Rogers 2006 Annual Report Download - page 108

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104 ROG ERS CO MMU N ICAT ION S IN C . 20 0 6 ANN UA L RE PORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 2006, a summary of the stock option plans is as follows:
2006 2005
Weighted Weighted
average average
Number of exercise Number of exercise
options price options price
Outstanding, beginning of year 26,478,848 $ 9.62 36,151,698 $ 9.19
Granted 2,043,900 22.71 1,205,068 18.64
Exercised (7,826,982) 8.80 (10,796,072) 9.28
Forfeited (1,000,906) 12.22 (940,394) 10.68
Exchanged from Call-Net options – – 858,548 12.19
Outstanding, end of year 19,694,860 11.17 26,478,848 9.62
Exercisable, end of year 14,160,866 $ 9.65 19,140,406 $ 9.38
At December 31, 2006, the range of exercise prices, the weighted average exercise price and the weighted average remaining contractual life
are as follows:
Options outstanding Options exercisable
Weighted
average Weighted Weighted
remaining average average
Range of Number contractual exercise Number exercise
exercise prices outstanding life (years) price exercisable price
$ 1.36 – $ 4.46 2,844,986 1.0 $ 3.16 2,844,986 $ 3.16
$ 4.47 – $ 6.59 2,663,852 3.7 5.77 2,167,852 5.99
$ 6.60 – $10.30 2,400,332 6.4 8.45 1,445,886 8.58
$10.31 – $13.00 6,893,436 5.5 11.42 5,503,270 11.60
$13.01 – $19.09 2,650,796 3.7 17.25 2,123,453 17.31
$19.10 – $29.00 2,228,458 6.1 22.63 75,419 22.59
$29.01 – $36.00 13,000 6.9 33.95 – –
19,694,860 4.5 11.17 14,160,866 9.65
resulted in additional compensation cost of $7 million, of which
$2 million was immediately recorded as stock-based compensation
expense related to vested options. The remaining $5 million related
to unvested options will be charged to income over the remaining
vesting period, of which $2 million was recorded in 2006.
(c) Performance options:
On March 1, 2006, the Company granted 1,398,800 performance-
based options to certain key executives. These options are governed
by the terms of the 2000 plan. These options vest on a straight-line
basis over four years provided that certain targeted stock prices are
met on or after the anniversary date. A binomial valuation model
was used to determine the $12 million fair value of these options
at the date of grant. Of this $12 million, $2 million was recorded as
stock-based compensation expense in the year ended December 31,
2006 with the remainder to be recognized over the remaining service
period.
During the year ended December 31, 2006, the Company recorded
stock-based compensation expense of $28 million (2005 – $35 million)
related to stock option grants to employees. The expense for 2006
includes the impact of the amendment to the option plans.
The weighted average estimated fair value at the date of grant for
options granted during the year ended December 31, 2006 is $8.89
(2005 – $8.05).
(b) Amendment to stock option plans:
Effective March 1, 2006, the Company amended certain provisions of
its stock option plans which resulted in a new measurement date for
purposes of determining compensation cost. The amendment pro-
vides that on the death or retirement of an option holder, or the
resignation of a director, options would continue to be exercisable
until the original expiry date in accordance with their original terms
and the vesting would not be accelerated but instead would con-
tinue in accordance with the original vesting period. The amendment