Pitney Bowes 2008 Annual Report Download - page 87

Download and view the complete annual report

Please find page 87 of the 2008 Pitney Bowes annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 120

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120

PITNEY BOWES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular dollars in thousands, except per share data)
68
Restricted Stock and Restricted Stock Units
Our stock plan permits the issuance of restricted stock and restricted stock units. Restricted stock units are stock awards that are
granted to employees and entitle the holder to shares of common stock as the award vests, typically over a four year service period.
The fair value of the awards is determined on the grant date based on our stock price at that date.
Restricted stock awards are subject to one or more restrictions, which may include continued employment over a specified period or
the attainment of specified financial performance goals. Where a restricted stock award is subject to both tenure and attainment of
financial performance goals, the restrictions would be released, in total or in part, only if the executive is still employed by us at the
end of the performance period and if the performance objectives are achieved. Where the sole restriction of a restricted stock award is
continued employment over a specified period, such period may not be less than three years. The compensation expense for each
award is recognized over the performance period. We issued 10,000 shares of restricted stock in August 2008. We did not issue any
shares of restricted stock during 2007 and 2006. During 2008, compensation expense was offset by forfeiture reversals. We recorded
compensation expenses of $0.7 million and $1.3 million in 2007 and 2006, respectively.
The following table summarizes information about restricted stock unit transactions during 2008:
Units / Shares
Weighted average grant
date fair value
Restricted stock units outstanding at December 31, 2007 460,479 $46.09
Granted 512,415 $36.91
Vested (130,500) $45.62
Forfeited (51,113) $41.78
Restricted stock units outstanding at December 31, 2008 791,281 $40.50
We issued 334,442 shares and 256,519 shares of restricted stock units in 2007 and 2006, respectively. The weighted average grant
price was $47.91 and $42.63 for 2007 and 2006, respectively. The intrinsic value of the outstanding restricted stock units at
December 31, 2008 was $20.2 million, with a weighted average remaining term of 2.6 years.
Employee Stock Purchase Plans
The U.S. Employee Stock Purchase Plan enables substantially all U.S. and Canadian employees to purchase shares of our common
stock at a discounted offering price and is considered a compensatory plan in accordance with SFAS No. 123(R). In 2008, the
offering price was 85% of the average price of our common stock on the New York Stock Exchange on the offering date. At no time
will the exercise price be less than the lowest price permitted under Section 423 of the Internal Revenue Code. The U.K. S.A.Y.E.
Plan also enables eligible employees of our participating U.K. subsidiaries to purchase shares of our stock at a discounted offering
price which, in 2008, was 90% of the average closing price of our common stock on the New York Stock Exchange for the three
business days preceding the offering date. We may grant rights to purchase up to 6,226,677 common shares to our regular employees
under the U.S. and U.K. Plans. Compensation expense relating to the U.S. Plan is recognized over a twelve month participation
period. Compensation expense for the U.K. Plan is recognized over participation periods of 3 or 5 years.
We granted rights to purchase 437,350 shares in 2008, 446,755 shares in 2007 and 435,592 shares in 2006. The per share fair value of
rights granted was $5 in 2008, $8 in 2007 and $7 in 2006 for the U.S. ESPP and $4 in 2008, $7 in 2007 and $8 in 2006 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 26,400 in 2008 and 24,665 in 2007. Compensation expense, net of taxes, was $0.6 million for 2008, $0.8 million
for 2007 and $0.4 million for 2006. 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.