Proctor and Gamble 1999 Annual Report Download - page 42

38 The Procter & Gamble Company and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Stock option activity was as follows:
Options in Thousands
1999 1998 1997
Outstanding, July 1 79,918 68,514 66,657
Granted 7,026 20,315 10,409
Exercised (9,397) (8,477) (8,357)
Canceled (737) (434) (195)
Outstanding, June 30 76,810 79,918 68,514
Exercisable 61,664 59,610 58,098
Available for grant 39,874 31,558 28,538
Average price
Outstanding, beginning of year $45.58 $31.00 $24.79
Granted 89.72 83.26 58.72
Exercised 22.36 18.57 16.02
Outstanding, end of year 52.11 45.58 31.00
Exercisable, end of year 43.79 32.74 26.03
Weighted average fair value of
options granted during the year 32.23 24.56 17.14
The following table summarizes information about stock
options outstanding at June 30, 1999:
Options Outstanding
Number Weighted-Avg
Range of Outstanding Weighted-Avg Remaining
Prices (Thousands) Exercise Price Contractual Life
$15 to 26 19,642 $22.99 2.3 years
28 to 46 21,899 35.24 5.7
57 to 83 17,822 71.10 8.0
84 to 94 17,447 86.66 10.6
The following table summarizes information about stock
options exercisable at June 30, 1999:
Options Exercisable
Number
Range of Exercisable Weighted-Avg
Prices (Thousands) Exercise Price
$15 to 26 19,642 $22.99
28 to 46 21,899 35.24
57 to 83 9,824 61.65
84 to 94 10,299 84.59
8EMPLOYEE STOCK OWNERSHIP PLAN
The Company maintains the Procter & Gamble Profit
Sharing Trust and Employee Stock Ownership Plan (ESOP)
to provide funding for two primary postretirement benefits: a
defined contribution profit sharing plan and certain U.S.
postretirement health care benefits.
The ESOP borrowed $1,000 in 1989, which has been
guaranteed by the Company. The proceeds were used to
purchase Series A ESOP Convertible Class A Preferred Stock
to fund a portion of the defined contribution plan. Principal
and interest requirements are $117 per year, paid by the trust
from dividends on the preferred shares and from cash contri-
butions and advances from the Company. The shares are
convertible at the option of the holder into one share of the
Company’s common stock. Annual credits to participants’
accounts are based on individual base salaries and years of
service, and do not exceed 15% of total participants’ annual
salaries and wages. The liquidation value is equal to the issue
price of $13.75 per share.
Years Ended June 30
1999 1998 1997
ESOP preferred shares allocated
at market value $279 $235 $247
Company contributions 18 35 11
Benefits earned 297 270 258
In 1991, the ESOP borrowed an additional $1,000, also
guaranteed by the Company. The proceeds were used to
purchase Series B ESOP Convertible Class A Preferred Stock
to fund a portion of retiree health care benefits. Debt service
requirements are $94 per year, funded by preferred stock divi-
dends and cash contributions from the Company. Each share
is convertible at the option of the holder into one share of the
Company’s common stock. The liquidation value is equal to
the issue price of $26.12 per share.
Shares in Thousands
1999 1998 1997
Outstanding, June 30
Series A 58,342 60,635 62,952
Series B 37,485 37,805 38,045
Shares of the ESOP are allocated at original cost based on
debt service requirements, net of advances made by the
Company to the trust. The fair value of the Series A shares
serves to reduce the Company’s cash contribution required to
fund the profit sharing plan contributions earned. The Series B
shares are considered plan assets of the other retiree benefits
plan. Dividends on all preferred shares, net of related tax bene-
fit, are charged to retained earnings. The preferred shares held
by the ESOP are considered outstanding from inception for
purposes of calculating diluted net earnings per common share.
9POSTRETIREMENT BENEFITS
The Company offers various postretirement benefits to its
employees.
Defined Contribution Retirement Plans
Within the U.S., the most significant retirement benefit is the
defined contribution profit sharing plan described in Note 8.
Other Retiree Benefits
The Company also provides certain health care and life insur-
ance benefits for substantially all U.S. employees who become
eligible for these benefits when they meet minimum age and