Huntington National Bank 2012 Annual Report Download - page 164

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The calculation of basic and diluted earnings per share for each of the three years ended December 31 was as follows:
Year ended December 31,
(dollar amounts in thousands, except per share amounts) 2012 2011 2010
Basic earnings per common share:
N
et income $ 641,022 $ 542,613 $ 312,347
Preferred stock dividends, deemed dividends and accretion of discount (31,989) (30,813) (172,032)
N
et income available to common shareholders $ 609,033 $ 511,800 $ 140,315
Average common shares issued and outstanding 857,962 863,691 726,934
Basic earnings per common share $ 0.71 $ 0.59 $ 0.19
Diluted earnings per common share
N
et income available to common shareholders $ 609,033 $ 511,800 $ 140,315
Effect of assumed preferred stock conversion --- --- ---
N
et income applicable to diluted earnings per share $ 609,033 $ 511,800 $ 140,315
Average common shares issued and outstanding 857,962 863,691 726,934
Dilutive potential common shares:
Stock options and restricted stock units and awards 4,202 2,916 1,722
Shares held in deferred compensation plans 1,238 1,017 876
Conversion of preferred stock --- --- ---
Dilutive potential common shares: 5,440 3,933 2,598
Total diluted average common shares issued and outstanding 863,402 867,624 729,532
Diluted earnings per common share $ 0.71 $ 0.59 $ 0.19
Approximately 24.4 million, 23.6 million, and 18.5 million options to purchase shares of common stock outstanding at the end of
2012, 2011, and 2010, respectively, were not included in the computation of diluted earnings per share because the effect would be
antidilutive.
16. SHARE-BASED COMPENSATION
Huntington sponsors nonqualified and incentive share based compensation plans. These plans provide for the granting of stock
options and other awards to officers, directors, and other employees. Compensation costs are included in personnel costs on the
Consolidated Statements of Income. Stock options are granted at the closing market price on the date of the grant. Options granted
typically vest ratably over three years or when other conditions are met. Stock options, which represented a significant portion of our
grant values, have no intrinsic value until the stock price increases. Options granted prior to May 2004 have a term of ten years. All
options granted after May 2004 have a term of seven years.
During the 2012 second quarter, shareholders approved the Huntington Bancshares Incorporated 2012 Long-Term Incentive Plan
(the Plan) which authorized 51 million shares for future grants. The Plan is the only active plan under which Huntington is currently
granting share based options and awards. At December 31, 2012, 39.4 million shares from the Plan were available for future grants.
Huntington issues shares to fulfill stock option exercises and restricted stock unit and award vesting from available authorized
common shares. At December 31, 2012, the Company believes there are adequate authorized common shares to satisfy anticipated
stock option exercises and restricted stock unit and award vesting in 2013.
Huntington uses the Black-Scholes option pricing model to value share-based compensation expense. Forfeitures are estimated at
the date of grant based on historical rates, and updated as necessary, and reduce the compensation expense recognized. The risk-free
interest rate is based on the U.S. Treasury yield curve in effect at the date of grant. The expected dividend yield is based on the
dividend rate and stock price at the date of the grant. Expected volatility is based on the estimated volatility of Huntington’s stock
over the expected term of the option.