Unum 2007 Annual Report Download - page 127

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Unum 2007 Annual Report 125
The total fair value of shares vested during 2007, 2006, and 2005 was $20.6 million, $12.6 million, and $2.4 million, respectively.
At December 31, 2007, we had $14.6 million of unrecognized compensation cost related to nonvested stock awards that will be
recognized over a weighted average period of 1.0 year. Prior to adoption of SFAS 123(R), this amount was reported as additional paid-in
capital and deferred compensation, a contra equity account. The value of this contra equity account at the adoption of SFAS 123(R) was
$13.8 million.
Performance Restricted Stock Units (PRSUs)
In September 2007, we issued 1,247,500 PRSUs with a grant date fair value of $15.99. Vesting for this grant is contingent upon
meeting various company threshold performance and stock price conditions. Dividend equivalents on PRSUs are accrued in the form of
additional restricted stock units. We had 1,251,385 PRSUs outstanding at December 31, 2007, all of which are nonvested.
At December 31, 2007, we had $15.8 million of unrecognized compensation cost related to PRSUs that will be recognized over a
weighted average period of 2.5 years. The PRSU expense and unrecognized compensation cost assume the performance goals are attained
at 100 percent. Actual performance may result in zero to 100 percent of the units ultimately being earned. We used the accelerated method
of amortization for recognizing compensation expense, which treats each of the three vesting tranches as a separate award over the
expected life of the unit.
We estimated the fair value on the date of grant using the Monte-Carlo model. The following assumptions were used to value the
2007 grants:
 •Expectedvolatilityof29percent,basedonourhistoricaldailystockprices.
 •Expectedlifeof4.4years,whichequalsthemaximumterm.
 •Expecteddividendyieldof1.24percent,basedonthedividendrateatthedateofgrant.
 •Risk-freeinterestrateof3.97percent,basedontheyieldoftreasurybondsatthedateofgrant.
Stock Options
Stock option activity is summarized as follows:
Shares Weighted Average Remaining Intristic
(000S) Exercise Price Contractual Term Value (000s)
Outstanding at December 31, 2006 9,705 $ 32.68
Granted 166 21.68
Exercised (378) 13.82
Expired (1,790) 35.10
Outstanding at December 31, 2007 7,703 32.81 2.3 Years $ 13,171
Exercisable at December 31, 2007 7,537 $ 33.06 2.2 Years $ 12,821
All outstanding stock options at December 31, 2007 are expected to vest. The total intrinsic value of options exercised during 2007,
2006, and 2005 was $3.9 million, $0.9 million, and $1.9 million, respectively. The total fair value of options that vested during 2006 and
2005 was $0.5 million and $5.5 million, respectively. No stock options vested in 2007. At December 31, 2007, we had $0.9 million of
unrecognized compensation cost related to stock options that will be recognized over a weighted average period of 1.1 years.