Huntington National Bank 2007 Annual Report Download - page 100

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grant. The following table illustrates the weighted-average assumptions used in the option-pricing model for options granted in the
three years ended December 31, 2007, 2006 and 2005.
2007 2006 2005
Assumptions
Risk-free interest rate 4.74% 4.96% 4.07%
Expected dividend yield 5.26 4.24 3.34
Expected volatility of Huntington’s common stock 21.1 22.2 26.3
Expected option term (years) 6.0 6.0 6.0
Weighted-average grant date fair value per share $2.80 $4.21 $5.28
The following pro forma disclosures for net income and earnings per diluted common share for the year ended December 31, 2005
are presented as if Huntington had applied the fair value method of accounting of Statement No. 123 in measuring compensation
costs for stock options.
(in millions, except per share amounts) 2005
Year Ended
December 31,
Pro forma results
Net income, as reported $412.1
Pro forma expense, net of tax (11.9)
Pro forma net income $400.2
Net income per common share:
Basic, as reported $ 1.79
Basic, pro forma 1.74
Diluted, as reported 1.77
Diluted, pro forma 1.71
Huntington’s stock option activity and related information for the year ended December 31, 2007, was as follows:
(in thousands, except per share amounts) Options
Weighted-
Average
Exercise
Price
Weighted-
Average
Remaining
Contractual
Life (Years)
Aggregate
Intrinsic
Value
Outstanding at January 1, 2007 20,573 $21.36
Granted 2,131 20.03
Acquired
(1)
7,374 18.40
Exercised (1,048) 18.10
Forfeited/expired (965) 22.80
Outstanding at December 31, 2007 28,065 $20.55 4.5 $1,578
Exercisable at December 31, 2007 24,106 $20.32 4.2 $1,578
(1) Relates to option plans acquired from the merger with Sky Financial.
As a result of the acquisition of Sky Financial, the outstanding stock options to purchase Sky Financial’s common stock were
converted into 7.4 million options to purchase shares of Huntington common stock with a weighted average exercise price of
$18.40. All shares were fully vested on the conversion date and were included in the purchase price of Sky Financial.
The aggregate intrinsic value represents the amount by which the fair value of underlying stock exceeds the option exercise price.
The total intrinsic value of stock options exercised during 2007, 2006 and 2005 was $4.3 million, $11.8 million, and $11.6 million,
respectively.
For the years ended December 31, 2007 and 2006, share-based compensation expense was $21.8 million and $18.6 million,
respectively. The tax benefits recognized related to share-based compensation for the years ended December 31, 2007 and 2006,
were $7.6 million and $6.5 million, respectively.
98
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS HUNTINGTON BANCSHARES INCORPORATED