BB&T 2012 Annual Report Download - page 134

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NOTE 11. Shareholders’ Equity
Preferred Stock
Dividends on the preferred stock, if declared, accrue and are payable quarterly, in arrears. For each issuance, BB&T issued
depositary shares, each of which represents a fractional ownership interest in a share of the Company’ s preferred stock. The
preferred stock has no stated maturity and redemption is solely at the option of the Company in whole, but not in part, upon
the occurrence of a regulatory capital treatment event, as defined. In addition, the preferred stock may be redeemed in whole
or in part, on any dividend payment date after five years from the date of issuance. Under current rules, any redemption of
the preferred stock is subject to prior approval of the FRB. The preferred stock is not subject to any sinking fund or other
obligations of the Company.
The following table presents a summary of the preferred stock as of December 31, 2012:
Issuance Liquidation Net Dividend
Issue Date Amount Proceeds Rate
(Dollars in millions)
Series D Non-Cumulative Perpetual Preferred Stock 5/1/12 $ 575 $ 559 5.850 %
Series E Non-Cumulative Perpetual Preferred Stock 7/31/12 1,150 1,120 5.625
Series F Non-Cumulative Perpetual Preferred Stock 10/31/12 450 437 5.200
$ 2,175 $ 2,116
Equity-Based Plans
At December 31, 2012, BB&T had options, restricted shares and restricted share units outstanding from the following equity-
based compensation plans: the 2012 Plan, the 2004 Plan, the Omnibus Plan, the Directors’ Plan, and a plan assumed from an
acquired entity. BB&T’ s shareholders have approved all equity-based compensation plans with the exception of the plan
assumed from an acquired entity. As of December 31, 2012, the 2012 Plan is the only plan that has shares available for
future grants. The 2012 and 2004 Plans 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 2012 and 2004 Plans are intended to assist the Company 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, 2012, there were 30.6 million non-qualified and incentive stock options at exercise prices ranging from $16.88
to $44.20, 13.9 million restricted shares and restricted share units outstanding under the 2004 Plan and 110 thousand
restricted share units outstanding under the 2012 Plan. Awards outstanding under the 2004 and 2012 Plans vest as follows:
(1) those granted prior to 2010 generally vest over five years and (2) those granted after 2009 generally vest over four years.
Options outstanding have a ten year term. At December 31, 2012, there were no shares available for future grants under the
2004 Plan and 34.9 million shares available for future grants under the 2012 Plan.
At December 31, 2012, 14.7 million non-qualified and qualified stock options at prices ranging from $32.66 to $43.25 were
outstanding under the Omnibus Plan. All options under this plan are fully vested and have a ten year term.
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 2012, 2011 and 2010, respectively. Substantially all
of BB&T’ s option awards are granted in February of each year:
December 31,
2012 2011 2010
Assumptions:
Risk-free interest rate 1.5 % 1.7 % 2.0 %
Dividend yield 4.4 3.5 5.4
Volatility factor 33.0 37.2 36.0
Expected life 7.0 yrs 7.4 yrs 7.2 yrs
Fair value of options per share $ 6.07 $ 7.45 $ 5.60
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