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PITNEY BOWES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular dollars in thousands, except per share data)
66
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 attainment of financial
performance goals and subsequent tenure, if the performance objectives are achieved, the restrictions would be released, in total or in
part, only if the executive is still employed by us at the end of the service period. 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 service period. We did not issue any shares of restricted stock during 2009 or 2007. We issued 10,000
shares of restricted stock in 2008. We recorded compensation expense, net of taxes, of $0.1 million, $0.0 million and $0.7 million in
2009, 2008, and 2007, respectively.
The following table summarizes information about restricted stock unit transactions during 2009:
Units / Shares
Weighted average
grant date fair value
Restricted stock units outstanding at December 31, 2008 791,281 $40.50
Granted 867,129 $24.39
Vested (231,939) $41.34
Forfeited (84,742) $34.28
Restricted stock units outstanding at December 31, 2009 1,341,729 $30.55
We issued 512,415 shares and 334,442 shares of restricted stock units in 2008 and 2007, respectively. The weighted average grant
price was $36.91 and $47.91 for 2008 and 2007, respectively. The intrinsic value of the outstanding restricted stock units at
December 31, 2009 was $30.5 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 the share-based payments accounting
guidance. In 2009, the offering price was increased to 95% from 85% in 2008 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. No future offerings were made under the U.K. S.A.Y.E. Plan after 2008. Prior to the time the
offering ceased, eligible employees of our participating U.K. subsidiaries were able to purchase shares of our stock at a discounted
offering price which 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 5,686,017 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 540,660 shares in 2009, 437,350 shares in 2008 and 446,755 shares in 2007. The per share fair value of
rights granted was $0 in 2009, $5 in 2008 and $8 in 2007 for the U.S. ESPP and $0 in 2009, $4 in 2008 and $7 in 2007 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 2009, 26,400 in 2008 and 24,665 in 2007. Compensation expense, net of taxes, was $0.4 million for
2009, $0.6 million for 2008 and $0.8 for 2007. 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