CVS 1999 Annual Report Download - page 35

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Stock Incentive Plans
As of January 1, 2000, the Company had the following stock
incentive plans, which include the pre-merger plans of
Arbor and Revco. Effective with the mergers, all outstanding
Arbor and Revco stock options were exchanged for options
to purchase CVS common stock.
1997 Incentive Compensation Plan
The 1997 Incentive Compensation Plan (the “1997 ICP”)
superceded the 1990 Omnibus Stock Incentive Plan, the
1987 Stock Option Plan and the 1973 Stock Option Plan
(collectively, the “Preexisting Plans”). Upon approval of the
1997 ICP, authority to make future grants under the
Preexisting Plans was terminated, although previously
granted awards remain outstanding in accordance with
their terms and the terms of the Preexisting Plans.
As of January 1, 2000, the 1997 ICP provided for the granting
of up to 23,382,245 shares of common stock in the form of
stock options, stock appreciation rights, restricted shares,
deferred shares and performance-based awards to selected
officers, employees and directors of the Company. All grants
under the 1997 ICP are awarded at fair market value on the
date of grant. The right to exercise or receive these awards
generally commences between one and five years from the
date of the grant and expires not more than ten years after
the date of the grant, provided that the holder continues to
be employed by the Company. As of January 1, 2000, there
were 17,915,519 shares available for future grants under
the 1997 ICP.
Restricted shares issued under the 1997 ICP may not exceed
3.6 million shares. In fiscal 1999, 1998 and 1997, 14,402,
155,400 and 44,610 shares of restricted stock were granted
at a weighted average grant date fair value of $50.88, $37.80
and $23.02, respectively. Participants are entitled to vote
and receive dividends on their restricted shares, although
they are subject to certain transfer restrictions. Compensation
costs, which are recognized over the restricted period,
totaled $2.3 million in 1999, $3.1 million in 1998 and
$3.5 million in 1997.
The 1996 Directors Stock Plan
The 1996 Directors Stock Plan (the “1996 DSP”) provides
for the granting of up to 346,460 shares of common stock
to the Company’s nonemployee directors (the “Eligible
Directors”). The 1996 DSP allows the Eligible Directors to
elect to receive shares of common stock in lieu of cash
compensation. Eligible Directors may also elect to defer
compensation payable in common stock until their service
as a director concludes. The 1996 DSP replaced the
Company’s 1989 Directors Stock Option Plan. As of
January 1, 2000, there were 247,071 shares available for
future grant under the 1996 DSP.
1 2 3 4 5 6 78 9 10 11 12 13 14 15
Following is a summary of the fixed stock option activity for the respective fiscal years:
1999 1998 1997
Weighted Average Weighted Average Weighted Average
Shares Exercise Price Shares Exercise Price Shares Exercise Price
Outstanding at beginning of year 11,982,122 $ 23.31 16,070,146 $ 16.95 23,569,930 $ 13.96
Granted 2,175,342 48.02 3,119,410 37.16 3,695,530 23.62
Exercised (927,080) 18.87 (7,137,027) 15.01 (10,756,726) 12.99
Canceled (265,784) 37.65 (70,407) 26.48 (438,588) 14.48
Outstanding at end of year 12,964,600 27.38 11,982,122 23.31 16,070,146 16.95
Exercisable at end of year 6,065,351 $ 17.92 6,127,402 $ 17.16 11,729,688 $ 16.11
Following is a summary of the fixed stock options outstanding and exercisable as of January 1, 2000:
Options Outstanding Options Exercisable
Range of Number Weighted Average Weighted Average Number Weighted Average
Exercise Prices Outstanding Remaining Life Exercise Price Exercisable Exercise Price
Under $15 516,927 5.3 $ 11.43 496,038 $ 11.83
$15.01 to $20.00 4,934,909 4.9 16.72 4,607,689 16.72
20.01 to 25.00 2,357,420 6.4 22.81 652,241 22.27
25.01 to 40.00 3,110,464 8.0 36.71 297,019 36.24
40.01 to 51.38 2,044,880 9.3 48.19 12,364 42.65
Total 12,964,600 6.6 $ 27.38 6,065,351 $ 17.92