Motorola 2006 Annual Report Download - page 112

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outstanding. In 2006, the Company began using an estimated forfeiture rate of 25% based on historical data. This
estimated forfeiture rate may be revised in subsequent periods if actual forfeitures differ from this estimate. Prior to
2006, the Company used the actual forfeiture method, which assumed that all options would vest and pro forma
expense was adjusted when options were forfeited prior to the vesting dates.
Stock options activity was as follows (in thousands, except exercise price and employee data):
2006 2005 2004
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 1 267,755 $17 335,757 $16 305,842 $17
Options granted 37,202 21 40,675 16 58,429 18
Adjustments to options outstanding
to reflect Freescale
Semiconductor spin-off ÌÌ Ì Ì 36,111 2
Options exercised (59,878) 13 (85,527) 12 (25,178) 13
Options terminated, cancelled or
expired (11,634) 19 (23,150) 25 (39,447)* 15
Options outstanding at
December 31 233,445 18 267,755 17 335,757 16
Options exercisable at
December 31 135,052 19 149,329 19 195,297 17
Approx. number of employees
granted options 28,900 25,300 33,900
* 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-off.
At December 31, 2006, the Company had $408 million of total unrecognized compensation expense, net of
estimated forfeitures, related to stock option plans and the employee stock purchase plan that will be recognized
over the weighted average period of approximately two years. Cash received from stock option exercises and the
employee stock purchase plan was $918 million, $1.2 billion and $477 million for the years ended December 31,
2006, 2005 and 2004, respectively. The total intrinsic value of options exercised during the years ended
December 31, 2006, 2005 and 2004 was $568 million, $571 million and $70 million, respectively. The aggregate
intrinsic value for options outstanding and exercisable as of December 31, 2006 was $1.2 billion and $768 million,
respectively.
On December 2, 2004, in connection with the spin-off of the Company's remaining equity interest in Freescale
Semiconductor, 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.
At December 31, 2006 and 2005, 110.9 million shares and 79.6 million shares, respectively, were available for
future share-based award grants under the 2006 Motorola Omnibus Plan, covering all equity awards to employees
and non-employee directors.