Regions Bank 2008 Annual Report Download - page 140

time shares would be prorated and released. Upon adoption of a new long-term incentive plan in 2006, Regions
amended all other open stock and long-term incentive plans, such that no new awards may be granted under those
plans subsequent to the amendment date. The outstanding awards were unaffected by this plan amendment. The
plan adopted in 2006 provides that 20,000,000 common share equivalents are subject to and available for
distribution to recipients. Each share of restricted stock granted under the 2006 plan is assigned a share
equivalent factor of 4.0, as compared to the stock option equivalent factor of 1.0. The number of remaining share
equivalents authorized for issuance under Regions’ long-term compensation plans was approximately 9,160,000
share equivalents at December 31, 2008.
In connection with the AmSouth acquisition, Regions assumed AmSouth’s long-term incentive plans. The
awards issued under these plans are consistent with the awards issued under Regions’ plans described above.
However, all unvested awards vest upon the employee’s retirement. Also, in determining shares authorized,
restricted stock grants are equally weighted with stock options. At December 31, 2008, approximately 7,585,000
shares were authorized for issuance under these assumed plans. In other business combinations prior to 2006,
Regions assumed stock options that were previously granted by those companies and converted those options,
based on the appropriate exchange ratio, into options to acquire Regions’ common stock. The common stock for
such options has been registered under the Securities Act of 1933 by Regions and is not included in the
maximum number of shares that may be granted by Regions under its existing stock option plans.
The following tables summarize the impact of adoption of FAS 123(R) and the elements of compensation
costs recognized in the consolidated financial statements for the years ended December 31:
Impact of Adoption
2006
(In thousands, except
per share data)
Income before income taxes ................................... $ (3,842)
Net income ................................................ (3,070)
Earnings per share—basic .................................... —
Earnings per share—diluted ................................... —
Cash flows from operating activities ............................ (32,454)
Cash flows from financing activities ............................ 32,454
Elements of Compensation Cost
2008 2007 2006
(In thousands)
Compensation cost of share-based compensation awards:
Restricted stock awards and units ..................... $49,745 $ 62,924 $ 53,389
Stock options ..................................... 15,820 12,864 3,842
Tax benefits related to compensation cost ................... (23,995) (28,410) (21,060)
Compensation cost of share-based compensation awards, net of
tax ................................................ $41,570 $ 47,378 $ 36,171
The following table summarizes the weighted-average assumptions used and the weighted-average
estimated fair values related to stock options granted during the years ended December 31:
2008 2007 2006
Expected dividend yield ...................................... 6.9% 4.1% 4.0%
Expected volatility .......................................... 26.4% 19.7% 19.5%
Risk-free interest rate ........................................ 2.9% 4.5% 4.7%
Expected option life ......................................... 5.8yrs. 5.0 yrs. 4.0 yrs.
Fair value ................................................. $2.46 $5.23 $4.99
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