Prudential 2002 Annual Report Download - page 131
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Notes to Consolidated Financial Statements
16. STOCK-BASED COMPENSATION (continued)
The compensation expense recognized for stock-based non-employee compensation awards was $4 million
and $270 thousand for the year ended December 31, 2002 and the period December 18, 2001 through December
31, 2001, respectively.
The fair value of each option was estimated on the balance sheet date for nonvested options and on the
vesting date for vested options using a Black-Scholes option-pricing model with the following weighted average
assumptions:
2002 2001
Dividend yield ....................................................................... 1.30% 1%
Expected volatility .................................................................... 35.60% 37%
Risk-free interest rate .................................................................. 2.15% 4.07%
Expected life of stock option ............................................................ 3.21years 3.95 years
The dividend yield reflects the assumption that the current dividend payout will continue with no anticipated
increases.
A summary of the status of the Company’s non-employee stock option grants is as follows:
Shares
Weighted
Average
Exercise Price
Outstanding at December 31, 2000 .................................................... — $ —
Granted.......................................................................... 773,760 27.50
Exercised ........................................................................ — —
Forfeited ......................................................................... (1,920) 27.50
Expired .......................................................................... — —
Transfer from employee status ........................................................ 41,760 27.50
Outstanding at December 31, 2001 .................................................... 813,600 27.50
Granted.......................................................................... 83,980 33.96
Exercised ........................................................................ (2,480) 27.50
Forfeited ......................................................................... (99,935) 27.54
Expired .......................................................................... — —
Transfer from employee status ........................................................ 68,662 27.70
Outstanding at December 31, 2002 .................................................... 863,827 $28.14
Options exercisable were 268,080 shares with a weighted average exercise price of $27.50 and 1,200 shares
with a weighted average exercise price of $27.50 at December 31, 2002 and 2001, respectively. The weighted
average fair value was $9.26 and $12.77 at December 31, 2002 and 2001, respectively.
The following table summarizes information about the non-employee stock options outstanding at December
31, 2002:
Options Outstanding Options Exercisable
Number
Outstanding
Weighted
Average
Remaining
Contractual Life
Weighted
Average
Exercise
Price
Number
Exercisable
Weighted
Average
Exercise
Price
Range of exercise prices:
$27.50 — $29.81 ........................... 778,320 8.96 $27.50 268,080 $27.50
$33.95 — $34.24 ........................... 85,507 9.47 $33.96 — $ —
Total .................................... 863,827 9.00 $28.14 268,080 $27.50
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