Safeway 2002 Annual Report Download - page 42

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40 SAFEWAY INC. 2002 ANNUAL REPORT
Activity in the Company’s stock option plans for the three-year period ended December 28, 2002 was as follows:
Weighted Average
Options Exercise Price
Outstanding, year-end 1999 40,506,313 $17.44
2000 Activity:
Granted 8,617,500 43.93
Canceled (1,502,400) 33.81
Exercised (10,441,672) 7.40
Outstanding, year-end 2000 37,179,741 25.66
2001 Activity:
Granted 5,463,474 50.06
Canceled (1,073,248) 40.99
Exercised (2,923,086) 12.85
Outstanding, year-end 2001 38,646,881 29.61
2002 Activity:
Granted 5,044,297 39.57
Canceled (2,727,671) 39.08
Exercised (3,019,997) 10.64
Outstanding, year-end 2002 37,943,510 31.70
Exercisable, year-end 2000 17,239,036 11.52
Exercisable, year-end 2001 18,758,616 16.20
Exercisable, year-end 2002 19,960,460 21.79
Weighted average fair value of options granted during the year:
2000 $ 21.31
2001 22.99
2002 18.46
In 2000, the Company granted an option to purchase
100,000 shares of common stock to a member of the
Company’s Board of Directors as compensation for servic-
es to Safeway as a consultant regarding the Company’s
equity investment in Future Beef Operations Holdings,
LLC (“FBO”). The option has an exercise price of $41.00
per share and vests ratably over five years. The Company
estimates the fair value of the option granted using the
Black-Scholes option pricing model with assumptions simi-
lar to those used by the Company to value employee stock
options. The Company reversed $0.2 million from com-
pensation expense in 2002 and charged $0.4 million in
2001 and $0.2 million in 2000 to compensation expense for
this option.
RESTRICTED STOCK Safeway includes restricted stock
awards in its basic earnings per share computation when
vested and diluted earnings per share computation when
granted, provided that continued employment is the only
condition for vesting. A restricted stock award of 41,344
shares with a fair value of $48.38 per share was granted to an
executive officer of the Company in 2000. No restricted
stock awards were made in 2002 or 2001. Under the terms of
the restricted shares issued, continued employment is the
only condition for vesting. The Company charged $1.0 mil-
lion to compensation expense in both 2001 and 2000 for this
award. The restricted shares were fully vested as of January
1, 2002 and 14,641 shares have been returned to Safeway to
satisfy the executive officer’s tax withholding obligation.