Honeywell 2003 Annual Report Download - page 397

NOTE 20--STOCK-BASED COMPENSATION PLANS
We have stock plans available to grant incentive stock options, non-qualified
stock options and stock appreciation rights to officers and employees.
Fixed Stock Options
The exercise price, term and other conditions applicable to each option granted
under the stock plans are generally determined by the Management Development and
Compensation Committee of the Board. The options are granted at a price equal to
our stock's fair market value on the date of grant. The options generally become
exercisable over a three-year period and expire after ten years.
The following table summarizes information about stock option activity for the
three years ended December 31, 2003:
Weighted
Average
Number of Exercise
Options Price
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Outstanding at December 31, 2000 ....................... 46,000,324 $40.36
Granted ............................................. 15,479,120 36.23
Exercised ........................................... (3,121,867) 21.49
Lapsed or canceled .................................. (4,477,952) 51.24
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Outstanding at December 31, 2001 ....................... 53,879,625 39.37
Granted ............................................. 2,996,005 33.61
Exercised ........................................... (1,692,005) 18.15
Lapsed or canceled .................................. (3,168,916) 43.14
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Outstanding at December 31, 2002 ....................... 52,014,709 39.50
Granted ............................................. 9,372,850 23.70
Exercised ........................................... (2,361,930) 18.34
Lapsed or canceled .................................. (4,735,283) 39.58
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OUTSTANDING AT DECEMBER 31, 2003 ....................... 54,290,346 37.68
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There were 38,179,208 and 30,142,728 options exercisable at weighted average
exercise prices of $39.58 and $37.66 at December 31, 2002 and 2001,
respectively. There were 27,942,430 shares available for future grants under the
terms of our stock option plans at December 31, 2003.
Restricted Stock Units
Restricted stock unit (RSU) awards entitle the holder to receive one share of
common stock for each unit when the units vest. RSU's are issued to certain key
employees as compensation and as incentives tied directly to the achievement of
certain performance objectives.
RSU's issued were 1,578,000, 1,777,700 and 186,500 in 2003, 2002 and 2001,
respectively. There were 3,103,513, 2,342,960 and 1,580,091 RSU's outstanding,
with a weighted average grant date fair value per share of $30.10, $37.12 and
$43.49 at December 31, 2003, 2002 and 2001, respectively.
Non-Employee Directors' Plan
We also have a Stock Plan for Non-Employee Directors (Directors' Plan) under
which restricted shares and options are granted. Each new director receives a
one-time grant of 3,000 shares of common stock, subject to specific
restrictions.
The Directors' Plan also provides for an annual grant to each director of
options to purchase 5,000 shares of common stock at the fair market value on the
date of grant. We have set aside 450,000 shares for issuance under the
Directors' Plan. Options generally become exercisable over a three-year period
and expire after ten years.
The following table summarizes information about stock options outstanding at
December 31, 2003:
Options Outstanding Options Exercisable
--------------------------------- -----------------------
Weighted Weighted
Weighted Average Average
Number Average Exercise Number Exercise
Range of exercise prices Outstanding Life (1) Price Exercisable Price
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$16.85-$29.86 .......... 14,485,978 6.4 $22.96 5,239,428 $21.88
$30.14-$39.94 .......... 22,320,901 6.4 36.07 17,889,850 36.24
$40.02-$49.97 .......... 9,750,354 5.0 43.46 9,687,249 43.48