Motorola 2004 Annual Report Download - page 118

110 MOTOROLA INC. AND SUBSIDIARIESNOTES TO
CONSOLIDATED FINANCIAL STATEMENTS (Dollars in millions, except as noted)
On December 2, 2004, in connection with the distribution of Freescale Semiconductor to Motorola shareholders,
certain adjustments were made to outstanding stock options. For vested and unvested options held by Motorola
employees and vested options held by Freescale Semiconductor employees, the number of underlying shares and the
exercise price of the options were adjusted to preserve the intrinsic value and the ratio of the exercise price to the fair
market value of an underlying share that existed immediately prior to the distribution. In addition, the contractual life of
the vested options held by Freescale Semiconductor employees was truncated according to the terms of the original
grant. Unvested options held by Freescale Semiconductor employees expired according to the terms of the original
grants. No other adjustments were made to the terms of the original option grants.
Stock options activity was as follows (in thousands, except exercise price and employee data):
2004 2003 2002
Shares Wtd. Avg. Shares Wtd. Avg. Shares Wtd. Avg.
Subject to Exercise Subject to Exercise Subject to Exercise
Years Ended December 31 Options Price Options Price Options Price
Options outstanding at January 1 305,842 $ 17 286,536 $20 217,073 $24
Options granted 58,429 18 76,769 8 100,066 13
Adjustments to options outstanding to
reÖect Freescale Semiconductor spin-oÅ 36,111 2 ÌÌ ÌÌ
Options exercised (25,178) 13 (1,412) 8 (8,402) 9
Options terminated, cancelled or expired* (39,447) 15 (56,051) 21 (22,201) 25
Options outstanding at December 31 335,757 16 305,842 17 286,536 20
Options exercisable at December 31 195,297 17 135,612 23 141,551 23
Approx. number of employees granted
options 33,900 41,900 44,600
* The 39,447 options terminated, cancelled or expired includes approximately 22,000 options that were unvested
and forfeited by employees of Freescale Semiconductor as of the spin-oÅ.
At December 31, 2004 and 2003, 111.2 million shares and 142.8 million shares, respectively, were available for
future grants under the terms of these plans.
The following table summarizes information about stock options outstanding and exercisable at December 31,
2004 (in thousands, except exercise price and years):
Options Outstanding Options Exercisable
Wtd. avg. Wtd. avg. Wtd. avg.
No. of exercise contractual No. of exercise
Exercise price range options price life (in yrs.) options price
Under $7 1,738 $ 6 5 1,199 $ 6
$7-$13 173,638 10 5 94,035 11
$14-$20 115,033 17 6 54,715 17
$21-$27 4,202 25 4 4,200 25
$28-$34 3,658 32 3 3,658 32
$35-$41 36,997 39 8 36,997 39
$42-$48 439 44 6 439 44
$49-$55 54 51 4 54 51
335,759 195,297
Restricted Stock and Restricted Stock Unit Grants
Restricted stock and restricted stock unit grants (""restricted stock'') consist of shares or the rights to shares of
the Company's common stock which are awarded to employees. The grants are restricted such that they are subject
to substantial risk of forfeiture and to restrictions on their sale or other transfer by the employee. Upon the
occurrence of a change in control, the restrictions on all shares of restricted stock and restricted stock units
outstanding on the date on which the change in control occurs will lapse.