Ford 2003 Annual Report Download - page 90

88 FORD MOTOR COMPANY
NOTES TO FINANCIAL STATEMENTS
NOTE 15. STOCK OPTIONS
We have stock options outstanding under two Long-term Incentive Plans (“LTIP”), the 1990 LTIP and the 1998 LTIP. No further
grants may be made under the 1990 LTIP and all outstanding options are exercisable. Grants may be made under the 1998 LTIP
through April 2008. All outstanding options under the 1990 LTIP continue to be governed by the terms and conditions of the
existing option agreements for those grants. Under the 1998 LTIP, 33% of the options are generally exercisable after the first
anniversary of the date of grant, 66% after the second anniversary, and 100% after the third anniversary. Stock options expire
ten years from the grant date and, beginning in 2003, are expensed. Additionally, we have outstanding performance stock rights,
restricted stock units, restricted stock grants and equivalents, and stock appreciation rights.
Under the 1998 LTIP, 2% of our issued common stock as of December 31 becomes available for granting plan awards in the
succeeding calendar year. Any unused portion is available for later years. The limit may be increased up to 3% in any year, with
a corresponding reduction in shares available for grants in future years. At December 31, 2003, the number of unused shares
carried forward aggregated to 36.2 million shares.
2003 2002 2001
Weighted- Weighted- Weighted-
Average Average Average
Exercise Exercise Exercise
Stock Option Activity (in millions) Shares Price Shares Price Shares Price
Outstanding, beginning of year 212.9 $ 20.88 172.1 $ 22.01 153.7 $ 19.16
Granted 31.3 7.93 50.6 16.29 35.3 30.49
Exercised a/ (4.2) 11.06 (4.3) 7.63 (14.0) 12.07
Terminated/expired or surrendered (5.3) 19.90 (5.5) 24.37 (2.9) 25.91
Outstanding, end of year 234.7 19.34 212.9 20.88 172.1 22.01
Exercisable, end of year 161.7 21.44 134.0 21.02 113.2 18.74
a/ Exercised at option prices ranging from $10.99 to $13.54 during 2003, $7.09 to $12.53 during 2002, and $5.75 to $26.59 during 2001.
Details on various stock option exercise price ranges are as follows:
Outstanding Options Exercisable Options
Weighted- Weighted- Weighted-
Range of Shares Average Life Average Shares Average
Exercise Prices (millions) (years) Exercise Price (millions) Exercise Price
$ 7.09 — $10.58 33.7 9.2 $ 8.10 1.2 $ 9.75
10.62 — 15.81 51.9 2.7 12.40 48.9 12.25
15.91 — 23.88 91.5 6.5 20.11 64.5 21.45
23.97 — 35.79 56.9 6.2 30.88 46.4 31.13
41.03 — 42.52 0.7 4.3 41.42 0.7 41.42
Total options 234.7 161.7
The estimated fair value of stock options at the time of grant using the Black-Scholes option pricing model was as follows:
2003 2002 2001*
Fair value per option $ 2.07 $ 5.76 $ 7.86
Assumptions:
Annualized dividend yield 5.1% 2.5% 4.0%
Expected volatility 39.3% 35.0% 32.7%
Risk-free interest rate 3.7% 5.1% 4.9%
Expected option term (in years) 776
* Previously disclosed values adjusted to conform with SFAS 123 requirements.
See Note 1 for a discussion of the impact on earnings of our adoption of SFAS No. 123 in respect to stock option awards,
effective January 1, 2003.
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