Unum 2013 Annual Report Download - page 156

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154 / UNUM 2013 ANNUAL REPORT
Notes To Consolidated Financial Statements
Stock Options
Stock option activity is summarized as follows:
Remaining Intrinsic
Shares Weighted Average Contractual Value
(000s) Exercise Price Term (in years) (in millions)
Outstanding at December 31, 2012 1,691 $20.98
Granted 103 24.25
Exercised (399) 21.15
Outstanding at December 31, 2013 1,395 21.17 4.2 $19.4
Exercisable at December 31, 2013 1,041 $20.15 3.5 $15.5
All outstanding stock options at December 31, 2013 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 2013, 2012, and 2011 was $4.4 million, $0.6 million, and $3.9 million, respectively.
The total fair value of options that vested during 2013, 2012, and 2011 was $2.4 million, $2.3 million, and $2.7 million, respectively.
At December 31, 2013, we had $0.6 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 2013, 2012, and 2011 was $9.77, $9.78, and $11.73, 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 2013, 2012, and 2011 grants:
• Expected volatility of 52 percent, 52 percent, and 53 percent, respectively, based on our historical daily stock prices.
• Expected life of 6.0 years, 6.0 years, and 5.5 years, respectively, based on historical average years to exercise.
• Expected dividend yield of 2.14 percent, 1.80 percent, and 1.41 percent, respectively, based on the dividend rate at the date of grant.
• Risk free interest rate of 1.12 percent, 1.13 percent, and 2.37 percent, respectively, based on the yield of U.S. 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) 2013 2012 2011
Performance Share Units $ 1.1 $ — $ —
Restricted Stock Units and Cash-Settled Awards 21.0 20.9 19.6
Stock Options 1.0 2.7 2.7
Other 0.5 0.6 1.2
Total Compensation Expense, Before Income Tax $23.6 $24.2 $23.5
Total Compensation Expense, Net of Income Tax $15.6 $15.6 $15.3
Cash received under all share-based payment arrangements for the years ended December 31, 2013, 2012, and 2011 was
$11.4 million, $4.9 million, and $14.8 million, respectively.