Quest Diagnostics 2003 Annual Report Download - page 97

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(dollars in thousands unless otherwise indicated)
The following relates to options outstanding at December 31, 2003:
Options Outstanding Options Exercisable
Weighted
Average
Remaining Weighted Weighted
Range of Shares Contractual Life Average Shares Average
Exercise Price (in thousands) (in years) Exercise Price (in thousands) Exercise Price
$ 5.26–$11.28 ...... 564 3.8 $ 7.91 564 $ 7.91
$12.92–$19.16 ...... 2,431 5.8 14.02 2,431 14.02
$28.53–$35.64 ...... 360 6.4 30.44 360 30.44
$44.00–$60.00 ...... 4,142 8.3 51.44 1,349 53.13
$60.06–$75.94 ...... 2,376 8.5 68.43 836 69.16
$80.95–$94.99 ...... 367 8.4 93.06 166 91.15
The following summarizes the activity relative to incentive stock awards granted in 2003, 2002 and 2001
(shares in thousands):
2003 2002 2001
Incentive shares, beginning of year ...................................... 735 1,320 1,788
Incentive shares granted ................................................. 102 - -
Incentive shares vested .................................................. (533) (570) (439)
Incentive shares forfeited and canceled ................................... (16) (15) (29)
Incentive shares, end of year ............................................ 288 735 1,320
Weighted average fair value of incentive shares at grant date .............. $49.88 $ - $ -
The balance of the incentive stock awards at December 31, 2003 are subject to forfeiture if employment
terminates prior to the end of the prescribed vesting period.
Employee Stock Purchase Plan
Under the Company’s Employee Stock Purchase Plan (“ESPP’’), substantially all employees can elect to
have up to 10% of their annual wages withheld to purchase Quest Diagnostics common stock. The purchase
price of the stock is 85% of the lower of its beginning-of-quarter or end-of-quarter market price. Under the
ESPP, the maximum number of shares of Quest Diagnostics common stock which may be purchased by eligible
employees is 4 million. Approximately 272, 236 and 203 thousand shares of common stock were purchased by
eligible employees in 2003, 2002 and 2001, respectively.
Employee Stock Ownership Plan
Prior to 1999, the Company maintained its Employee Stock Ownership Plan (“ESOP’’) to account for
certain shares of Quest Diagnostics common stock which had been issued for the account of all active regular
employees of the Company as of December 31, 1996. Effective with the closing of the SBCL acquisition, the
Company modified certain provisions of the ESOP to provide an additional benefit to employees through
ownership of the Company’s common stock. During the year ended December 31, 2002, the ESOP was merged
into the Company’s defined contribution plan. Prior to the merger of the ESOP into the Company’s defined
contribution plan, substantially all of the Company’s employees were eligible to participate in the ESOP. The
Company’s contributions to the ESOP trust were based on 2% of eligible employee compensation for those
employees who were actively employed or on a leave of absence on the last day of the Plan year. Company
contributions to the trust were made in the form of shares of Quest Diagnostics common stock. The Company’s
contributions to this plan aggregated $10.4 million and $19.7 million for 2002 and 2001, respectively.
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