Humana 2003 Annual Report Download - page 90

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Humana Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Stock Based Compensation
We have plans under which restricted stock awards and options to purchase our common stock have been
granted to officers, directors, key employees and consultants.
Activity for our restricted stock awards was as follows for the years ended December 31, 2003, 2002 and
2001:
2003 2002 2001
Balance, January 1, ......................... 4,131,726 4,733,000 5,047,500
Granted—treasury issuance ................. — — 125,000
Granted—original issuance ................. — — 30,000
Total granted .......................... — — 155,000
Vested ................................. (3,904,382) (270,000) (6,000)
Forfeited ................................ (72,344) (331,274) (463,500)
Balance, December 31, ...................... 155,000 4,131,726 4,733,000
Restricted stock awards generally vest three years from the date of grant. Unearned compensation under the
restricted stock award plans is amortized over the vesting periods. Compensation expense recognized related to
our restricted stock award plans was $5.8 million in 2003, $9.0 million in 2002, and $9.5 million in 2001. The
decrease in compensation expense in 2003 was due to the August 7, 2003 vesting of 3.9 million shares of
restricted stock.
Options are granted at the average market price on the date of grant. Exercise provisions vary, but most
options vest in whole or in part 1 to 5 years after grant and expire 10 years after grant. At December 31, 2003,
there were 17,710,572 shares reserved for employee and director stock option plans, including 8,016,595 shares
of common stock available for future grants. As of February 24, 2004, a total of 2,540,114 additional options and
awards were granted.
Activity for our option plans was as follows for the years ended December 31, 2003, 2002 and 2001:
Shares
Under
Option
Exercise Price Per
Share
Weighted
Average
Exercise
Price
Balance, January 1, 2001 ................................ 11,390,017 $ 6.41 to $26.94 $13.41
Granted .......................................... 935,500 9.37 to 14.94 11.30
Exercised ......................................... (236,878) 6.50 to 9.59 7.66
Canceled or lapsed ................................. (1,630,691) 6.50 to 23.44 16.71
Balance, December 31, 2001 ............................. 10,457,948 6.41 to 26.94 12.84
Granted .......................................... 1,588,000 11.55 to 15.40 12.99
Exercised ......................................... (973,647) 6.50 to 15.59 8.76
Canceled or lapsed ................................. (545,430) 6.50 to 20.16 15.36
Balance, December 31, 2002 ............................. 10,526,871 6.41 to 26.94 13.11
Granted .......................................... 2,500,000 9.26 to 19.73 11.51
Exercised ......................................... (2,646,578) 6.41 to 20.16 10.59
Canceled or lapsed ................................. (686,316) 6.50 to 23.06 15.47
Balance, December 31, 2003 ............................. 9,693,977 $ 6.50 to $26.94 $13.22
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