GE 2011 Annual Report Download - page 114

112 GE 2011 ANNUAL REPORT
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STOCK COMPENSATION PLANS
December 31, 2011 (Shares in thousands)
Securities
to be
issued
upon
exercise
Weighted
average
exercise
price
Securities
available
for future
issuance
APPROVED BY SHAREOWNERS
Options 449,517 $18.86 (a)
RSUs 15,412 (b) (a)
PSUs 700 (b) (a)
NOT APPROVED BY SHAREOWNERS
(CONSULTANTS’ PLAN)
Options 344 26.94 (c)
RSUs 132 (b) (c)
Total 466,105 $18.87 113,963
(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 85.6 million shares at December 31, 2011.
(b) Not applicable.
(c) Total shares available for future issuance under the Consultants’ Plan amount to
28.3 million shares.
Outstanding options expire on various dates through
December 9, 2021.
The following table summarizes information about stock
options outstanding at December 31, 2011.
STOCK OPTIONS OUTSTANDING
(Shares in thousands) Outstanding Exercisable
Exercise price range Shares
Average
life (a)
Average
exercise
price Shares
Average
exercise
price
Under $10.00 59,344 6.8 $ 9.57 28,440 $ 9.57
10.01–15.00 78,001 7.1 11.98 37,521 11.97
15.01–20.00 202,808 8.9 17.42 24,366 16.20
20.01–25.00 1,270 8.9 20.57 49 22.49
25.01–30.00 45,788 3.3 27.62 38,748 27.51
30.01–35.00 47,396 3.1 33.22 47,291 33.22
Over $35.00 15,254 5.1 38.67 12,934 38.66
Total 449,861 7.0 $18.87 189,349 $22.47
At year-end 2010, options with a weighted average exercise price of $29.76 were
exercisable on 158 million shares.
(a) Average contractual life remaining in years.
STOCK OPTION ACTIVITY
Shares
(In thousands)
Weighted
average
exercise price
Weighted
average
remaining
contractual
term (In years)
Aggregate
intrinsic value
(In millions)
Outstanding at
January 1, 2011 400,439 $20.82
Granted 105,944 18.59
Exercised (7,994) 11.13
Forfeited (8,739) 15.73
Expired (39,789) 39.98
Outstanding at
December 31, 2011 449,861 $18.87 7.0 $1,140
Exercisable at
December 31, 2011 189,349 $22.47 5.0 $ 505
Options expected
to vest 230,694 $16.23 8.4 $ 576
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 2011, 2010
and 2009 was $4.00, $4.11 and $3.81, respectively. The following
assumptions were used in arriving at the fair value of options
granted during 2011, 2010 and 2009, respectively: risk-free inter-
est rates of 2.6%, 2.9% and 3.2%; dividend yields of 3.9%, 3.9% and
3.9%; expected volatility of 30%, 35% and 49%; and expected lives
of seven years and eight months, six years and eleven months, and
six years and ten months. Risk-free interest rates refl ect the yield
on zero-coupon U.S. Treasury securities. Expected dividend yields
presume a set dividend rate and we used a historical fi ve-year
average for the dividend yield. 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 2011, 2010
and 2009 amounted to $65 million, $23 million and an insignifi -
cant amount, respectively. As of December 31, 2011, there was
$765 million of total unrecognized compensation cost related to
nonvested options. That cost is expected to be recognized over
a weighted average period of two years, of which approximately
$189 million after tax is expected to be recognized in 2012.
Stock option expense recognized in net earnings during
2011, 2010 and 2009 amounted to $230 million, $178 million and
$120 million, respectively. Cash received from option exercises
during 2011, 2010 and 2009 was $89 million, $37 million and an
insignifi cant amount, respectively. The tax benefi t realized from
stock options exercised during 2011, 2010 and 2009 was $21 mil-
lion, $7 million and an insignifi cant amount, respectively.
OTHER STOCK-BASED COMPENSATION
Shares
(In thousands)
Weighted
average
grant date
fair value
Weighted
average
remaining
contractual
term (In years)
Aggregate
intrinsic
value
(In millions)
RSUs outstanding at
January 1, 2011 21,571 $29.16
Granted 3,145 16.74
Vested (8,559) 31.92
Forfeited (613) 27.78
RSUs outstanding at
December 31, 2011 15,544 $25.18 2.7 $278
RSUs expected to vest 14,223 $25.22 2.6 $255