Lexmark 2011 Annual Report Download - page 108

A summary of the status of the Company’s stock-based compensation plans as of December 31, 2011
and the change during the year is presented below:
Options
(In Millions)
Weighted
Average
Exercise
Price
(Per Share)
Weighted
Average
Remaining
Contractual
Life (Years)
Aggregate
Intrinsic
Value
(In Millions)
Outstanding at December 31, 2010 .............. 8.3 $59.02 3.5 $11.0
Granted .................................... — n/a
Exercised ................................... (0.0) 33.26
Forfeited or canceled ......................... (1.5) 54.52
Outstanding at December 31, 2011 .............. 6.8 $60.04 3.1 $9.1
Vested and expected to vest at December 31,
2011 ....................................... 6.7 $60.38 3.0 $8.3
Exercisable at December 31, 2011 ............... 6.4 $62.69 2.8 $3.3
For the year ended December 31, 2011, the total intrinsic value of options exercised was $0.0 million.
For the year ended December 31, 2010, the total intrinsic value of options exercised was $0.2 million.
There were no options exercised during 2009. As of December 31, 2011, the Company had
$1.6 million of total unrecognized compensation expense, net of estimated forfeitures, related to
unvested stock options that will be recognized over the weighted average period of 1.8 years.
Restricted Stock and Deferred Stock Units
Lexmark has granted RSUs with various vesting periods and generally these awards vest based upon
continued service with the Company or continued service on the Board of Directors. As of
December 31, 2011, the Company has issued DSUs to certain members of management who elected
to defer all or a portion of their annual bonus into such units and to certain nonemployee directors who
elected to defer all or a portion of their annual retainer, chair retainer and/or meeting fees into such
units. These DSUs are 100% vested when issued. The Company has also issued supplemental DSUs
to certain members of management upon the election to defer all or a portion of an annual bonus into
DSUs. These supplemental DSUs vest at the end of five years based upon continued employment with
the Company. The cost of the RSUs and supplemental DSUs, generally determined to be the fair
market value of the shares at the date of grant, is charged to compensation expense ratably over the
vesting period of the award.
During 2011, a certain number of executive officers of the Company were also granted additional RSU
awards having a performance condition, which could range from 94,650 RSUs to 283,950 RSUs
depending on the level of achievement. The performance measure selected to indicate the level of
achievement was free operating cash flow, defined as net cash flow provided by operating activities
less net cash outflows for property plant and equipment, and acquisitions and pension contributions.
The performance period ended on December 31, 2011 and, as of that date, the minimum level of the
performance condition had not been satisfied though the cancellation of the awards was pending
certification of the performance measure by the Compensation and Pension Committee of the Board of
Directors. No expense for these awards was accrued. The table below includes the awards at the
target level of 189,300 RSUs. If the cancellation of the performance awards had been included, the
Weighted Average Grant Date Fair Value per share would have been $35.92 for RSUs and DSUs
granted during 2011 and $33.61 for RSUs and DSUs outstanding at December 31, 2011. If the
cancellation of the performance awards had been included, the Aggregate Intrinsic Value in millions
would have been $70.6 for RSUs and DSUs outstanding at December 31, 2011. In connection with the
retirement of an executive officer from the Company and in consideration of the executive officer’s
years of service to the Company, the Company’s Compensation and Pension Committee accelerated
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