Unum 2014 Annual Report Download - page 151

UNUM • 2014 ANNUAL REPORT 149
Note 11. Stock-Based Compensation
Description of Stock Plans
Under the stock incentive plan of 2012 (the 2012 Plan), up to 20 million shares of common stock are available for awards to our
employees, officers, consultants, and directors. Awards may be in the form of stock options, stock appreciation rights, restricted stock,
restricted stock units, performance share units, and other stock-based awards. Each full-value award, defined as any award other than a
stock option or stock appreciation right, is counted as 1.76 shares. The exercise price for stock options issued cannot be less than the fair
value of the underlying common stock as of the grant date. Stock options generally have a term of eight years after the date of grant and
fully vest after three years. At December 31, 2014, approximately 17.05 million shares were available for future grants under the 2012 Plan.
Under the stock incentive plan of 2007 (the 2007 Plan), which was terminated in May 2012 for purposes of any further grants, up to
35 million shares of common stock were available for awards to our employees, officers, consultants, and directors. Awards could be in
the form of stock options, stock appreciation rights, restricted stock, restricted stock units, performance share units, and other stock-based
awards. Each full-value award, defined as any award other than a stock option or stock appreciation right, is counted as 2.7 shares. Awards
granted before the termination of the 2007 Plan remain outstanding in accordance with the plan’s terms. Stock options generally have a
term of eight years after the date of grant and fully vest after three years.
We issue new shares of common stock for all of our stock plan vestings and exercises.
Performance Share Units (PSUs)
Activity for PSUs classified as equity is as follows:
Shares (000s) Weighted Average Grant Date Fair Value
Outstanding at December 31, 2013 116 $25.26
Granted 166 34.72
Forfeited (1) 34.84
Outstanding at December 31, 2014 281 30.83
During 2014 and 2013, we issued PSUs with a weighted average grant date fair value per share of $34.72 and $25.26, respectively.
Vesting for the PSUs occurs at the end of a three-year period and is contingent upon our achievement of prospective company performance
goals and our total shareholder return relative to a particular peer group during the three-year period. Forfeitable dividend equivalents on
PSUs are accrued in the form of additional PSUs.
At December 31, 2014, we had approximately $5.2 million of unrecognized compensation cost related to PSUs that will be recognized
over a weighted average period of 1.7 years. The expense and unrecognized compensation cost assume the performance goals are attained
at 100 percent. Actual performance, including modification for relative total shareholder return, may result in 0 to 180 percent of the PSUs
ultimately being earned. The estimated compensation expense is adjusted for actual performance experience and is recognized ratably
during the service period, or remaining service period, if and when it becomes probable that the performance conditions will be satisfied.
Compensation cost for PSUs subject to accelerated vesting at the date of retirement eligibility is recognized over the implicit service period.