Lexmark 2007 Annual Report Download - page 75

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A summary of the status of the Company’s RSU and DSU grants as of December 31, 2007 and 2006, and
changes during the year then ended is presented below:
Units
Weighted
Average
Grant Date
Fair Value
(Per Share)
Weighted
Average
Remaining
Contractual
Life (Years)
Aggregate
Intrinsic
Value
RSUs and DSUs at December 31, 2005 . . . . . . . . . . . 0.4 $54.55 4.2 $18.4
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.6 48.75
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.1) 35.52
Forfeited or canceled . . . . . . . . . . . . . . . . . . . . . . . . (0.1) 54.89
RSUs and DSUs at December 31, 2006 . . . . . . . . . . . 0.8 $52.84 3.5 $61.9
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.5 56.08
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.1) 58.62
Forfeited or canceled . . . . . . . . . . . . . . . . . . . . . . . . — 54.43
RSUs and DSUs at December 31, 2007 . . . . . . . . . . . 1.2 $53.79 2.6 $42.6
For the years ended December 31, 2007 and 2006, the total fair value of RSUs and DSUs that vested was
$3.2 million and $4.9 million, respectively. As of December 31, 2007, the Company had $33.7 million of
total unrecognized compensation expense, net of estimated forfeitures, related to RSUs and DSUs that will
be recognized over the weighted average period of 3.1 years.
Employee Stock Purchase Plan
The Company’s Employee Stock Purchase Plan (“ESPP”) enables substantially all regular employees to
purchase full or fractional shares of Lexmark Class A Common Stock through payroll deductions of up to
10% of eligible compensation. Effective January 1, 2006, the ESPP was amended whereby the share price
paid by an employee is 85% of the closing market price on the last business day of the respective offering
period. Prior to January 1, 2006, the share price paid by an employee was 85% of the lesser of the closing
market price on (i) the last business day immediately preceding the first day of the respective offering
period and (ii) the last business day of the respective offering period. The ESPP provides semi-annual
offering periods beginning each January 1 and July 1. During the years ended December 31, 2007, 2006
and 2005, employees paid the Company $5.6 million, $6.2 million and $8.6 million, respectively, to
purchase approximately 0.1 million shares during each of these years. During 2007 and 2006, the
Company recognized approximately $0.9 million and $1.9 million of compensation expense related to this
ESPP activity due to the adoption of SFAS 123R mentioned earlier. Compensation expense was
calculated using the fair value of the employees’ purchase rights under the Black-Scholes model.
The Company discontinued the ESPP as of December 31, 2007. Employees enrolled in the ESPP during
the offering period that ended December 31, 2007, qualified for the final ESPP purchase executed
according the plan provisions described above.
Pro Forma Information for Periods Prior to Adopting SFAS 123R
Prior to the adoption of SFAS 123R on January 1, 2006, the Company accounted for its stock-based
employee compensation plans under APB 25 and related interpretations. Under APB 25, compensation
cost was not recognized for substantially all options granted because the exercise price was at least equal
to the market value of the underlying common stock on the date of grant.
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