BB&T 2009 Annual Report Download - page 126

BB&T CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Equity-Based Plans
At December 31, 2009, 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. As of December 31, 2009, 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, 2009, there were 20.0 million non-qualified and qualified stock options at prices
ranging from $8.11 to $44.20 and 10.9 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, 2009, there were 27.7 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, 2009,
22.0 million non-qualified and qualified stock options at prices ranging from $11.36 to $43.25 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. Directors are currently eligible to receive grants under the 2004
Plan. At December 31, 2009, options to purchase 308 thousand shares of common stock at prices ranging from
$20.74 to $31.80 were outstanding pursuant to the Directors’ Plan.
BB&T also has equity-based plans outstanding as the result of assuming the plans of acquired companies. At
December 31, 2009, there were 148 thousand stock options outstanding in connection with these plans, with option
prices ranging from $24.04 to $29.54.
BB&T measures the fair value of each option award on the date of grant using the Black-Scholes option-
pricing model with the following weighted average assumptions used for grants awarded in 2009, 2008 and 2007,
respectively. Substantially all of BB&T’s option awards are granted in February of each year. Therefore, the
assumptions noted below are weighted accordingly.
For the Years Ended December 31,
2009 2008 2007
Assumptions:
Risk-free interest rate 3.1% 3.7% 4.7%
Dividend yield 6.0 4.5 4.0
Volatility factor 29.1 15.5 14.0
Expected life 7.1 yrs 6.9 yrs 6.9 yrs
Fair value of options per share $2.59 $3.43 $5.34
BB&T determines the assumptions used in the Black-Scholes option pricing model as follows: the risk-free
interest rate is based on the U.S. Treasury yield curve in effect at the time of the grant; the dividend yield is
based on the historical dividend yield of BB&T’s stock, adjusted to reflect the expected dividend yield over the
expected life of the option; the volatility factor is based on the historical volatility of BB&T’s stock, adjusted to
reflect the ways in which current information indicates that the future is reasonably expected to differ from the
past; and the weighted-average expected life is based on the historical behavior of employees related to exercises,
forfeitures and cancellations.
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