American Express 2005 Annual Report Download - page 91

similar awards designed to meet the requirements of
non-U.S. jurisdictions.
The Company also has options that remain outstanding
pursuant to a Directors’ Stock Option Plan that expired
in 2003. Under these plans, there were a total of 71 mil-
lion, 68 million and 78 million common shares available
for grant at December 31, 2005, 2004 and 2003, respec-
tively. Each option has an exercise price equal to the
market price of the Company’s common stock on the
date of grant and a term of no more than 10 years. Sum-
marized below are the vesting provisions relating to
stock options:
Grant Year Vesting Provisions
2005–2004–2003 Generally vest ratably at 25
percent per year beginning
with the first anniversary of
the grant date
Prior to 1999 and
in 2002
Generally vest ratably at 33
1
⁄ 3
percent per year beginning
with the first anniversary of
the grant date
2001–2000–1999 Generally vest ratably at 33
1
⁄ 3
percent per year beginning
with the second anniversary
of the grant date
In 1998, the Company adopted a restoration stock
option program. This program provided that employees
who exercised options that had been outstanding at least
five years by surrendering previously owned shares as
payment would automatically receive a new (restora-
tion) stock option with an exercise price equal to the
market price on the date of exercise. The size of the res-
toration option was equal to the number of shares sur-
rendered plus any shares surrendered or withheld to sat-
isfy the employees’ income tax requirements. The term
of the restoration option, which became exercisable six
months after grant, was equal to the remaining life of the
original option. In July 2003, the Company discontin-
ued granting restoration options upon the eligible exer-
cise of a stock option granted on or after January 1,
2004. In July 2004, the Company further discontinued
granting restoration options upon the exercise of any
stock options effective January 1, 2005.
A summary of stock option and nonvested restricted stock award (RSA) activity as of December 31, 2005, and changes
during the year are presented below:
(Shares in thousands) Stock Options RSAs
Shares
Weighted Average
Exercise Price Shares
Weighted Average
Grant Price
Outstanding at beginning of year 131,872 $ 39.97 11,799 $ 41.25
Granted 6,858 $ 52.31 3,896 $ 52.30
Exercised/vested (26,618) $ 37.03 (5,487) $ 36.47
Forfeited/expired (4,329) $ 45.39 (2,696) $ 46.33
Adjustment pursuant to Ameriprise spin-off
(a)
15,992 — 1,466 —
Outstanding at end of year 123,775 $ 35.75 8,978 $ 40.77
Options exercisable at end of year 105,423 $ 34.89
(a)The adjustment is as a result of the Ameriprise spin-off described in Note 2, which increased the number of options and RSAs and decreased the exercise/
grant price for these stock awards. No additional compensation expense was created by the adjustment.
Notes to Consolidated
Financial Statements
AXP / AR.2005
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