Note 25—Incentive Compensation Plan

On January 20, 2009, the Board of Directors of the Company adopted with shareholder approval, the First Commonwealth Financial Corporation Incentive Compensation Plan. This plan allows for shares of common stock to be issued to employees, directors, and consultants of the Company and its subsidiaries as an incentive to aid in the financial success of the Company. The shares can be issued as options, stock appreciation rights, performance share or unit awards, dividend or dividend equivalent rights, stock awards, restricted stock awards, or other annual incentive awards. Up to 5,000,000 shares of stock can be awarded under this plan, of which, 4,810,369 shares are still eligible for awards.

Restricted Stock

The following provides detail on the restricted stock awards which were issued in 2011 and 2010 in order to retain and attract key employees. The grant date fair value of the restricted stock awards is equal to the price of the Corporation's common stock on grant date.

On November 21, 2011, we issued 10,000 shares of our common stock to an executive of the Company as an inducement for her employment which was issued under the Incentive Compensation Plan adopted by the Company. The shares were issued pursuant to a Restricted Stock Agreement dated November 21, 2011. The restricted stock was determined to have a fair value of $4.41 per share and was based on the closing price of our common stock on the grant date. The restricted stock fully vests at the end of a three year period on November 21, 2014.

On April 1, 2011, we issued 25,000 shares of our common stock to an executive of the Bank as an inducement to his employment which was issued under the Incentive Compensation Plan adopted by the Company. The shares were issued pursuant to a Restricted Stock Agreement dated April 1, 2011. The restricted stock was determined to have a fair value of $6.82 per share and was based on the closing price of our common stock on the grant date. The restricted stock fully vests at the end of a five year period on April 1, 2016.

On January 22, 2010, we issued 30,120 shares of our common stock to an executive of the Company as an inducement for his employment which was issued under the Incentive Compensation Plan adopted by the Company. The shares were issued pursuant to a Restricted Stock Agreement dated January 22, 2010. The restricted stock was determined to have a fair value of $5.70 per share and was based on the closing price of our common stock on the grant date. The restricted stock vests equally over a two year period ending January 22, 2012.

On April 1, 2008, we issued 12,654 shares of our common stock to an executive of the Bank as an inducement for his continued employment and not under any stock incentive plan adopted by the Company. The shares were issued pursuant to a Restricted Stock Agreement dated April 1, 2008. The restricted stock was determined to have a fair value of $12.35 per share and was based on the closing price of our common stock on the grant date. The restricted stock vests equally over a three year period ending April 1, 2011.

On November 12, 2007, we issued 35,000 shares of our common stock to an executive of the Bank as an inducement for his employment and not under any stock incentive plan adopted by the Company. The shares were issued pursuant to a Restricted Stock Agreement dated October 19, 2007. The restricted stock was determined to have a fair value of $10.95 per share and was based on the closing price of our common stock on the grant date. The restricted stock vested equally over a three year period, and the final vesting occurred on November 12, 2010.

Compensation expense related to restricted stock was $249 thousand, $244 thousand and $180 thousand in 2011, 2010 and 2009, respectively. As of December 31, 2011, there was $684.9 thousand of unrecognized compensation cost related to unvested restricted stock awards granted.

On December 30, 2011, First Commonwealth entered into an agreement with an executive of the Company to issue 100,000 shares of our common stock as inducement for his continued employment on January 1, 2012. The restricted stock is determined to have a fair value of $5.26 per share and was based on the closing price of our stock on the grant date. The restricted stock will vest equally over a four year period with final vesting occurring on January 1, 2016. This grant will require compensation expense of $526 thousand to be recorded over the four-year vesting period.

A summary of the status of First Commonwealth's unvested service-based restricted stock awards as of December 31 and changes for the years ended on those dates is presented below:


	2011					2010					2009
	Shares			Weighted Average Grant Date Fair Value		Shares			Weighted Average Grant Date Fair Value		Shares			Weighted Average Grant Date Fair Value
Outstanding, beginning of the year		34,338		$	6.52		20,103		$	11.53		35,988		$	11.44
Granted		35,000			6.13		30,120			5.70		0			0.00
Vested		(19,278	)		7.16		(15,885	)		11.32		(15,885	)		11.32
Forfeited		0			0.00		0			0.00		0			0.00

Outstanding, end of the year		50,060			6.00		34,338			6.52		20,103			11.53

On January 17, 2011, the Board of Directors approved the 2011—2013 Long-Term Incentive Plan (the "Plan"). The Plan stipulates restricted stock awards based on future performance of the Company over a three-year performance period. If performance thresholds are met, participants will receive 40% of the target award; if performance targets are met, participants will receive 100% of the target award; if performance targets are exceeded at a superior level, participants will receive 200% of the target award. If the performance thresholds are not achieved, participants will not receive an award. If awards are received, the restricted shares will vest over a one-year period after the performance period, with final vesting occurring on January 17, 2014. The following table summarizes the unvested target award for the Plan as of December 31:


	2011
	Shares			Weighted Average Grant Date Fair Value
Outstanding, beginning of the year		0		$	0.00
Granted		126,000			7.03
Vested		0			0.00
Forfeited		(32,667	)		7.03

Outstanding, end of the year		93,333			7.03

Stock Option Plan

First Commonwealth's stock based compensation plan expired on October 15, 2005, and is described below. All of the exercise prices and related number of shares have been adjusted to reflect historical stock splits. The plan permitted the Executive Compensation Committee to grant options for up to 4.5 million shares of First Commonwealth's common stock through October 15, 2005.

The vesting requirements and terms of options granted were at the discretion of the Executive Compensation Committee. Options granted in 2005 vested in the year granted. All options expire ten years from the grant date. All equity compensation plans were approved by security holders.

A summary of the status of First Commonwealth's outstanding stock options as of December 31 and changes for the years ended on those dates is presented below:


	2011					2010					2009
	Shares			Weighted Average Exercise Price		Shares			Weighted Average Exercise Price		Shares			Weighted Average Exercise Price
Outstanding, beginning of the year		640,866		$	10.05		728,552		$	10.18		758,480		$	10.26
Granted		0			0.00		0			0.00		0			0.00
Exercised		(13,760	)		5.29		0			0.00		(4,476	)		11.56
Forfeited		(130,243	)		10.61		(87,686	)		11.19		(25,452	)		12.34

Balance, end of the year		496,863			10.03		640,866			10.05		728,552			10.18

Exercisable at the end of the year		496,863			10.03		640,866			10.05		728,552			10.18

The intrinsic value of stock options exercised during the years ended December 31, 2011 and 2009 was $1.17 per share and $3.30 per share, respectively. There were no options exercised during the year ended December 31, 2010.

The following table summarizes information about the stock options outstanding at December 31, 2011:


	Options Outstanding						Options Exercisable
Range of Exercise Prices	Number Outstanding		Weighted Average Remaining Contract Life		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price
$5.14 - $8.99		164,945		0.6	$	6.68		164,945	$	6.68
$9.00 - $9.99		50,087		1.4		9.27		50,087		9.27
$10.00 - $10.99		4,954		1.9		10.46		4,954		10.46
$11.00 - $11.99		112,414		0.1		11.70		112,414		11.70
$12.00 - $15.00		164,463		1.3		12.46		164,463		12.46

Total		496,863		0.79		10.03		496,863		10.03