BB&T 2008 Annual Report Download - page 112

BB&T CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
NOTE 11. Shareholders’ Equity
Common Stock
The authorized common stock of BB&T consists of one billion shares with a $5 par value. At December 31,
2008, 559 million common shares were issued and outstanding.
Preferred Stock
The authorized preferred stock of BB&T consists of five million shares. BB&T issued 3,133.64 shares of
preferred stock, with a $1,000,000 per share liquidation preference, to the United States Department of the
Treasury (“Treasury Department”) in connection with the Troubled Asset Relief Program’s Capital Purchase
Program. The preferred stock pays a dividend of 5% per year for the first five years the preferred stock is
outstanding and thereafter pays at a rate of 9% per year. As part of the purchase of the preferred stock, the
Treasury Department received a warrant to purchase 13,902,573 shares of BB&T’s common stock at an exercise
price of $33.81, which is a component of shareholders’ equity. The proceeds from the offering of the preferred
stock and related warrant were allocated between the preferred stock and warrant based on their relative fair
values. The discount attributable to the preferred stock is being amortized over a five-year period. The warrant
expires ten years from the issuance date. The agreement with the Treasury Department stipulated that the
preferred stock could not be redeemed during the first three years except with proceeds from a qualified equity
offering. The warrant agreement also provided that the number of shares in the original warrant would be
reduced by one-half if BB&T was able to redeem the preferred stock by December 31, 2009 with proceeds from a
qualified equity offering. However, recent legislation allows BB&T to redeem the preferred stock without a
qualified equity offering, subject to the approval of its primary federal regulator. If BB&T were to redeem the
preferred stock under these provisions, the warrant would be liquidated.
Equity-Based Plans
At December 31, 2008, BB&T had options, restricted shares and restricted share units outstanding from the
following equity-based compensation plans: the 2004 Stock Incentive Plan (“2004 Plan”), the 1995 Omnibus Stock
Incentive Plan (“Omnibus Plan”), the Non-Employee Directors’ Stock Option Plan (“Directors’ Plan”), and plans
assumed from acquired entities, which are described below. All plans generally allow for accelerated vesting of
awards for holders who retire and have met all retirement eligibility requirements and in connection with certain
other events. BB&T’s shareholders have approved all equity-based compensation plans with the exception of
plans assumed from acquired companies. BB&T changed its practices regarding equity-based awards in 2006 and
began issuing a combination of restricted share units and nonqualified stock options in connection with its
incentive plans. Formerly, the Company had issued substantially all of its equity-based awards in the form of
stock options. As of December 31, 2008, the 2004 Plan is the only plan that has shares available for future grants.
BB&T’s 2004 Plan is intended to assist the Corporation in recruiting and retaining employees, directors and
independent contractors and to associate the interests of eligible participants with those of BB&T and its
shareholders. At December 31, 2008, there were 17.5 million non-qualified and qualified stock options at prices
ranging from $8.11 to $50.71 and 6.3 million restricted shares and restricted share units outstanding under the
2004 Plan. The options outstanding under the 2004 Plan generally vest ratably over five years and have a
ten-year term. The restricted shares and restricted share units generally vest five years from the date of grant.
At December 31, 2008, there were 10.0 million shares available for future grants under the 2004 Plan.
BB&T’s Omnibus Plan was intended to allow BB&T to recruit and retain employees with ability and
initiative and to align the employees’ interests with those of BB&T and its shareholders. At December 31, 2008,
5.1 million qualified stock options at prices ranging from $11.66 to $47.53 and 18.7 million non-qualified stock
options at prices ranging from $11.36 to $47.53 were outstanding. The stock options generally vest over 3 to 5
years and have a ten-year term.
The Directors’ Plan was intended to provide incentives to non-employee directors to remain on the Board of
Directors and share in the profitability of BB&T. In 2005, the Directors’ Plan was amended and no future grants
will be awarded in connection with this Plan. At December 31, 2008, options to purchase 371 thousand shares of
common stock at prices ranging from $20.74 to $31.80 were outstanding pursuant to the Directors’ Plan.
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