Morgan Stanley 2014 Annual Report Download - page 276

MORGAN STANLEY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
termination of employment. Stock option awards have vesting, restriction and cancellation provisions that are
generally similar to those in restricted stock units. The weighted average fair value of the Company’s options
granted during 2013 was $5.41, utilizing the following weighted average assumptions:
Grant Year
Risk-Free Interest
Rate
Expected
Life
Expected Stock
Price Volatility
Expected Dividend
Yield
2013 .................................... 0.6% 3.9 years 32.0% 0.9%
No stock options were granted during 2014 or 2012.
The Company’s expected option life has been determined based upon historical experience. The expected stock
price volatility assumption was determined using the implied volatility of exchange-traded options, in accordance
with accounting guidance for share-based payments. The risk-free interest rate was determined based on the
yields available on U.S. Treasury zero-coupon issues.
The following table sets forth activity relating to the Company’s stock options (options data in millions):
2014
Number of
Options
Weighted
Average
Exercise Price
Options outstanding at beginning of period ................................... 33 $49.40
Canceled .............................................................. (14) 47.29
Options outstanding at end of period(1) ...................................... 19 $51.30
Options exercisable at end of period ......................................... 17 $53.86
(1) At December 31, 2014, approximately 18 million options with a weighted average exercise price of $51.74 were vested.
The total intrinsic value of stock options exercised in 2014 was $2 million with a weighted average exercise price
of $24.68. There were no stock options exercised during 2013 or 2012. At December 31, 2014, the intrinsic value
of in the money exercisable stock options was $71 million.
The following table presents information relating to the Company’s stock options outstanding at December 31,
2014 (options data in millions):
At December 31, 2014 Options Outstanding Options Exercisable
Range of Exercise Prices
Number
Outstanding
Weighted Average
Exercise Price
Average
Remaining Life
(Years)
Number
Exercisable
Weighted Average
Exercise Price
Average
Remaining Life
(Years)
$22.00 – $39.99 ........ 6 $26.98 3.0 4 $28.37 3.0
$40.00 – $49.99 ........ 2 43.62 0.2 2 43.62 0.2
$50.00 – $59.99 ........ 1 52.23 1.2 1 52.23 1.2
$60.00 – $76.99 ........ 10 66.75 1.9 10 66.75 1.9
Total ................ 19 17
Performance-Based Stock Units. The Company has awarded PSUs to certain senior executives. These PSUs
will vest and convert to shares of common stock at the end of the performance period only if the Company
satisfies predetermined performance and market goals over the three-year performance period that began on
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