Morgan Stanley 1999 Annual Report Download - page 85

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page 83 |99 AR
Deferred Compensation Awards
The Company has made deferred compensation awards pursuant to
several equity-based compensation plans. These plans provide for
the deferral of a portion of certain key employees’ compensation
with payments made in the form of the Company’s common stock
or in the right to receive unrestricted shares (collectively,
“Restricted Stock”). Compensation expense for all such awards
(including those subject to forfeiture) amounted to $699 million,
$415 million and $347 million in fiscal 1999, fiscal 1998 and fis-
cal 1997, respectively. Compensation expense for Restricted Stock
awards was determined based on the fair value of the Company’s
common stock (as defined in the plans). The number of Restricted
Stock shares outstanding was 115 million at November 30, 1999,
118 million at November 30, 1998 and 124 million at Novem-
ber 30, 1997.
Restricted Stock awarded under these plans are subject to
restrictions on sale, transfer or assignment until the end of a spec-
ified restriction period, generally five to 10 years from the date of
grant. Holders of Restricted Stock generally may forfeit ownership
of a portion of their award if employment is terminated before the
end of the relevant restriction period. Holders of vested Restricted
Stock generally will forfeit ownership in certain limited situations,
including termination for cause during the restriction period.
Employee Stock Purchase Plan
Under the Employee Stock Purchase Plan, eligible employees may
purchase shares of the Company’s common stock at not less than
85% of the fair value on the date of purchase. Employees of the
Company purchased 1.4 million shares of common stock in fiscal
1999, 1.2 million shares in fiscal 1998 and 1.0 million shares in
fiscal 1997.
The discount to fair value was $9 million for fiscal 1999,
$6 million for fiscal 1998 and $3 million for fiscal 1997. The plan
is “non-compensatory” under APB No. 25, and, accordingly, no
charge to earnings has been recorded for the amount of the dis-
count to fair value.
The following table sets forth activity relating to the Company’s stock option awards (share data in millions):
FISCAL 1999 FISCAL 1998 FISCAL 1997
_______________________________ ____________________________________ __________________________________
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
NUMBER EXERCISE NUMBER EXERCISE NUMBER EXERCISE
OF SHARES PRICE OF SHARES PRICE OF SHARES PRICE
Options outstanding at beginning of period 126.6 $20.04 128.2 $13.93 120.6 $ 8.52
Granted 23.2 56.65 31.2 34.39 40.4 24.08
Exercised (15.5) 17.12 (30.6) 9.12 (29.8) 5.84
Forfeited (3.0) 23.88 (2.2) 19.70 (3.0) 13.33
Options outstanding at end of period 131.3 $26.76 126.6 $20.04 128.2 $13.93
Options exercisable at end of period 93.6 $25.21 81.2 $19.69 88.6 $13.34
The following table presents information relating to the Company’s stock options outstanding at November 30, 1999 (share data in millions):
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
______________________________________________________________ __________________________________________
WEIGHTED AVERAGE WEIGHTED
AVERAGE REMAINING AVERAGE
NUMBER EXERCISE LIFE NUMBER EXERCISE
RANGE OF EXERCISE PRICES OUTSTANDING PRICE (YEARS) EXERCISABLE PRICE
$4.00-$9.99 40.1 $ 8.75 5.1 33.5 $ 8.69
$10.00-$19.99 13.8 15.21 3.9 5.8 14.54
$20.00-$29.99 33.5 26.43 7.2 25.8 26.36
$30.00-$39.99 19.2 35.54 8.8 13.5 35.52
$40.00-$49.99 5.0 44.19 6.9 4.4 44.12
$50.00-$63.00 19.7 59.01 9.8 10.6 59.45
Total 131.3 6.8 93.6