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| note 15 |
| STOCK INCENTIVE PLANS |
We determined stock-option
related employee compensation expense for 2004 and 2003,
as well as the pro forma expense for 2002 (see Note
2) using the Black-Scholes option-pricing model based
on the following weighted-average assumptions: |
| |
|
2004 |
|
|
|
2003 |
|
|
|
2002 |
|
|
 |
|
| Dividend
yield |
|
4.2 |
% |
|
|
4.0 |
% |
|
|
3.2 |
% |
|
| Expected
volatility |
|
31.3 |
|
|
|
30.9 |
|
|
|
28.5 |
|
|
| Risk-free
interest rate |
|
3.3 |
|
|
|
3.4 |
|
|
|
4.6 |
|
|
| Expected
lives (in years) |
|
6 |
|
|
6 |
|
|
6 |
|
|
|
The
weighted-average value of options granted during 2004,
2003 and 2002 was $7.88, $8.41 and $12.11, respectively.
Our stock incentive plans are described below:
Fixed Stock Option Plans
We have fixed stock option plans for substantially all
employees. Options to purchase common stock were granted
at a price equal to the market price of the stock at
the date of grant. The options generally vest over three
years and have a maximum term of ten years.
This table summarizes our fixed stock option plans: |
|
|
Stock
Options |
|
|
Weighted-Average |
|
|
| |
(in
thousands |
) |
|
Exercise
Price |
|
|
|
|
| Outstanding,
January 1, 2002 |
|
245,208 |
|
|
$ |
47.60 |
|
|
| Granted |
|
31,206 |
|
|
|
48.57 |
|
|
| Exercised |
|
(7,417 |
) |
|
|
28.15 |
|
|
| Canceled/forfeited |
|
(7,560 |
) |
|
|
43.62 |
|
|
|
| Outstanding,
December 31, 2002 |
|
261,437 |
|
|
|
48.32 |
|
|
| Granted |
|
22,207 |
|
|
|
38.94 |
|
|
| Exercised |
|
(4,634 |
) |
|
|
31.29 |
|
|
| Canceled/forfeited |
|
(7,917 |
) |
|
|
47.87 |
|
|
|
| Outstanding,
December 31, 2003 |
|
271,093 |
|
|
|
47.86 |
|
|
| Granted |
|
16,824 |
|
|
|
36.75 |
|
|
| Exercised |
|
(10,163 |
) |
|
|
29.90 |
|
|
| Canceled/forfeited |
|
(6,364 |
) |
|
|
49.69 |
|
|
|
| Outstanding,
December 31, 2004 |
|
271,390 |
|
|
|
47.80 |
|
|
|
|
| Options
exercisable, December 31, |
|
|
|
|
|
|
|
|
| 2002 |
|
162,620 |
|
|
|
48.37 |
|
|
| 2003 |
|
233,374 |
|
|
|
48.27 |
|
|
| 2004 |
|
239,093 |
|
|
|
48.91 |
|
|
|
| The
following table summarizes information about fixed stock
options outstanding as of December 31, 2004: |
|
|
Stock
Options Outstanding |
|
Stock
Options Exercisable |
|
|
|
|
|
|
|
Weighted |
- |
Weighted |
- |
|
|
Weighted |
- |
|
|
|
Shares |
|
Average |
|
Average |
|
Shares |
|
Average |
|
|
|
Range of Exercise Prices |
(in
thousands |
) |
Remaining
Life |
|
Exercise
Price |
|
(in
thousands |
) |
Exercise
Price |
|
|
|
|
|
$ |
20.00 – 29.99 |
|
568 |
|
|
|
.57 |
years |
$ |
26.82 |
|
|
|
554 |
|
|
$ |
26.81 |
|
|
|
30.00 – 39.99 |
|
58,700 |
|
|
|
6.08 |
|
|
36.72 |
|
|
|
32,764 |
|
|
|
36.14 |
|
|
|
40.00 – 49.99 |
|
103,575 |
|
|
|
5.55 |
|
|
45.32 |
|
|
|
97,228 |
|
|
|
45.11 |
|
|
|
50.00 – 59.99 |
|
106,947 |
|
|
|
5.06 |
|
|
56.19 |
|
|
|
106,947 |
|
|
|
56.19 |
|
|
|
60.00 – 69.99 |
|
1,600 |
|
|
|
4.79 |
|
|
62.22 |
|
|
|
1,600 |
|
|
|
62.22 |
|
|
|
|
Total |
|
271,390 |
|
|
|
5.46 |
|
|
47.80 |
|
|
|
239,093 |
|
|
|
48.91 |
|
|
|
|
Performance-Based
Shares
In 2004, stock compensation awards consisted of stock
options, performance-based stock units and restricted
stock units that vest over three years. The 2004 performance-based
stock units and restricted stock units will be paid
in cash upon vesting. The expense associated with these
awards is disclosed as part of other stock-based compensation
(see Note 2).
In 2003, stock compensation awards consisted of stock
options and performance-based stock units that vest
over three years. This was the first grant of performance
based shares since 2000, when certain key Verizon employees
were granted restricted stock units that vest over a
three to five year period.
The number of shares accrued for the performance-based
share programs was 5,993,000, 6,707,000 and 2,861,000
at December 31, 2004, 2003 and 2002, respectively. |
|
|
|
|
