Stockholders' Equity and Earnings per Common Share

Net income per common share is determined as follows:



	Three Months Ended June 30				Six Months Ended June 30
	2011		2010		2011		2010
	(in millions of dollars, except share data)
Numerator
Net Income	$	229.8	$	209.7	$	455.2	$	439.5

Denominator (000s)
Weighted Average Common Shares - Basic	306,316.2		331,236.8		309,513.0		331,752.6
Dilution for Assumed Exercises of Stock Options and Nonvested Stock Awards	1,094.8		1,395.4		1,342.4		1,324.9
Weighted Average Common Shares - Assuming Dilution	307,411.0		332,632.2		310,855.4		333,077.5

Net Income Per Common Share
Basic	$	0.75	$	0.63	$	1.47	$	1.32
Assuming Dilution	$	0.75	$	0.63	$	1.46	$	1.32

We use the treasury stock method to account for the effect of outstanding stock options, nonvested stock awards, and performance restricted stock units on the computation of dilutive earnings per share. Under this method, these potential common shares will each have a dilutive effect, as individually measured, when the average market price of Unum Group common stock during the period exceeds the exercise price of the stock options, the grant price of the nonvested stock awards, and/or the threshold stock price of performance restricted stock units.

The outstanding stock options have exercise prices ranging from $11.37 to $26.29, the nonvested stock awards have grant prices ranging from $10.59 to $26.31, and the performance restricted stock units have a threshold stock price of $26.00.

In computing earnings per share assuming dilution, only potential common shares that are dilutive (those that reduce earnings per share) are included. Potential common shares not included in the computation of dilutive earnings per share because their impact would be antidilutive, based on current market prices, approximated 1.9 million shares of common stock for the three and six month periods ended June 30, 2011, and 3.4 million and 3.6 million common shares for the three and six month periods ended June 30, 2010.

In May 2010, our board of directors authorized the repurchase of up to $500.0 million of Unum Group’s common stock. During the second quarter of 2010, we repurchased 5.7 million shares at a cost of $129.8 million, including commissions of $0.1 million. For the year ended December 31, 2010, we repurchased 16.4 million shares at a cost of $356.0 million, including commissions of $0.3 million, under this share repurchase program.

On February 2, 2011, our board of directors authorized the repurchase of up to $1.0 billion of Unum Group's common stock, in addition to the amount remaining to be repurchased under the $500.0 million authorization. The $1.0 billion share repurchase program has an expiration date of August 2012.

On February 4, 2011, we repurchased 7.1 million shares, at a cost of $200.0 million, using an accelerated repurchase agreement with a financial counterparty. As part of this transaction, we simultaneously entered into a forward contract indexed to the price of Unum Group common stock, which subjected the transaction to a future price adjustment. Under the terms of the repurchase agreement, we were to receive, or be required to pay, a price adjustment based on the volume weighted average price of Unum Group common stock during the term of the agreement, less a discount. Any price adjustment payable to us was to be settled in shares of Unum Group common stock. Any price adjustment we would have been required to pay would have been settled in either cash or common stock. The final price adjustment settlement occurred on March 18, 2011 resulting in the delivery to us of 0.6 million additional shares. In total, we repurchased 7.7 million shares pursuant to the accelerated repurchase agreement, which completed the $500.0 million repurchase authorization and initiated the $1.0 billion repurchase program.

Note 8 - Stockholders' Equity and Earnings per Common Share - Continued

In addition to these repurchases, for the three and six month periods ended June 30, 2011, we repurchased an additional 5.7 million and 6.6 million shares on the open market at a cost of $146.1 million and $169.7 million, respectively, including commissions of $0.1 million for the six months ended June 30, 2011. The dollar value of shares remaining under the $1.0 billion repurchase program at June 30, 2011 is $774.8 million.

Pursuant to these repurchase programs, we retired 7.7 million shares during the first quarter of 2011. All other repurchased shares have been classified as treasury stock and accounted for using the cost method.

Unum Group has 25,000,000 shares of preferred stock authorized with a par value of $0.10 per share. No preferred stock has been issued to date.