Starwood 2006 Annual Report Download - page 100

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respectively, resulting in tax benefits of approximately $128 million, $88 million and $67 million, respectively. As
of December 31, 2006, there was approximately $47 million of unrecognized compensation cost, net of estimated
forfeitures, related to nonvested options, which is expected to be recognized over a weighted-average period of
1.15 years on a straight-line basis for 2006 and future grants and using an accelerated recognition method for grants
prior to January 1, 2006.
The following table summarizes information about outstanding stock options at December 31, 2006:
Range of Exercise Prices
Number
Outstanding
(in millions)
Weighted Average
Remaining
Contractual Life
in Years
Weighted Average
Exercise Price
Number
Exercisable
(in millions)
Weighted Average
Exercise Price
Options Outstanding Options Exercisable
$12.28 — $20.36 3.6 3.78 $19.78 3.6 $19.79
$20.36 — $31.49 3.7 4.34 $29.12 3.6 $29.14
$31.49 — $31.71 3.9 5.13 $31.71 0.9 $31.71
$31.71 — $48.13 1.4 3.40 $40.27 1.0 $41.65
$48.13 — $48.39 3.8 6.11 $48.39 0.8 $48.39
$48.39 — $61.04 2.8 7.08 $49.04 0.1 $49.12
$12.28 — $61.04 19.2 5.07 $35.40 10.0 $28.93
In April 2006, as part of the Host Transaction, the Company depaired its Corporation Shares and
Class B Shares. As a result, the number of the Company’s options and their strike prices have been adjusted as
discussed in Note 2.
The aggregate intrinsic value of outstanding options as of December 31, 2006 was $530 million. The aggregate
intrinsic value of exercisable options as of December 31, 2006 was $338 million. The weighted-average contractual
life of exercisable options was 4.16 years as of December 31, 2006.
The Company recognizes compensation expense equal to the fair market value of the stock on the date of
issuance for restricted stock and restricted stock unit grants over the service period. The service period is typically
three years except in the case of restricted shares or units issued in lieu of a portion of an annual cash bonus where
the vesting period is typically in equal installments over a two year period. Compensation expense of approximately
$56 million, $31 million and $16 million, net of reimbursements from third parties, was recorded during 2006, 2005
and 2004, respectively, related to restricted stock awards.
At December 31, 2006 and 2005 there were approximately $103 million (net of estimated forfeitures) and
$53 million, respectively, in unamortized compensation cost related to restricted stock and restricted stock units.
The weighted average remaining term was 1.52 years for restricted stock grants outstanding at December 31, 2006.
The aggregate intrinsic value of restricted stock converted and distributed during 2006 was $7 million.
In accordance with SFAS No. 123(R), the deferred compensation line on the Company’s consolidated balance
sheet, a contra-equity line representing the amount of unrecognized share-based compensation costs, is no longer
presented. In 2006 the amount previously included in the deferred compensation line was reversed through
additional paid-in capital.
F-39
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)