Avon 2000 Annual Report Download - page 31

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8Stock Option Plans
A summary of the Company’s stock option activity, weighted-average exercise price and related information for the
years ended December 31 is as follows:
1998 1999 2000
Weighted Weighted Weighted
Shares Average Shares Average Shares Average
(in 000’s) Price (in 000’s) Price (in 000’s) Price
Outstanding– beginning of year 7,070 $22.29 7,127 $25.46 8,106 $29.38
Granted 1,664 32.40 2,225 37.33 3,424 38.28
Exercised (1,412) 17.59 (1,152) 20.35 (1,702) 23.94
Forfeited (195) 26.87 (94) 31.14 (249) 31.68
Outstanding– end of year 7,127 $25.46 8,106 $29.38 9,579 $33.47
Options exercisable– end of year 2,943 $18.74 3,627 $23.32 4,241 $28.61
The following table summarizes information about stock options outstanding at December 31, 2000:
Options Outstanding Options Exercisable
Shares Average Average Shares Average
Exercise Price (in 000’s) Price Term (in 000’s) Price
$13.13– $23.00 1,142 $17.23 5 years 1,142 $17.23
$29.63– $35.25 3,611 $31.54 7 years 2,532 $31.10
$38.25– $54.81 4,826 $38.75 9 years 567 $40.43
The 1993 Stock Incentive Plan (the “1993 Plan”),
and the Avon Products, Inc. 2000 Stock Incentive Plan
(the “2000 Plan”), which replaced the 1993 Plan effective
May 4, 2000, provide for several types of equity-based
incentive compensation awards. Under the 2000 Plan, the
maximum number of shares that may be awarded is
18,250,000 shares, of which no more than 6,000,000
shares may be used for restricted share and stock bonus
grants. Under the 1993 Plan, the maximum number of
shares that could be awarded was 14,100,000 shares, of
which no more than 8,000,000 shares could be used for
restricted share and stock bonus grants. Awards under
either Plan may be in the form of stock options, stock
appreciation rights, dividend equivalent rights or per-
formance unit awards. Stock options are granted at a price
no less than fair market value on the date the option is
granted. During 2000, 1999 and 1998, restricted shares
with aggregate value and vesting and related amortiza-
tion periods were granted as follows: 2000–261,700
valued at $10.2 vesting over one to three years;
1999 –137,000 valued at $5.8 vesting over one to three
years and 1998 –499,000 valued at $16.0 vesting over one
to three years.
Effective January 1, 1997, the 1997 Long-Term
Incentive Plan (“1997 ltip”) was authorized under the
1993 Plan. The 1997 ltip provided for the grant of two
forms of incentive awards, performance units for potential
cash incentives and ten-year stock options. Performance
units were earned over the three-year performance period
(1997–1999), based on the degree of attainment of per-
formance objectives. As of December 31, 1999, certain
performance goals under the 1997 ltip were achieved
and, accordingly, cash incentives totaling approximately
$31.0 were paid in 2000. Effective May 4, 2000, stock
options were awarded under the 2000 Plan. Options are
awarded annually over a three-year performance period
and vest in thirds over the three-year period following
each option grant date. As discussed above, these options
are granted at the fair market value on the date the option
is granted.
Compensation expense under all plans in 2000 was
$6.6 (1999 –$20.4; 1998–$17.8). The unamortized cost
of restricted shares as of December 31, 2000 was $10.0
(1999 –$6.8).
The Company has adopted the disclosure provisions
of fas No. 123. Had compensation cost for the plans been
based on the fair value at the grant dates for awards under
those plans consistent with the method prescribed by