IBM 2002 Annual Report Download - page 96

2002 2001 2000
wtd. avg. wtd. avg. wtd. avg.
exercise no. of shares exercise no. of shares exercise no. of shares
price under option price under option price under option
Balance at January 1 $««85 177,956,490 $««73 160,557,003 $««60 146,136,523
Options granted 77 59,966,106 110 43,410,364 102 42,601,014
Options exercised 33 (7,490,424)) 37 (20,354,701) 35 (18,243,347)
Options canceled/expired 103 (7,495,472) 100 (5,656,176) 87 (9,937,187)
Balance at December 31 $««84 222,936,700 $««85 177,956,490 $««73 160,557,003
Exercisable at December 31 $««75 108,347,895 $««62 80,773,980 $««45 66,599,878
The shares under option at December 31, 2002, were in the following exercise price ranges:
options outstanding options currently exercisable
wtd. avg.
wtd. avg. remaining wtd. avg.
exercise no. of contractual exercise no. of
exercise price range price options life (in years) price options
$12 – $50 $««29 30,094,313 3 $««29 30,094,313
$51 – $90 65 74,701,940 8 61 32,466,761
$91 – $110 103 68,564,527 8 105 22,223,431
$111 and over 122 49,575,920 8 126 23,563,390
$««84 222,936,700 7 $««75 108,347,895
Notes to Consolidated Financial Statements
94 international business machines corporation and Subsidiary Companies
authorized to be issued under the Plans was 411.3 million.
There were 183.3 million and 193.4 million unused shares
available to be granted under the Plans as of December 31,
2002 and 2001, respectively. Awards under the Plans resulted
in compensation expense of $183 million, $170 million and
$134 million in 2002, 2001 and 2000, respectively.
stock option grants
Stock options are granted to employees and directors at an
exercise price equal to the fair market value of the company’s
stock at the date of grant. Generally, options vest 25 percent
per year, are fully vested four years from the grant date and
have a term of ten years. The following tables summarize
option activity under the Plans during 2002, 2001 and 2000:
vStock-Based Compensation Plans
The following is a description of the terms of the company’s
stock-based compensation plans:
Incentive Plans
Incentive awards are provided to employees and directors
under the terms of the company’s plans (the Plans). Employee
awards 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 under the Plans may include stock options, stock
appreciation rights, restricted stock, cash or stock awards, or
any combination thereof. The original amount of shares
IBM Employees Stock Purchase Plan
The ESPP enables substantially all regular employees to pur-
chase full or fractional shares of IBM common stock through
payroll deductions of up to 10 percent of eligible compensa-
tion. Effective July 1, 2000, the ESPP was amended whereby
the share price paid by an employee changed from 85 percent
of the average market price on the last business day of each
pay period, to the lesser of 85 percent of the average market
price on the first business day of each offering period or 85
percent of the average market price on the last business day of
each pay period. This change did not have a material impact
on the company’s financial condition. The current plan pro-
vides semi-annual offerings over the five-year period
commencing July 1, 2000. ESPP participants are restricted
from purchasing more than $25,000 of common stock in one
calendar year or 1,000 shares in an offering period.
Approximately 4.6 million, 16.5 million and 26.3 million
reserved unissued shares were available for purchase under the
ESPP at December 31, 2002, 2001 and 2000, respectively. The
beyond
(dollars in millions) 2003 2004 2005 2006 2007 2007
Gross minimum rental commitments $«1,370 $«1,066 $«859 $«689 $«511 $«1,590
Vacant space ««««206 «««««161 «««131 «««92 «««54 ««««««185
Sublease income commitments ««««««46 ««««««38 «««31 «««20 «««5 ««««««41