IBM 1997 Annual Report Download - page 70

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68
notes to consolidated financial statements
International Business Machines Corporation
and Subsidiary Companies
SRental Expense and Lease Commitments
Rental expense, including amounts charged to inventories and fixed assets and excluding amounts previously reserved,
was $1,280 million in 1997, $1,210 million in 1996 and $1,145 million in 1995. The table below depicts gross minimum
rental commitments under noncancelable leases, amounts related to vacant space that the company had previously
reserved and sublease income commitments. These amounts generally reflect activities related to office space.
Beyond
(Dollars in millions) 1998 1999 2000 2001 2002 2002
Gross rental commitments $1,431 $1,235 $1,101 $936 $752 $1,787
Vacant space 262 206 194 149 111 255
Sublease income commitments 127 115 107 79 57 106
T Stock-Based Compensation Plans
The company applies Accounting Principles Board (APB)
Opinion 25 and related Interpretations in accounting for
its stock-based compensation plans. A description of the
terms of the company’s stock-based compensation plans
follows:
Long-Term Performance Plan
Incentive awards are provided to officers and other key
employees under the terms of the IBM 1997 Long-Term
Performance Plan, which was approved by stockholders
in April 1997, and its predecessor plan, the 1994 Long-
Term Performance Plan (“the Plans”). The Plans are
administered by the Executive Compensation and
Management Resources Committee of the Board of
Directors. The committee determines the type and terms
of the awards to be granted, including vesting provisions.
Awards may include stock options, stock appreciation
rights (SARs), restricted stock, cash or stock awards, or
any combination thereof. The number of shares that may
be issued under the IBM 1997 Long-Term Performance
Plan for awards is 50.3 million, which was 5 percent of
the outstanding common stock on February 10, 1997.
There were 46.4 million unused shares available for
granting under the IBM 1997 Long-Term Performance
Plan and approximately 9.0 million shares available for
granting under the 1994 Long-Term Performance Plan at
December 31, 1997.
Awards under the Plans resulted in compensation expense
of $214.1 million, $203.9 million and $106.3 million that
were included in net earnings before income taxes in
1997, 1996 and 1995, respectively. Such awards include
those that settle in cash, such as SARs, and restricted
stock grants.