Ford 2005 Annual Report Download - page 85

Download and view the complete annual report

Please find page 85 of the 2005 Ford annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 108

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108

Ford Motor Company Annual Report 2005 82 Ford Motor Company Annual Report 2005 83
Notes to the Financial Statements
NOTE 19. SHARE-BASED COMPENSATION (Continued)
Stock option activity was as follows:
2005 2004 2003
Stock Option Activity
Shares
(millions)
Weighted-
Average
Exercise
Price
Shares
(millions)
Weighted-
Average
Exercise
Price
Shares
(millions)
Weighted-
Average
Exercise
Price
Outstanding, beginning of year................................................................................. 245.4 $ 19.13 234.7 $ 19.34 212.9 $ 20.88
Granted ...................................................................................................................... 27.6 12.46 26.7 13.46 31.3 7.93
Exercised* ................................................................................................................. (3.7) 9.14 (11.7) 10.60 (4.2) 11.06
Forfeited (including expirations) .............................................................................. (24.1) 17.13 (4.3) 18.68 (5.3) 19.90
Outstanding, end of year ........................................................................................... 245.2 18.72 245.4 19.13 234.7 19.34
Exercisable, end of year ............................................................................................ 191.9 20.61 183.0 21.41 161.7 21.44
__________
* Exercised at option prices ranging from $7.40 to $12.53 during 2005, $7.55 to $12.53 during 2004, and $10.99 to $13.54 during 2003.
The total fair value of shares vested during the years ended December 31, 2005, 2004, and 2003, was $145 million,
$184 million, and $206 million, respectively. We have 191.9 million fully vested stock options with a weighted-average exercise
price of $20.61 and remaining term of 4.4 years. We expect 52.3 million stock options (after forfeitures) with a weighted-average
exercise price of $11.95 and remaining term of 8.5 years to vest in the future. The aggregate intrinsic value of these options is
$2.8 million and $1.7 million, respectively.
We received $33.2 million from the exercise of stock options in 2005. The tax benefit realized was $3.1 million.
An equivalent of $42.2 million in treasury shares were used to settle exercised options. For options exercised during the years
ended December 31, 2005, 2004 and 2003, the difference between the fair value of the common shares issued and their respective
exercise price was $9.0 million, $47.7 million, and $3.5 million, respectively. Compensation cost for 2005, 2004, and 2003 was
$92.7 million, $77.4 million, and $112.1 million net of tax of $23.3 million, $41.6 million, and $60.4 million, respectively.
As of December 31, 2005, there is $50.9 million in unrealized compensation cost related to non-vested stock options. This
expense will be recognized over a weighted-average period of 1.3 years. A summary of the status of our non-vested shares and
changes during the year follows:
Shares
(millions)
Weighted-Average
Grant-date
Fair Value
Nonvested beginning of year ............................................................................................................................................................. 62.4 $4.16
Granted ............................................................................................................................................................................................... 27.6 4.44
Vested................................................................................................................................................................................................. (32.8) 4.43
Forfeited ............................................................................................................................................................................................. (3.9) 4.73
Nonvested end of year........................................................................................................................................................................ 53.3 4.09
The estimated fair value of stock options at the time of grant using the Black-Scholes option-pricing model was as follows:
2005 2004 2003
Fair value per option ............................................................................................................................................................
.
$ 4.44 $ 4.71 $ 2.07
Assumptions:
Annualized dividend yield .................................................................................................................................................
.
3.2% 3.0% 5.1%
Expected volatility .............................................................................................................................................................
.
41.9% 42.2% 39.3%
Risk-free interest rate.........................................................................................................................................................
.
4.4% 3.4% 3.7%
Expected option term (in years).........................................................................................................................................
.
7 7 7