Humana 2014 Annual Report Download - page 117

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Humana Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
109
Stock-Based Compensation
We have plans under which options to purchase our common stock and restricted stock, including both restricted
stock units and restricted stock awards, have been granted to executive officers, directors and key employees. The terms
and vesting schedules for stock-based awards vary by type of grant. Generally, the awards vest upon time-based
conditions. The stock awards of retirement-eligible participants will continue to vest upon retirement from the Company.
Our equity award program includes a retirement provision that generally treats employees with a combination of age
and years of services with the Company totaling 65 or greater, with a minimum required age of 55 and a minimum
requirement of 5 years of service, as retirement-eligible. Upon exercise, stock-based compensation awards are settled
with authorized but unissued company stock or treasury stock. The compensation expense that has been charged against
income for these plans was as follows for the years ended December 31, 2014, 2013, and 2012:
2014 2013 2012
(in millions)
Stock-based compensation expense by type:
Restricted stock $ 91 $ 84 $ 66
Stock options 7 8 16
Total stock-based compensation expense 98 92 82
Tax benefit recognized (22)(22)(21)
Stock-based compensation expense, net of tax $ 76 $ 70 $ 61
The tax benefit recognized in our consolidated financial statements is based on the amount of compensation expense
recorded for book purposes. The actual tax benefit realized in our tax return is based on the intrinsic value, or the excess
of the market value over the exercise or purchase price, of stock options exercised and restricted stock vested during
the period. The actual tax benefit realized for the deductions taken on our tax returns from option exercises and restricted
stock vesting totaled $30 million in 2014, $20 million in 2013, and $43 million in 2012. There was no capitalized stock-
based compensation expense during these years.
At December 31, 2014, there were 19.3 million shares reserved for stock award plans. These reserved shares
included giving effect to, under the 2011 Plan, 10.6 million shares of common stock available for future grants assuming
all stock options were granted or 4.6 million shares available for future grants assuming all restricted stock were
granted. Shares may be issued from authorized but unissued company stock or treasury stock.
Restricted Stock
Restricted stock is granted with a fair value equal to the market price of our common stock on the date of grant
and generally vests three years from the date of grant. Certain restricted stock units have forfeitable dividend equivalent
rights equal to the dividend paid on common stock. The weighted-average grant date fair value of our restricted stock
was $103.57 in 2014, $73.50 in 2013, and $85.29 in 2012. Activity for our restricted stock was as follows for the year
ended December 31, 2014:
Shares
Weighted-
Average
Grant-Date
Fair Value
(shares in thousands)
Nonvested restricted stock at December 31, 2013 3,642 $ 71.84
Granted 1,264 103.57
Vested (972) 62.68
Forfeited (299) 75.38
Nonvested restricted stock at December 31, 2014 3,635 $ 85.52