Humana 2008 Annual Report Download - page 101

Download and view the complete annual report

Please find page 101 of the 2008 Humana annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 136

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136

Humana Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Shares
Under
Option
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Term
Aggregate
Intrinsic
Value Per
Share (1)
Aggregate
Intrinsic
Value
($000) (1)
Options exercisable at December 31, 2008 ........ 3,608,012 $32.60 3.89 Years $10.12 $36,512
Options vested and expected to vest at December 31,
2008(2) .................................. 5,707,542 $42.57 4.31 Years $ 6.41 $36,606
(1) Computed based upon the amount by which the fair market value of our common stock at December 31,
2008 of $36.96 per share exceeded the weighted-average exercise price.
(2) We began estimating forfeitures upon adoption of SFAS 123R on January 1, 2006.
The total intrinsic value of stock options exercised during 2008 was $18.3 million, compared with $133.9
million during 2007 and $133.7 million during 2006. Cash received from stock option exercises for the years
ended December 31, 2008, 2007, and 2006 totaled $12.1 million, $62.7 million, and $49.2 million, respectively.
Total compensation expense not yet recognized related to nonvested options was $26.4 million at
December 31, 2008. We expect to recognize this compensation expense over a weighted-average period of
approximately 1.6 years.
Restricted Stock Awards
Restricted stock awards are granted with a fair value equal to the market price of our common stock on the
date of grant. Compensation expense is recorded straight-line over the vesting period, generally three years from
the date of grant.
The weighted-average grant date fair value of our restricted stock awards was $68.10, $63.59, and $54.36
for the years ended December 31, 2008, 2007, and 2006, respectively. Activity for our restricted stock awards
was as follows for the year ended December 31, 2008:
Shares
Weighted-
Average
Grant-Date
Fair Value
Nonvested restricted stock at December 31, 2007 ............. 1,844,978 $53.61
Granted .......................................... 666,571 68.10
Vested ........................................... (421,261) 34.10
Forfeited ......................................... (82,987) 63.22
Nonvested restricted stock at December 31, 2008 ............. 2,007,301 $62.12
The fair value of shares vested during the years ended December 31, 2008, 2007, and 2006 was $28.7
million, $3.4 million, and $2.3 million, respectively. Beginning in 2005, a greater proportion of stock awards
granted to employees, excluding executive officers, were restricted stock awards with a three-year vesting
schedule as opposed to stock options, which resulted in an increase in the fair value of shares vested from 2007 to
2008. Total compensation expense not yet recognized related to nonvested restricted stock awards was $42.5
million at December 31, 2008. We expect to recognize this compensation expense over a weighted-average
period of approximately 1.2 years. There are no other contractual terms covering restricted stock awards once
vested.
91