Huntington National Bank 2010 Annual Report Download - page 180

following table illustrates the weighted average assumptions used in the option-pricing model for options
granted in the three years ended December 31, 2010, 2009, and 2008.
2010 2009 2008
Assumptions
Risk-free interest rate ...................................... 2.30% 2.70% 3.41%
Expected dividend yield .................................... 0.68 0.96 5.28
Expected volatility of Huntington’s common stock ................. 38.5 51.8 34.8
Expected option term (years) ................................. 6.0 6.0 6.0
Weighted-average grant date fair value per share ................. $2.20 $1.95 $1.54
The following table illustrates total share-based compensation expense and related tax benefit for the
three years ended December 31, 2010, 2009, and 2008:
2010 2009 2008
(Dollar amounts in thousands)
Share-based compensation expense ......................... $15,453 $8,492 $14,142
Tax benefit ........................................... 5,408 2,972 4,950
During 2009, Huntington updated its forfeiture rate assumption, as a result of increased employee
turnover, and adjusted share-based compensation expense to account for the higher forfeiture rate.
Huntington’s stock option activity and related information for the year ended December 31, 2010, was as
follows:
Options
Weighted-
Average
Exercise
Price
Weighted-
Average
Remaining
Contractual
Life (Years)
Aggregate
Intrinsic
Value
(Amounts in thousands, except years and per share amounts)
Outstanding at January 1, 2010 ............... 23,722 $17.21
Granted .................................. 2,694 6.00
Exercised ................................. (61) 3.85
Forfeited/expired ............................ (4,493) 16.74
Outstanding at December 31, 2010 ............. 21,862 $15.96 3.0 $9,533
Vested and expected to vest at December 31,
2010(1) ................................. 20,367 $16.73 2.8 $7,392
Exercisable at December 31, 2010 .............. 16,829 $19.11 2.1 $2,110
(1) The number of options expected to vest includes an estimate of expected forfeitures.
The aggregate intrinsic value represents the amount by which the fair value of underlying stock exceeds
the “in-the-money” option exercise price. For the year ended December 31, 2010, cash received for the
exercises of stock options was $0.2 million. The tax benefit realized for the tax deductions from option
exercises totaled less than $0.1 million in 2010. There were no exercises of stock options for the years ended
December 31, 2009 and 2008.
Huntington also grants restricted stock units and awards. Restricted stock units and awards are issued at
no cost to the recipient, and can be settled only in shares at the end of the vesting period. Restricted stock
awards provide the holder with full voting rights and cash dividends during the vesting period. Restricted stock
units do not provide the holder with voting rights or cash dividends during the vesting period, but do accrue a
dividend equivalent that is paid upon vesting, and are subject to certain service restrictions. The fair value of
the restricted stock units and awards is the closing market price of the Company’s common stock on the date
of the grant.
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