Pitney Bowes 2007 Annual Report Download - page 84

PITNEY BOWES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular dollars in thousands, except per share data)
66
We granted rights to purchase 446,755 shares in 2007, 435,592 shares in 2006 and 434,428 shares in 2005. The per share fair
value of rights granted was $8 in 2007, $7 in 2006 and $7 in 2005 for the U.S. ESPP and $7 in 2007, $8 in 2006 and $8 in
2005 for the U.K. ESPP.
Directors’ Stock Plan
Under this plan, each non-employee director is granted 2,200 shares of restricted common stock annually. Shares granted at
no cost to the directors were 24,665 in 2007 and 14,000 in 2006. Compensation expense, net of taxes, was $0.8 million for
2007 and $0.4 million a year for 2006 and 2005. The shares carry full voting and dividend rights but, except as provided
herein, may not be transferred or alienated until the later of (1) termination of service as a director, or, if earlier, the date of a
change of control, or (2) the expiration of the six-month period following the grant of such shares. If a director terminates
service as a director prior to the expiration of the six-month period following a grant of restricted stock, that award will be
forfeited. The Directors’ Stock Plan permits certain limited dispositions of restricted common stock to family members,
family trusts or partnerships, as well as donations to charity after the expiration of the six-month holding period, provided the
director retains a minimum of 7,500 shares of restricted common stock.
Non-employee directors may defer up to 100% of their eligible compensation, subject to the terms and conditions of the
Pitney Bowes Deferred Incentive Savings Plan for directors. Participants may allocate deferred compensation among
specified investment choices. Previously, the investment choices offered included stock options under the Directors’ Stock
Plan. Stock options acquired under this plan were generally exercisable three years following their grant and expired after a
period not to exceed ten years. There were 22,091, 41,716 and 48,019 options outstanding under this plan at December 31,
2007, 2006 and 2005, respectively. Beginning with the 2004 plan year, options were no longer offered as an investment
choice.
13. Retirement Plans and Nonpension Postretirement Benefits
We have several defined benefit and defined contribution retirement plans covering substantially all employees worldwide.
Benefits are primarily based on employees’ compensation and years of service. Our contributions are determined based on
the funding requirements of U.S. federal and other governmental laws and regulations. We use a measurement date of
December 31 for all of our retirement plans.
U.S. employees hired after January 1, 2005, Canadian employees hired after April 1, 2005, and U.K. employees hired after
July 1, 2005, are not eligible for our defined benefit retirement plans.
We contributed $30.5 million, $28.1 million and $22.6 million to our U.S. defined contribution plans in 2007, 2006 and
2005, respectively.
Defined Benefit Pension Plans
The change in benefit obligations, plan assets and the funded status for defined benefit pension plans are as follows:
United States Foreign
2007
2006 2007 2006
Change in benefit obligation:
Benefit obligation at beginning of year ............. $ 1,621,463 $ 1,638,252
$ 522, 451
$ 471,420
Service cost ....................................................... 28,204 26,495
12,797 11,207
Interest cost ....................................................... 93,977 91,652
27,627 22,666
Plan participants’ contributions......................... - -
2,924 2,781
Actuarial gain .................................................... (41,067) (21,909)
(25,544) (2,655)
Foreign currency changes.................................. - -
32,299 33,360
Curtailment ....................................................... - -
906 883
Special termination benefits ............................. 1,187 -
- -
Benefits paid...................................................... (111,035) (113,027)
(18,443) (17,211)
Benefit obligation at end of year ....................... $ 1,592,729 $ 1,621,463
$ 555,017
$ 522,451