Travelers 2003 Annual Report Download - page 135

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133
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
11. INCENTIVE PLANS, Continued
On August 20, 2002, in connection with the Citigroup Distribution, Citigroup stock option awards held by
Travelers employees on that date under Citigroup’s various stock option plans were cancelled and replaced with
stock option awards (replacement awards) to purchase Travelers class A common stock under Travelers own
incentive plan. These replacement awards were granted on substantially the same terms, including vesting, as the
former Citigroup awards. The total number of Travelers class A common stock subject to the replacement
awards was 56.9 million shares of which 24.6 million shares were then exercisable. The number of shares of
Travelers class A common stock to which the replacement awards relate and the per share exercise price of the
replacement awards were determined so that:
• the intrinsic value of each Citigroup option, which was the difference between the closing price of
Citigroup’s common stock on August 20, 2002 and the exercise price of the Citigroup options, was
preserved in each replacement award for Travelers class A common stock; and
• the ratio of the exercise price of the replacement award to the closing price of Travelers class A common
stock on August 20, 2002, immediately after the Citigroup Distribution, was the same as the ratio of the
exercise price of the Citigroup option to the price of Citigroup common stock immediately before the
Citigroup Distribution.
Information with respect to stock option activity under Travelers stock option plans for the years ended
December 31, 2003 and 2002 is as follows:
Options
Weighted Average
Exercise Price
Outstanding, January 1, 2002 - $ -
Granted:
Replacement awards 56,894,116 17.29
Original 21,643,341 18.22
Reload 264,595 13.77
Exercised (1,186,383) 8.54
Forfeited (1,500,419) 19.84
Outstanding, December 31, 2002 76,115,250 $ 17.63
Granted:
Original 457,473 16.17
Reload 1,100,880 15.81
Exercised (3,971,931) 10.15
Forfeited (3,506,611) 20.85
Outstanding, December 31, 2003 70,195,061 $ 17.85