Unum 2007 Annual Report Download - page 125

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Unum 2007 Annual Report 123
Earnings Per Common Share
Net income per common share is determined as follows:
Year Ended December 31
(in millions of dollars, except share data) 2007 2006 2005
Numerator
Net Income $ 679.3 $ 411.0 $ 513.6
Denominator (000s)
Weighted Average Common Shares — Basic 352,969.1 324,654.9 295,776.4
Dilution for the Purchase Contract Element of the Adjustable
Conversion-Rate Equity Security Units 1,673.0 8,153.0 14,297.8
Dilution for Assumed Exercises of Stock Options and Nonvested Stock Awards 1,134.4 1,553.8 2,438.4
Weighted Average Common Shares — Assuming Dilution 355,776.5 334,361.7 312,512.6
Net Income Per Common Share
Basic $ 1.92 $ 1.27 $ 1.74
Assuming Dilution $ 1.91 $ 1.23 $ 1.64
We use the treasury stock method to account for the effect of the purchase contract element of the units, outstanding stock options,
and nonvested stock awards on the computation of dilutive earnings per share. Under this method, these potential common shares will
each have a dilutive effect, as individually measured, when the average market price of Unum Group’s common stock during the period
exceeds the threshold appreciation price of the purchase contract element of the units, as described in Note 9, the exercise price of the
stock options, as described in Note 12, or the grant price of the nonvested stock awards.
The purchase contract element of the units issued in 2004 and 2003 had a threshold appreciation price of $16.95 per share and
$13.27 per share, respectively. The outstanding stock options have exercise prices ranging from $12.23 to $58.56, and the nonvested
stock awards have grant prices ranging from $19.18 to $27.18.
In computing earnings per share assuming dilution, only potential common shares that are dilutive (those that reduce earnings per
share) are included. Potential common shares not included in the computation of dilutive earnings per share because their impact would
be antidilutive, based on current market prices, approximated 6.2 million, 8.2 million, and 12.1 million shares of common stock for the
years ended December 31, 2007, 2006, and 2005, respectively.
Note 12. Stock-Based Compensation
Description of Stock Plans
Under the stock incentive plan of 2007, up to 35,000,000 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 units, and other stock-based awards. Each full value award, defined as any award other than a stock option or stock
appreciation right, shall be counted as 2.7 shares. The exercise price for stock options issued cannot be less than the fair market value
of the underlying common stock as of the grant date. Stock options have a maximum term of ten years after the date of grant and
generally vest after three years. At December 31, 2007, 31,486,483 shares were available for future grants.