MetLife 2007 Annual Report Download - page 166

The following is a summary of Stock Option exercise activity for the:
2007 2006 2005
Years Ended
December 31,
(In millions)
Totalintrinsicvalueofstockoptionsexercised ....................................... $122 $65 $39
Cashreceivedfromexerciseofstockoptions........................................ $110 $83 $72
Taxbenefitrealizedfromstockoptionsexercised...................................... $ 43 $23 $13
Performance Shares
Beginning in 2005, certain members of management were awarded Performance Shares under (and as defined in) the 2005 Stock Plan.
Participants are awarded an initial target number of Performance Shares with the final number of Performance Shares payable being
determined by the product of the initial target multiplied by a factor of 0.0 to 2.0. The factor applied is based on measurements of the
Company’s performance with respect to: (i) the change in annual net operating earnings per share, as defined; and (ii) the proportionate
total shareholder return, as defined, with reference to the three-year performance period relative to other companies in the S&P Insurance
Index with reference to the same three-year period. Performance Share awards will normally vest in their entirety at the end of the three-
year performance period (subject to certain contingencies) and will be payable entirely in shares of the Company’s common stock.
The following is a summary of Performance Share activity for the year ended December 31, 2007:
Performance
Shares
Weighted Average
Grant Date
Fair Value
Outstanding at January 1, 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,849,575 $42.24
Granted........................................................ 916,075 $60.86
Forfeited ....................................................... (75,525) $49.20
Outstanding at December 31, 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,690,125 $48.39
Performance Shares expected to vest at December 31, 2007 . . . . . . . . . . . . . . . . . . . . . . 2,641,669 $48.20
Performance Share amounts above represent aggregate initial target awards and do not reflect potential increases or decreases
resulting from the final performance factor to be determined at the end of the respective performance period. As of December 31, 2007,
the three year performance period for the 2005 Performance Share grants was completed. Included in the immediately preceding table are
965,525 outstanding Performance Shares to which the final performance factor will be applied. The calculation of the performance factor is
expected to be finalized during the second quarter of 2008 after all data necessary to perform the calculation is publicly available.
Performance Share awards are accounted for as equity awards but are not credited with dividend-equivalents for actual dividends paid
on the Holding Company’s common stock during the performance period. Accordingly, the fair value of Performance Shares is based upon
the closing price of the Holding Company’s common stock on the date of grant, reduced by the present value of estimated dividends to be
paid on that stock during the performance period.
Compensation expense related to initial Performance Shares granted prior to January 1, 2006 and expected to vest is recognized
ratably during the performance period. Compensation expense related to initial Performance Shares granted on or after January 1, 2006
and expected to vest is recognized ratably over the performance period or the period to retirement eligibility, if shorter. Performance Shares
expected to vest and the related compensation expenses may be further adjusted by the performance factor most likely to be achieved, as
estimated by management, at the end of the performance period. Compensation expense of $90 million, $74 million and $24 million,
related to Performance Shares was recognized for the years ended December 31, 2007, 2006 and 2005, respectively.
As of December 31, 2007, there were $57 million of total unrecognized compensation costs related to Performance Share awards. It is
expected that these costs will be recognized over a weighted average period of 1.72 years.
Long-Term Performance Compensation Plan
Prior to January 1, 2005, the Company granted stock-based compensation to certain members of management under the LTPCP. Each
participant was assigned a target compensation amount (an “Opportunity Award”) at the inception of the performance period with the final
compensation amount determined based on the total shareholder return on the Company’s common stock over the three-year perfor-
mance period, subject to limited further adjustment approved by the Company’s Board of Directors. Payments on the Opportunity Awards
were normally payable in their entirety (subject to certain contingencies) at the end of the three-year performance period, and were paid in
whole or in part with shares of the Company’s common stock, as approved by the Company’s Board of Directors. There were no new
grants under the LTPCP during the years ended December 31, 2007, 2006 and 2005.
A portion of each Opportunity Award under the LTPCP was settled in shares of the Holding Company’s common stock while the
remainder was settled in cash. The portion of the Opportunity Award settled in shares of the Holding Company’s common stock was
accounted for as an equity award with the fair value of the award determined based upon the closing price of the Holding Company’s
common stock on the date of grant. The compensation expense associated with the equity award, based upon the grant date fair value,
was recognized into expense ratably over the respective three-year performance period. The portion of the Opportunity Award settled in
cash was accounted for as a liability and was remeasured using the closing price of the Holding Company’s common stock on the final day
of each subsequent reporting period during the three-year performance period.
The final LTPCP performance period concluded during the six months ended June 30, 2007. Final Opportunity Awards in the amount of
618,375 shares of the Company’s common stock and $16 million in cash were paid on April 18, 2007. No significant compensation
F-70 MetLife, Inc.
MetLife, Inc.
Notes to Consolidated Financial Statements — (Continued)