MetLife 2004 Annual Report Download - page 89

METLIFE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Insurance regulatory approval of the extraordinary dividend was received on October 15, 2004 and the extraordinary dividend was paid on October 25,
2004. For the year ended December 31, 2003, Metropolitan Property and Casualty Insurance Company paid to MetLife, Inc. $75 million in dividends for
which prior insurance regulatory clearance was not required. As of December 31, 2004, the maximum amount of the dividend which may be paid to the
Holding Company from Metropolitan Property and Casualty Insurance Company in 2005, without prior regulatory approval, is $187 million for dividends
with a scheduled date of payment subsequent to November 16, 2005. Any dividend payment prior to November 16, 2005 will be considered
extraordinary requiring prior insurance regulatory clearance.
Stock Compensation Plans
Under the MetLife, Inc. 2000 Stock Incentive Plan, as amended, (the ‘‘Stock Incentive Plan’’), awards granted may be in the form of non-qualified or
incentive stock options qualifying under Section 422A of the Internal Revenue Code. Under the MetLife, Inc. 2000 Directors Stock Plan, as amended (the
‘‘Directors Stock Plan’’), awards granted may be in the form of stock awards, non-qualified stock options, or a combination of the foregoing to outside
Directors of the Company. The aggregate number of options to purchase shares of stock that may be awarded under the Stock Incentive Plan and the
Directors Stock Plan is subject to a maximum limit of 37,823,333, of which no more than 378,233 may be awarded under the Directors Stock Plan. The
Directors Stock Plan has a maximum limit of 500,000 stock awards.
All options granted have an exercise price equal to the fair market value price of the Company’s common stock on the date of grant, and an option’s
maximum term is ten years. Certain options under the Stock Incentive Plan become exercisable over a three year period commencing with the date of
grant, while other options become exercisable three years after the date of grant. Options issued under the Directors Stock Plan are exercisable
immediately.
The fair value of each option grant is estimated on the date of the grant using the Black-Scholes options-pricing model with the following weighted
average assumptions used for grants for the:
Years Ended December 31,
2004 2003 2002
Dividend yield ******************************************************************************* 0.70% 0.68% 0.68%
Risk-free rate of return ************************************************************************ 3.69% 5.07% 5.71%
Volatility ************************************************************************************ 34.85% 37.39% 31.62%
Expected duration**************************************************************************** 6 years 6 years 6 years
A summary of the status of options included in the Company’s Stock Incentive Plan and Directors Stock Plan is presented below:
Weighted Weighted
Average Options Average
Options Exercise Price Exercisable Exercise Price
Outstanding at January 1, 2002 *************************************** 11,116,684 $29.93 — $ —
Granted *********************************************************** 7,275,855 $30.35 — $ —
Exercised ********************************************************** (11,401) $29.95 — $ —
Canceled/Expired *************************************************** (2,121,508) $30.07 — $ —
Outstanding at December 31, 2002 *********************************** 16,259,630 $30.10 1,357,034 $30.01
Granted *********************************************************** 5,634,439 $26.13 — $ —
Exercised ********************************************************** (20,054) $30.02 — $ —
Canceled/Expired *************************************************** (1,578,987) $29.45 — $ —
Outstanding at December 31, 2003 *********************************** 20,295,028 $29.05 4,566,265 $30.15
Granted *********************************************************** 5,074,206 $35.28 — $ —
Exercised ********************************************************** (1,464,865) $29.70 — $ —
Canceled/Expired *************************************************** (642,268) $30.27 — $ —
Outstanding at December 31, 2004 *********************************** 23,262,101 $30.33 12,736,500 $29.57
Years Ended December 31,
2004 2003 2002
Weighted average fair value of options granted **************************************************** $13.25 $10.41 $10.48
The following table summarizes information about stock options outstanding at December 31, 2004:
Number
Number Weighted Average Weighted Exercisable at Weighted
Outstanding at Remaining Contractual Average December 31, Average
Range of Exercise Prices December 31, 2004 Life (Years) Exercise Price 2004 Exercise Price
$23.75 – $27.55 5,116,385 7.95 $26.02 1,697,554 $26.05
$27.55 – $31.35 13,061,369 6.31 $30.13 10,956,828 $30.09
$31.35 – $35.15 287,844 6.69 $33.31 62,840 $32.94
$35.15 – $38.95 4,788,503 8.92 $35.28 19,278 $35.26
$38.95 – $40.38 8,000 9.92 $40.16 — $ —
23,262,101 7.22 $30.34 12,736,500 $29.57
Effective January 1, 2003, the Company elected to prospectively apply the fair value method of accounting for stock options granted by the Holding
Company subsequent to December 31, 2002. As permitted under SFAS 148, options granted prior to January 1, 2003 will continue to be accounted for
MetLife, Inc.
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