STI » Topics » Note 6 - Stock Options

This excerpt taken from the STI DEF 14A filed Mar 6, 2009.

B. Stock Options.

The continuation of stock option awards to our senior executives with the same weighting as 2007 (approximately half of our NEOs’ long-term incentive compensation) was considered necessary because we believe stock options provide a long-term linkage between the interest of the executives and our shareholders. Stock options generally have a ten-year term and vest (100%) 3 years after the date of grant. The executive receives benefits from a stock option grant only to the extent our stock price appreciates, which is aligned with shareholder return.

The Committee favors stock options in part because such grants align the executive’s incentives with the interests of shareholders. The options generally are not transferable, and have value only to the extent that our stock price increases over the price level at the time of the grant. The following chart summarizes the grants that we made to our NEOs in 2008 and the alignment of these grants with shareholders returns:

 

NEO

  

Grant

Date

   Number
of Options  
    Exercise  
Price
   Current
Stock Price(1)  

James M. Wells III

   Feb. 12, 2008    250,000     $64.58    $7.11

William R. Reed, Jr.

   Feb. 12, 2008    84,500     $64.58    $7.11

William H. Rogers, Jr.

   Feb. 12, 2008    88,800 (2)   $64.58    $7.11

Mark A. Chancy

   Feb. 12, 2008    115,000 (2)   $64.58    $7.11

Timothy E. Sullivan

   Feb. 12, 2008    62,000     $64.58    $7.11

 

(1)

Closing market price of our common stock as of February 17, 2009.

 

(2)

On December 12, 2008, Mr. Wells announced organizational changes in leadership. Mr. Rogers was promoted to President. Mr. Chancy, CFO, took on additional responsibilities for the Corporate and Investment Banking line of business and the Chief Administrative Officer organization. In view of these promotions, the Committee made one-time stock option grants on December 31, 2008 of nonqualified stock options to each of 100,000 shares. Those grants had an exercise price of $29.54 per share.

 

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Effect of EESA and ARRA. ARRA directs the Treasury to adopt rules to implement “compensation standards” for CPP participants including a prohibition on incentives other than certain restricted stock. As a result, it is likely that these new legislative and regulatory restrictions will preclude the grant of stock options to the NEOs in the future until EESA no longer applies to us.

This excerpt taken from the STI DEF 14A filed Feb 29, 2008.

Stock Options

In addition to the PUP, we make annual stock option awards to senior executives. We use these awards to provide a long-term linkage between the interests of the executives and our shareholders and to attract and retain executive talent. Stock options represent approximately half of our NEOs’ long-term incentive compensation. Stock options generally have a ten-year term and vest (100%) 3 years after the date of grant. The executive benefits only to the extent our stock price appreciates, which is aligned with shareholder return.

This excerpt taken from the STI 10-Q filed Nov 8, 2005.

Note 6 – Stock Options

 

Effective January 1, 2002, the Company adopted the fair-value recognition provision of SFAS No. 123 prospectively to all awards granted after January 1, 2002. The effect on net income and earnings per share (“EPS”) if the fair-value based method had been

 

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Notes to Consolidated Financial Statements (Unaudited) - continued

 

applied to all outstanding awards for the three and nine months ended September 30, 2005 and 2004 is as follows:

 

     Three Months Ended
September 30


    Nine Months Ended
September 30


 

(Dollars in thousands)

 

   2005

    2004

    2005

    2004

 

Net income, as reported

   $510,774     $368,766     $1,468,768     $1,117,172  

Stock-based employee compensation expense included in reported net income, net of related tax effects

   4,006     3,072     12,655     8,976  

Total stock-based employee compensation expense determined under fair-value based method for all awards, net of related tax effects

   (4,006 )   (4,370 )   (12,659 )   (13,388 )
    

 

 

 

Net income, pro forma

   $510,774     $367,468     $1,468,764     $1,112,760  
    

 

 

 

Earnings per share:

                        

Diluted - as reported

   $1.40     $1.30     $4.04     $3.94  

Diluted - pro forma

   1.40     1.30     4.04     3.93  

Basic - as reported

   1.42     1.31     4.09     3.99  

Basic - pro forma

   1.42     1.32     4.09     3.98  

 

This excerpt taken from the STI 10-Q filed Aug 9, 2005.

Note 5 – Stock Options

 

Effective January 1, 2002, the Company adopted the fair-value recognition provision of SFAS No. 123 prospectively to all awards granted after January 1, 2002. The effect on net income and earnings per share (“EPS”) if the fair-value based method had been applied to all outstanding awards for the three and six months ended June 30, 2005 and 2004 is as follows:

 

     Three Months Ended
June 30


   

Six Months Ended

June 30


 

(Dollars in thousands)

 

   2005

    2004

    2005

    2004

 

Net income, as reported

   $465,700     $386,571     $957,994     $748,406  

Stock-based employee compensation expense included in reported net income, net of related tax effects

   4,692     3,245     8,649     5,904  

Total stock-based employee compensation expense determined under fair-value-based method for all awards, net of related tax effects

   (4,692 )   (4,742 )   (8,653 )   (9,018 )
    

 

 

 

Net income, pro forma

   $465,700     $385,074     $957,990     $745,292  
    

 

 

 

Earning per share:

                        

Diluted - as reported

   $1.28     $1.36     $2.64     $2.64  

Diluted - pro forma

   1.28     1.36     2.64     2.63  

Basic - as reported

   1.30     1.39     2.67     2.68  

Basic - pro forma

   1.30     1.37     2.67     2.66  

 

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Notes to Consolidated Financial Statements (Unaudited) - continued

 

This excerpt taken from the STI 10-Q filed May 6, 2005.

Note 5 – Stock Options

 

Effective January 1, 2002, the Company adopted the fair-value recognition provision of SFAS No. 123 prospectively to all awards granted after January 1, 2002. The effect on net income and earnings per share if the fair-value based method had been applied to all outstanding awards for the three months ended March 31, 2005 and 2004 is as follows:

 

     Three Months Ended
March 31


 
(Dollars in thousands) (Unaudited)    2005

    2004

 

Net income, as reported

   $492,294     $361,835  

Stock-based employee compensation expense included in reported net income, net of related tax effects

   3,957     2,659  

Total stock-based employee compensation expense determined under fair-value-based method for all awards, net of related tax effects

   (3,961 )   (4,276 )
    

 

Net income, pro forma

   $492,290     $360,218  
    

 

Earning per share:

            

Diluted - as reported

   $1.36     $1.28  

Diluted - pro forma

   1.36     1.27  

Basic - as reported

   1.37     1.29  

Basic - pro forma

   1.37     1.29  

 

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Notes to Consolidated Financial Statements (Unaudited) – continued

 

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