Aetna 2008 Annual Report Download - page 74

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Annual Report - Page 69
tock options and SARs granted in 2008, 2007 and 2006 had a weighted average per share fair value of $14.71,
$15.10, and $16.41, respectively, using the assumptions noted in the following table:
isk-free interest rate 2.5% 4.7% 4.6%
rs
S
2008 2007 2006
Dividend yield .1% .1% .1%
Expected volatility 31.7% 31.7% 30.9%
R
Expected term 4.4 years 4.7 years 4.5 yea
periods within the expected life of the
ock option or SAR is based on the benchmark five-year U.S. Treasury rate in effect on the date of grant. The
The stock option and SAR transactions in 2008, 2007 and 2006 were as follows:
22.48 4.0 345.9$
We use historical data to estimate the period of time that stock options or SARs are expected to be outstanding.
Expected volatilities are based on a weighted average of the historical volatility of our stock price and implied
volatility from traded options on our stock. The risk-free interest rate for
st
dividend yield assumption is based on our historical dividends declared.
Weighted Aggregate
Number of Stock Weighted Average Average Remaining Intrinsic
(Millions, except exercise price and remaining life) Options and SARs Exercise Price Contractual Life Value
2006
Outstanding, beginning of year 53.8 14.78$ 6.2 1,742.2$
Granted 5.5 49.84 - -
Exercised (9.5) 11.17 - 309.2
Expired or forfeited (.7) 28.72 - -
Outstanding, end of year 49.1 19.22$ 5.5 1,213.5$
Exercisable, end of year 38.8 13.27$ 4.9 1,161.3$
2007
Outstanding, beginning of year 49.1 19.22$ 5.5 1,213.5$
Granted 5.7 43.26 - -
Exercised (13.3) 12.55 - 494.1
Expired or forfeited (1.0) 37.31 - -
Outstanding, end of year 40.5 24.31$ 5.3 1,352.6$
Exercisable, end of year 30.6 18.49$ 4.4 1,201.5$
2008
Outstanding, beginning of year 40.5 24.31$ 5.3 1,352.6$
Granted 4.9 49.34 - -
Exercised (2.5) 14.13 - 75.5
Expired or forfeited (1.0) 38.19 - -
Outstanding, end of year 41.9 27.50$ 4.9 347.0$
Exercisable, end of year 33.4 $
During 2008, 2007 and 2006, the following activity occurred under the Plans:
ax benefits realized for the tax deductions from stock options and SARs exercised 26.4 172.9 108.2
71.0
(Millions) 2008 2007 2006
Cash received from stock option exercises 29.7$ 163.1$ 105.8$
Intrinsic value (the excess of stock price on the date of exercise over the exercise price) 75.5 494.1 309.2
T
Fair value of stock options and SARs vested 86.5 18.0
We settle employee stock options with newly issued common stock and generally utilize the proceeds to
repurchase common stock in the open market in the same period.