SunTrust 2005 Annual Report Download - page 90

SUNTRUST  ANNUAL REPORT88
(Dollars in thousands, except per share data)   
Net income, as reported ,, ,, ,,
Stock-based employee compensation expense included in
reported net income, net of related tax effects , , ,
Total stock-based employee compensation expense
determined under fair value based method for all awards,
net of related tax effects (,) (,) (,)
Net income, pro forma ,, ,, ,,
Earning per share:
Diluted – as reported . . .
Diluted – pro forma . . .
Basic – as reported . . .
Basic – pro forma . . .
The weighted average fair values of options granted during , , and  were ., ., and . per share, respectively. The fair value of each
option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions:
  
Expected dividend yield .% .% .%
Expected stock price volatility . . .
Risk-free interest rate (weighted average) . . .
Expected life of options  years  years  years
SunTrust maintains a defined contribution plan that offers a dollar for dollar
match on the first % and . cents on each dollar for the th and th per-
cents. There is a maximum match of % of eligible wages for contributions
of % or more in the SunTrust Banks, Inc. (k) Plan.
SunTrust maintains a funded, noncontributory qualified retirement
plan covering all employees meeting certain service requirements. The plan
provides benefits based on salary and years of service. SunTrust contributed
 million to this plan in  to maintain a well-funded position and
manage costs tax-efficiently. Due to SunTrust’s practice of contributing the
maximum tax deductible contribution each year, the plan was fully funded
at the beginning of , and no tax deductible contributions were per-
mitted. SunTrust will continue to review the funded status of the plan and
make additional contributions as permitted by law. It is anticipated that no
contributions will be required during .
On October , , SunTrust acquired NCF. Prior to the acquisition,
NCF sponsored a funded qualified retirement plan, an unfunded nonquali-
fied retirement plan for some of its participants, and certain post retirement
health benefits for its employees. Effective December , , participants
no longer earned future service in the NCF Retirement Plan (qualified plan),
and participants’ benefits were frozen with the exception of adjustments
for pay increases after . All former NCF employees who met the ser-
vice requirements began to earn benefits in the SunTrust Retirement Plan
effective January , . The NCF Retirement Plan was fully funded at the
beginning of both fiscal years  and ; therefore, no tax deductible
contributions were permitted. It is anticipated that no contributions will be
required during fiscal year .
SunTrust also maintains unfunded, noncontributory non-qualified
supplemental defined benefit pension plans that cover key executives of
the Company. The plans provide defined benefits based on years of service
and final average salary. Benefits in the NCF non-qualified supplemental
defined benefit pension plan were frozen effective December , .
SunTrust’s obligations for these non-qualified supplemental defined benefit
pension plans are shown separately under the “Supplemental Retirement
Benefits” section of the tables.
Although not under contractual obligation, SunTrust provides cer-
tain health care and life insurance benefits to retired employees (“Other
Post Retirement Benefits” in the tables). At the option of SunTrust, retirees
may continue certain health and life insurance benefits if they meet age
and service requirements for Post Retirement Benefits while working for the
Company. The health care plans are contributory with participant contri-
butions adjusted annually; the life insurance plans are noncontributory. As
part of a benefit study performed in , SunTrust realigned the cost shar-
ing of the Post Retirement Benefit Plans with retirees and eliminated Post
Retirement life insurance benefits for employees who retire after December
, . Additionally, SunTrust no longer subsidizes post- medi-
cal benefits for employees who retired after December , . Certain
retiree health benefits are funded in a Retiree Health Trust. In addition,
certain retiree life insurance benefits are funded in a Voluntary Employees’
Beneficiary Association (“VEBA”). SunTrust reserves the right to amend or
terminate any of the benefits at any time.
As part of SunTrust’s year end assumption setting process in ,
SunTrust authorized a study to examine recent experience in its plan popu-
lations. The scope of this study included analysis of the turnover, retirement,
disability, medical participation, and compensation increases in the past
three to five years. In general, the assumptions SunTrust used as of year-
end  were consistent with recent experience. SunTrust used the study
to refine its turnover and retirement assumptions to reflect expectations
for the future. SunTrust also increased its compensation increase assump-
tion from .% as of year end  to .% as of year end . In addi-
tion, SunTrust has updated its mortality table from  Group Annuity
Mortality to an RP  table.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued