MoneyGram 2006 Annual Report Download - page 94

Table of Contents
MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
liabilities under the deferred compensation plans. The Company assumed liabilities totaling $6.6 million related to the plans and retained
rabbi trust assets totaling $5.5 million. Subsequent to the spin-off, the Company adopted a deferred compensation plan for its non-
employee directors. Under the Deferred Compensation Plan for Directors of MoneyGram International, Inc., non-employee directors may
defer all or part of their retainers, fees and stock awards in the form of stock units or cash. Director deferred accounts are payable upon
resignation from the Board. In 2005, the Board of Directors approved a deferred compensation plan for certain employees which allows
for the deferral of base compensation in the form of cash. In addition, the Company makes contributions to the participants' accounts for
profit sharing contributions beyond the IRS qualified plan limits. Beginning with the 2006 plan year, eligible employees may defer
incentive pay in the form of cash. Management deferred accounts are generally payable under the timing and method elected by the
participant on the deferral date. Deferred stock unit accounts are credited quarterly with dividend equivalents and will be adjusted in the
event of a change in our capital structure from a stock split, stock dividend or other change. Deferred cash accounts are credited quarterly
with interest at a long-term, medium-quality bond rate. Both deferred compensation plans are unfunded and unsecured and the Company
is not required to physically segregate any assets in connection with the deferred accounts. At December 31, 2006 and 2005, the
Company had a liability related to the deferred compensation plans of $9.9 million and $7.0 million, respectively, recorded in the "Other
liabilities" component in the Consolidated Balance Sheets. The rabbi trust had a market value of $12.1 million and $6.6 million at
December 31, 2006 and 2005, respectively, recorded in "Other assets" in the Consolidated Balance Sheets.
Note 14. Stock-Based Compensation
As of the Distribution Date, each Viad option that immediately prior to the Distribution Date was outstanding and unexercised was
adjusted to consist of two options: (1) an option to purchase shares of Viad common stock and (2) an option to purchase shares of
MoneyGram common stock. The exercise price of the Viad stock option was adjusted by multiplying the exercise price of the old stock
option by a fraction, the numerator of which was the closing price of a share of Viad common stock on the first trading day after the
Distribution Date (divided by four to reflect the post-spin Viad reverse stock split) and the denominator of which was that price plus the
closing price for a share of MoneyGram common stock on the first trading day after the Distribution Date. The exercise price of each
MoneyGram stock option equals the exercise price of each old stock option times a fraction, the numerator of which was the closing price
of a share of MoneyGram common stock on the first trading day after the Distribution Date and the denominator of which was that price
plus the closing price of a share of Viad common stock on the first trading day after the Distribution Date (divided by four to reflect the
post-spin Viad reverse stock split). These MoneyGram options are considered to have been issued under the MoneyGram International,
Inc. 2004 Omnibus Incentive Plan. MoneyGram will take all tax deductions relating to the exercise of stock options and the vesting of
restricted stock held by employees and former employees of MoneyGram, and Viad will take the deductions arising from options and
restricted stock held by its employees and former employees.
On May 10, 2005, the Company's stockholders approved the MoneyGram International, Inc. 2005 Omnibus Incentive Plan, which
authorizes the issuance of awards of up to 7,500,000 shares of common stock. Effective upon the approval of the 2005 Omnibus Incentive
Plan, no new awards may be granted under the 2004 Omnibus Incentive Plan. The 2005 Omnibus Incentive Plan provides for the
following types of awards to officers, directors and certain key employees: (a) incentive and nonqualified stock options; (b) stock
appreciation rights; (c) restricted stock and restricted stock units; (d) dividend equivalents; (e) performance based awards; and (f) stock
and other stock-based awards. Shares covered by forfeited and cancelled awards become available for new grants, as well as shares that
are withheld for full or partial payment to the Company of the exercise price of awards. Shares that are withheld as satisfaction of tax
obligations relating to an award, as well as previously issued shares used for payment of the exercise price or satisfaction of tax
obligations relating to an award, become available for new grants through May 10, 2015. The Company plans to satisfy stock option
exercises and vesting of awards through the issuance of treasury stock and shares held in the Trust (see Note 12). As of December 31,
2006, the Company has remaining authorization to issue awards of up to 6,934,956 shares of common stock.
Option awards are granted with an exercise price equal to the market price of the Company's common stock on the date of grant. Stock
options granted in 2006 and 2005 under the 2005 Omnibus Incentive Plan become exercisable in a three-year
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