GE 2007 Annual Report Download - page 97

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ge 2007 annual report 95
STOCK COMPENSATION PLANS
Weighted Securities
Securities average available
to be issued exercise for future
December 31, 2007 (Shares in thousands) upon exercise price issuance
APPROVED BY SHAREOWNERS
Options 212,669 $36.68
(a)
RSUs 37,062 (b) (a)
PSUs 1,330 (b) (a)
NOT APPROVED BY SHAREOWNERS
(CONSULTANTS’ PLAN)
Options 713 35.55
(c)
RSUs 67 (b) (c)
Total 251,841 $36.68 497,051
(a) In 2007, the Board of Directors approved the 2007 Long-Term Incentive Plan (the
Plan). The Plan replaced the 1990 Long-Term Incentive Plan. The maximum number
of shares that may be granted under the Plan is 500 million shares, of which no more
than 250 million may be available for awards granted in any form provided under the
Plan other than options or stock appreciation rights. The approximate 105.9 million
shares available for grant under the 1990 Plan were retired upon approval of the
2007 Plan. Total shares available for future issuance under the 2007 Plan amounted
to 473.0 million shares.
(b) Not applicable.
(c) Total shares available for future issuance under the consultants’ plan amount to
24.0 million shares.
Outstanding options expire on various dates through December 6,
2017.
The following table summarizes information about stock
options outstanding at December 31, 2007.
STOCK OPTIONS OUTSTANDING
(Shares in thousands) Outstanding Exercisable
Average Average
exercise exercise
Exercise price range Shares Average life (a) price Shares price
Under $27.00 12,555 0.8 $26.21 12,555 $26.21
27.01 – 32.00 44,764 5.0 28.44 40,599 28.22
32.01 – 37.00 65,080 5.7 34.72 41,054 35.04
37.01 – 42.00 34,197 5.8 39.18 16,834 39.62
42.01 – 47.00 44,451 3.0 43.29 44,451 43.29
Over $47.00 12,335 2.7 56.84 12,335 56.84
Total 213,382 4.5 $36.68 167,828 $36.98
At year-end 2006, options with an average exercise price of $35.93 were exercisable
on 183 million shares.
(a) Average contractual life remaining in years.
STOCK OPTION ACTIVITY
Weighted
average
Weighted remaining Aggregate
average contractual intrinsic
Shares exercise term value
(In thousands) price (In years) (In millions)
Outstanding at
January 1, 2007 232,420 $35.25
Granted 17,905 38.64
Exercised (28,966) 25.80
Forfeited (2,949) 33.10
Expired (5,028) 42.22
Outstanding at
December 31, 2007 213,382 $36.68 4.5 $676
Exercisable at
December 31, 2007 167,828 $36.98 3.5 $579
Options expected to vest 40,402 $35.50 8.3 $ 88
We measure the fair value of each stock option grant at the date
of grant using a Black-Scholes option pricing model. The weighted
average grant-date fair value of options granted during 2007,
2006 and 2005 amounted to $9.28, $7.99 and $8.87, respectively.
The following assumptions were used in arriving at the fair value
of options granted during 2007, 2006 and 2005, respectively:
risk-free interest rates of 4.2%, 4.8% and 4.1%; dividend yields of
2.9%, 2.9% and 2.5%; expected volatility of 25%, 24% and 28%;
and expected lives of six years and ten months, six years and
two months and six years. Risk-free interest rates refl ect the yield
on zero-coupon U.S. Treasury securities. Expected dividend yields
presume a set dividend rate. Expected volatilities are based on
implied volatilities from traded options and historical volatility of
our stock. The expected option lives are based on our historical
experience of employee exercise behavior.
The total intrinsic value of options exercised during 2007, 2006
and 2005 amounted to $375 million, $587 million and $731 million,
respectively. As of December 31, 2007, there was $234 million of
total unrecognized compensation cost related to nonvested options.
That cost is expected to be recognized over a weighted average
period of four years.
Cash received from option exercises during 2007, 2006 and
2005 was $747 million, $622 million and $403 million, respectively.