Unum 2011 Annual Report Download - page 154

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Notes To Consolidated Financial Statements
Unum 2011 Annual Report
152
Stock Options
Stock option activity is summarized as follows:
Remaining Intrinsic
Shares Weighted Average Contractual Value
(000s) Exercise Price Term (in years) (000s)
Outstanding at December 31, 2010 3,357 $22.58
Granted 216 26.29
Exercised (657) 17.62
Expired (1,439) 27.91
Outstanding at December 31, 2011 1,477 20.13 5.0 $3,811
Exercisable at December 31, 2011 947 $19.89 4.4 $2,414
All outstanding stock options at December 31, 2011 are expected to vest. Stock options vest over a one to three year service period,
beginning at the date of grant, and the compensation cost is recognized ratably during the vesting period. Compensation cost for stock
options subject to accelerated vesting upon retirement is recognized over the implicit service period.
The total intrinsic value of options exercised during 2011, 2010, and 2009 was $3.9 million, $3.2 million, and $2.6 million, respectively.
The total fair value of options that vested during 2011, 2010, and 2009 was $2.7 million, $2.5 million, and $2.0 million, respectively.
At December 31, 2011, we had $0.5 million of unrecognized compensation cost related to stock options that will be recognized over a
weighted average period of 0.7 years.
The weighted average grant date fair value of options granted during 2011, 2010, and 2009 was $11.73, $9.04, and $4.45, respectively.
We estimated the fair value on the date of grant using the Black-Scholes valuation model. The following assumptions were used to value
the 2011, 2010, and 2009 grants:
• Expected volatility of 53 percent, 55 percent, and 50 percent, respectively, based on our historical daily stock prices.
• Expected life of 5.5 years for 2011, and 5.0 years for both 2010 and 2009, based on historical average years to exercise.
• Expected dividend yield of 1.41 percent, 1.59 percent, and 1.68 percent, respectively, based on the dividend rate at the date of grant.
• Risk free interest rate of 2.37 percent, 2.33 percent, and 1.89 percent, respectively, based on the yield of treasury bonds at the
date of grant.
Expense
Compensation expense for the stock plans, as reported in our consolidated statements of income, is as follows:
Year Ended December 31
(in millions of dollars) 2011 2010 2009
Nonvested Stock Awards and Cash-Settled Awards $19.6 $20.7 $22.4
Performance Restricted Stock Units 0.4 1.5 6.8
Stock Options 2.7 2.5 3.7
Other 0.8 0.5 1.0
Total Compensation Expense, Before Income Tax $23.5 $25.2 $33.9
Total Compensation Expense, Net of Income Tax $15.3 $17.2 $22.0
Cash received under all share-based payment arrangements for the years ended December 31, 2011, 2010, and 2009 was
$14.8 million, $10.0 million, and $8.0 million, respectively.