissued shares of common stock for future issuances under employee stock plans, common stock warrants, convertible notes and preferred stock.

Preferred Stock

During the three months ended March 31, 2014 and June 30, 2014, the cash dividends declared on preferred stock were $238 million and $256 million, or a total of $494 million for the six months ended June 30, 2014.

During the three months ended June 30, 2014, the Corporation issued 60,000 shares of its Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series V for $1.5 billion. The Series V Preferred Stock has a liquidation preference of $25,000 per share and is subject to certain restrictions in the event that the Corporation fails to declare and pay full dividends. Dividends are paid semi-annually commencing on December 17, 2014 through June 17, 2019 and thereafter are paid quarterly.

At the Corporation's annual meeting of stockholders on May 7, 2014, the stockholders approved an amendment to the Corporation's 6% Cumulative Perpetual Preferred Stock, Series T (the Series T Preferred Stock) such that it qualifies as Tier 1 capital, and the amendment became effective during the three months ended June 30, 2014. The more significant changes to the terms of the Series T Preferred Stock in the amendment were: (1) dividends are no longer cumulative; (2) the dividend rate is fixed at 6%; and (3) the Corporation may redeem the Series T Preferred Stock only after the fifth anniversary of the effective date of the amendment.

Restricted Stock Units

During the six months ended June 30, 2014, the Corporation granted 133 million restricted stock unit (RSU) awards to certain employees under the Key Associate Stock Plan. Generally, one-third of the RSUs vest on each of the first three anniversaries of the grant date provided that the employee remains continuously employed with the Corporation during that time. Except for two million RSUs that are authorized to settle in shares of common stock of the Corporation, the RSUs will be paid in cash to the employees on the vesting date based on the fair value of the Corporation's common stock as of the vesting date. The RSUs are expensed ratably over the vesting period, net of estimated forfeitures, for non-retirement eligible employees based upon the fair value of the Corporation's common stock on the accrual date. For RSUs granted to employees who are retirement eligible or will become retirement eligible during the vesting period, the RSUs are expensed as of the grant date or ratably over the period from the grant date to the date the employee becomes retirement eligible, net of estimated forfeitures. The accrued liability for the RSUs is adjusted to fair value based on changes in the fair value of the Corporation's common stock. The Corporation enters into cash-settled equity derivatives for a significant portion of the RSUs to minimize the change in expense driven by fluctuations in the fair value of the RSUs over the applicable vesting period. For additional information, see Note 18 – Stock-based Compensation Plans to the Consolidated Financial Statements of the Corporation's 2013 Annual Report on Form 10-K.