Verizon Wireless 2006 Annual Report Download - page 66

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The following table summarizes information about Verizon’s stock options outstanding as of December 31, 2006:
The weighted average remaining contractual term was 3.8 years for
stock options outstanding and exercisable as of December 31,
2006. The total intrinsic value was approximately $44 million and
$37 million for stock options outstanding and exercisable, respec-
tively, as of December 31, 2006. The total intrinsic value for stock
options exercised was $10 million, $6 million and $97 million, during
2006, 2005 and 2004, respectively.
The amount of cash received from the exercise of stock options
was approximately $101 million, $34 million and $306 million for
2006, 2005 and 2004, respectively.
The after-tax compensation expense for stock options was $28 mil-
lion, $53 million and $50 million for 2006, 2005 and 2004,
respectively. As of December 31, 2006, unrecognized compensa-
tion expense related to the unvested portion of stock options was
approximately $3 million.
NOTE 15
EMPLOYEE BENEFITS
We maintain noncontributory defined benefit pension plans for
many of our employees. The postretirement health care and life
insurance plans for our retirees and their dependents are both con-
tributory and noncontributory and include a limit on the company’s
share of cost for certain recent and future retirees. We also sponsor
defined contribution savings plans to provide opportunities for eli-
gible employees to save for retirement on a tax-deferred basis. We
use a measurement date of December 31 for our pension and
postretirement health care and life insurance plans.
In September 2006, the FASB issued SFAS No. 158. SFAS No. 158
requires the recognition of a defined benefit postretirement plan’s
funded status as either an asset or liability on the balance sheet.
SFAS No. 158 also requires the immediate recognition of the unrec-
ognized actuarial gains and losses and prior service costs and credits
that arise during the period as a component of other accumulated
comprehensive income, net of applicable income taxes. Additionally,
the fair value of plan assets must be determined as of the company’s
year-end. We adopted SFAS No. 158 effective December 31, 2006
which resulted in a net decrease to shareowners’ investment of
$6,883 million. This included a net increase in pension obligations of
$2,403 million, an increase in Other Postretirement Benefits
Obligations of $10,828 million and an increase in Other Employee
Benefit Obligations of $31 million, partially offset by a net decrease of
$1,205 million to reverse the Additional Minimum Pension Liability
and an increase in deferred taxes of $5,174 million. If we had
recorded an Additional Minimum Pension Liability at December 31,
2006, it would have been $396 million, ($262 million after-tax).
Pension and Other Postretirement Benefits
Pension and other postretirement benefits for many of our employees
are subject to collective bargaining agreements. Modifications in ben-
efits have been bargained from time to time, and we may also
periodically amend the benefits in the management plans.
As of June 30, 2006, Verizon management employees no longer
earned pension benefits or earned service towards the company
retiree medical subsidy. In addition, new management employees
hired after December 31, 2005 are not eligible for pension benefits
and managers with less than 13.5 years of service as of June 30,
2006 are not eligible for company-subsidized retiree healthcare or
retiree life insurance benefits. Beginning July 1, 2006, management
employees receive an increased company match on their savings
plan contributions.
The following tables summarize benefit costs, as well as the benefit
obligations, plan assets, funded status and rate assumptions asso-
ciated with pension and postretirement health care and life
insurance benefit plans.
Notes to Consolidated Financial Statements continued
Stock Options Outstanding Stock Options Exercisable
Shares Weighted-Average Weighted-Average Shares Weighted-Average
Range of Exercise Prices (in thousands) Remaining Life Exercise Price (in thousands) Exercise Price
$20.00 – 29.99 73 3.4 years $ 28.50 73 $ 28.50
30.00 – 39.99 44,874 5.5 36.36 40,577 36.45
40.00 – 49.99 96,154 3.7 43.92 96,154 43.92
50.00 – 59.99 87,687 3.1 54.40 87,687 54.40
60.00 – 69.99 576 2.8 60.93 576 60.93
Total 229,364 46.48 225,067 46.69