SunTrust 2007 Annual Report Download - page 120

SUNTRUST BANKS, INC.
Notes to Consolidated Financial Statements (Continued)
years 1997 and 1998 are still in dispute. The Company has paid the amounts assessed by the IRS in full and has filed refund
claims with the IRS related to the disputed issues. The Company’s 1999 through 2004 Federal income tax returns are
currently under examination by the IRS. Generally, the state jurisdictions in which the Company files income tax returns are
subject to examination for a period from three to seven years after returns are filed. The Corporation’s current estimate of the
resolution of these various examinations is reflected in accrued income taxes; however, final settlement of the examinations
or changes in the Corporation’s estimate may result in future income tax expense or benefit.
The following table rolls forward the activity related to the Company’s unrecognized tax benefits (“UTBs”) from January 1,
2007 to December 31, 2007:
(Dollars in thousands)
Federal
and state
tax
Accrued
interest
Gross
UTBs
Deferred
federal and
state income
tax benefit
UTBs net of
deferred
federal and
state
benefits
Balance at January 1, 2007 $288,146 $56,966 $345,112 ($75,527) $269,585
Increases for unrecognized tax benefits related to prior
years 9,197 33,932 43,129 (12,880) 30,249
Decreases for unrecognized tax benefits related to prior
years (17,577) (7,625) (25,202) 8,395 (16,807)
Increases for unrecognized tax benefits related to the
current year 54,696 - 54,696 (13,571) 41,125
Decreases to unrecognized tax benefits related to lapse of
the applicable statue of limitations (1,635) (2,774) (4,409) 1,543 (2,866)
Decreases for unrecognized tax benefits related to acquired
entities in prior years, offset to goodwill (7,426) (459) (7,885) 2,760 (5,125)
Balance as of December 31, 2007 325,401 80,040 405,441 (89,280) 316,161
Less: Unrecognized tax benefits included above that relate
to acquired entities that would impact goodwill if
recognized1(43,252) (10,623) (53,875) 15,159 (38,716)
Total unrecognized tax benefits that, if recognized, would
impact the effective tax rate as of December 31, 2007 $282,149 $69,417 $351,566 ($74,121) $277,445
1Upon the adoption of SFAS 141R on January 1, 2009, the Company will no longer recognize changes in unrecognized tax benefits through goodwill. The
amounts disclosed herein do not reflect the anticipated impact of SFAS 141R’s adoption.
Note 16 – Employee Benefit Plans
SunTrust sponsors various incentive plans for eligible employees. The Management Incentive Plan for key employees
provides for potential annual cash awards based on the attainment of the Company’s earnings and/or the achievement of
business unit and individual performance objectives. The Performance Unit Plan (“PUP”) for key executives provides
potential cash awards based on multi-year earnings performance in relation to earnings goals established by the
Compensation Committee of the Company’s Board of Directors. Compensation expense related to the Management Incentive
Plan and PUP for the years ended December 31, 2007, 2006 and 2005 totaled $48.5 million, $72.6 million and $57.3 million,
respectively.
Stock Based Compensation
The Company provides stock-based awards through the SunTrust Banks, Inc. 2004 Stock Plan (“Stock Plan”) under which
the Compensation Committee (the “Committee”) has the authority to grant stock options, restricted stock, and performance-
based restricted stock (“performance stock”) to key employees of the Company. Under the 2004 Stock Plan, a total of
14 million shares of common stock is authorized and reserved for issuance, of which no more than 2.8 million shares may be
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