ManpowerGroup 2006 Annual Report Download - page 50

Manpower฀2006฀Annual฀Report
46
NOT ES฀TO฀CONSOLID AT ED฀FINA NCIAL ฀S TATEMENT S฀
in฀million s,฀except฀per฀sha re฀data
Notes฀to฀Consolidated฀Financial฀Statements฀
The฀average฀risk-free฀interest฀rate฀is฀based฀on฀the฀five-year฀U.S.฀Treasury฀security฀rate฀in฀effect฀as฀of฀the฀grant฀date.฀The฀฀
expected฀dividend฀yield฀is฀based฀on฀the฀expected฀annual฀dividend฀as฀a฀percentage฀of฀the฀market฀value฀of฀our฀common฀stock฀as฀
of฀the฀grant฀date.฀We฀determined฀expected฀volatility฀using฀a฀weighted฀average฀of฀daily฀historical฀volatility฀(weighted฀40฀percent)฀
of฀our฀stock฀price฀over฀the฀past฀five฀years฀and฀implied฀volatility฀(weighted฀60฀percent)฀based฀upon฀exchange฀traded฀options฀for฀
our฀common฀stock.฀We฀believe฀that฀a฀blend฀of฀historical฀volatility฀and฀implied฀volatility฀better฀reflects฀future฀market฀conditions฀
and฀better฀indicates฀expected฀volatility฀than฀considering฀purely฀historical฀volatility.฀We฀determined฀the฀expected฀term฀of฀the฀
stock฀options฀using฀historical฀data.฀The฀weighted-average฀grant-date฀fair฀value฀of฀options฀granted฀during฀the฀year฀was฀$16.26,฀
$12.98฀and฀$17.76฀in฀2006,฀2005฀and฀2004,฀respectively.
Deferred฀Stock
Our฀non-employee฀directors฀may฀elect฀to฀receive฀deferred฀stock฀in฀lieu฀of฀part฀or฀all฀of฀their฀annual฀cash฀retainer฀otherwise฀฀
payable฀to฀them.฀The฀number฀of฀shares฀of฀deferred฀stock฀is฀determined฀pursuant฀to฀a฀formula฀set฀forth฀in฀the฀terms฀and฀฀
conditions฀adopted฀under฀the฀2003฀Plan฀and฀the฀deferred฀stock฀is฀settled฀in฀shares฀of฀common฀stock฀according฀to฀the฀terms฀
and฀conditions฀under฀the฀2003฀Plan.฀As฀of฀December฀31,฀2006,฀there฀were฀7,446฀shares฀of฀deferred฀stock฀awarded฀under฀this฀
arrangement,฀all฀of฀which฀are฀vested.
Effective฀January฀1,฀2006,฀non-employee฀directors฀also฀receive฀an฀annual฀grant฀of฀deferred฀stock฀(or฀restricted฀stock,฀if฀they฀so฀
elect)฀as฀additional฀compensation฀for฀board฀service.฀The฀award฀vests฀in฀equal฀quarterly฀installments฀and฀the฀vested฀portion฀of฀
the฀deferred฀stock฀is฀settled฀in฀shares฀of฀common฀stock฀after฀three฀years฀(which฀may฀be฀extended฀at฀the฀directors’฀election)฀in฀
accordance฀with฀the฀terms฀and฀conditions฀under฀the฀2003฀Plan.฀As฀of฀December฀31,฀2006,฀there฀were฀15,725฀shares฀฀
of฀deferred฀stock฀and฀7,548฀shares฀of฀restricted฀stock฀granted฀under฀this฀arrangement,฀all฀of฀which฀are฀vested.฀We฀have฀recog-
nized฀expenses฀of฀$0.8฀related฀to฀deferred฀stock฀in฀2006.฀
Restricted฀Stock
We฀grant฀restricted฀stock฀awards฀to฀certain฀employees฀and฀to฀non-employee฀directors฀who฀may฀elect฀to฀receive฀restricted฀
stock฀rather฀than฀deferred฀stock฀as฀described฀above.฀Restrictions฀lapse฀over฀periods฀ranging฀up฀to฀six฀years.฀We฀value฀฀
restricted฀stock฀awards฀at฀the฀closing฀market฀value฀of฀our฀common฀stock฀on฀the฀date฀of฀grant.
A฀summary฀of฀restricted฀stock฀activity฀is฀as฀follows:
Shares฀฀
(000)
Wtd.฀Avg.฀Price฀
Per฀Share
Wtd.฀Avg.฀
Remaining฀
Contractual฀
Term฀(years)
Aggregate฀
Intrinsic฀Value
Unvested,฀January฀1,฀2004 67 $฀ 31
฀ Granted 41 44
฀ Vested (9) 31
฀ Forfeited฀ (2) 31
Unvested,฀December฀31,฀2004 97฀ $฀ 37 1.6 $฀ 1.1
฀ Granted 112 44
฀ Vested (7) 31
฀ Forfeited฀ — —
Unvested,฀December฀31,฀2005 202฀ $฀ 41 1.3 $฀ 1.1
฀ Granted 54 52
฀ Vested (46) 39
฀ Forfeited฀ (5) 44
Unvested,฀December฀31,฀2006 205 $฀ 44 1.8 $฀ 6.2
During฀2006,฀2005฀and฀2004,฀we฀recognized฀$2.4,฀$1.7฀and฀$0.9,฀respectively,฀of฀expense,฀related฀to฀restricted฀stock฀grants.฀
As฀of฀December฀31,฀2006,฀there฀was฀approximately฀$5.9฀of฀total฀unrecognized฀compensation฀cost฀related฀to฀unvested฀฀
restricted฀stock,฀which฀we฀expect฀to฀recognize฀over฀a฀weighted-average฀period฀of฀approximately฀2.1฀years.