US Bank 2011 Annual Report Download - page 110

Expected stock volatility is based on several factors
including the historical volatility of the Company’s stock,
implied volatility determined from traded options and other
factors. The Company uses historical data to estimate option
exercises and employee terminations to estimate the
expected life of options. The risk-free interest rate for the
expected life of the options is based on the U.S. Treasury
yield curve in effect on the date of grant. The expected
dividend yield is based on the Company’s expected dividend
yield over the life of the options.
The following summarizes certain stock option activity of the Company:
Year Ended December 31 (Dollars in Millions) 2011 2010 2009
Fair value of options vested ....................................................................................... $ 54 $ 61 $74
Intrinsic value of options exercised ................................................................................ 61 35 3
Cash received from options exercised ............................................................................ 165 112 22
Tax benefit realized from options exercised ....................................................................... 23 13 1
To satisfy option exercises, the Company predominantly uses treasury stock.
Additional information regarding stock options outstanding as of December 31, 2011, is as follows:
Outstanding Options Exercisable Options
Range of Exercise Prices Shares
Weighted-
Average
Remaining
Contractual
Life (Years)
Weighted-
Average
Exercise
Price Shares
Weighted-
Average
Exercise
Price
$11.02 - $15.00 ............................................. 10,225,221 7.1 $11.42 4,141,927 $11.43
$15.01 - $20.00 ............................................. 212,080 4.4 19.28 182,151 19.50
$20.01 - $25.00 ............................................. 10,530,634 4.3 22.68 6,814,608 22.05
$25.01 - $30.00 ............................................. 17,848,881 4.8 29.12 13,566,583 29.32
$30.01 - $35.00 ............................................. 27,400,486 5.2 31.65 22,727,835 31.55
$35.01 - $36.25 ............................................. 9,606,639 5.0 36.07 9,606,230 36.07
75,823,941 5.2 $27.60 57,039,334 $29.14
Restricted Stock and Unit Awards
A summary of the status of the Company’s restricted shares of stock and unit awards is presented below:
2011 2010 2009
Year Ended December 31 Shares
Weighted-
Average Grant-
Date Fair
Value Shares
Weighted-
Average Grant-
Date Fair
Value Shares
Weighted-
Average
Grant-Date
Fair Value
Nonvested Shares
Outstanding at beginning of
period ......................... 8,811,027 $19.74 6,788,203 $16.68 2,420,535 $32.42
Granted .................... 3,136,086 28.20 4,398,660 24.05 5,435,363 12.09
Vested ..................... (2,552,979) 20.15 (1,862,228) 18.71 (869,898) 31.84
Cancelled .................. (398,839) 22.20 (513,608) 20.00 (197,797) 16.52
Outstanding at end of period .... 8,995,295(a) $22.46 8,811,027 $19.74 6,788,203 $16.68
(a) Includes maximum number of shares to be received by participants under awards that are based on the achievement of certain future performance criteria by the Company.
The total fair value of shares vested was $72 million, $44 million, and $12 million for 2011, 2010 and 2009, respectively.
Stock-based compensation expense was $118 million, $113 million and $89 million for 2011, 2010 and 2009, respectively. On
an after-tax basis, stock-based compensation was $73 million, $70 million and $55 million for 2011, 2010, and 2009,
respectively. As of December 31, 2011, there was $156 million of total unrecognized compensation cost related to nonvested
share-based arrangements granted under the plans. That cost is expected to be recognized over a weighted-average period of 2.4
years as compensation expense.
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