Travelers 2006 Annual Report Download - page 220

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
208
11. SHARE-BASED INCENTIVE COMPENSATION (Continued)
The following table presents the weighted averageexercise price and weighted average grant date fair
value information with respect to option awards granted in 2005 and2004:
Options
Weighted
Average
Exercise
Price
Weighted
Average
Grant
Date Fair
Value
2005
Original awards
Exercise price equal to market atgrant........ 4,961,029 $37.78$ 9.10
2004
Original awards
Exercise price equal to market at grant........ 1,881,158 $40.97$ 9.27
Exercise price exceeds market at grant ........ 350,188 $62.79$ 6.42
Assumed awards
Exercise price exceeds market at grant ........ 13,287,228 $45.13$ 7.58
Exercise price less than market at grant .......9,762,575 $31.88$ 1 2.40
Total granted2004....................... 25,281,149 $39.95 $9.55
In connection with the merger in April 2004, the Company assumed 23 million outstanding SPC stock
options, of which 4 million remained unvested and assumed approximately 240,000 of outstanding SPC
restricted stock awards related to SPC equity-based compensation plans. These stock options and
restricted stock awards retained the same terms and conditions that were applicable prior to the merger.
At April 1, 2004, the estimated fair values of the unvested stock option awards and the restricted stock
awards were $35 million and $9 million, respectively, which is being recognized as a chargeto income over
the remaining vesting period.
Restricted Stock, Restricted Stock Units,Deferred Stock and Performance Share Award Programs
Awards of restricted stock anddeferred stock are made to eligible officers and key employees
pursuant to the 2004 Incentive Plan. Such awards include restricted stock grants under the Capital
Accumulation Program (CAP) and Equity Awards program established pursuant to the 2004 Incentive
Plan. Awards issuedunder CAP are in the form of restricted stock and the number of shares included in
the restricted stock award is calculated at a 10% discount from the market price on the date of the award
and generally vest in full after a two-year period from the date of grant. CAP has been discontinued
following the issuance of CAP awards in February 2006. Other restricted stock awards issued under the
Equity Awards program generally vest in full after a three-year period from the dateof grant. Except
under limited circumstances, during this period the stock cannot be sold or transferred by the participant,
who is required to render service to the Company during the restricted period. Awards granted to non-U.S.
participants are in the form of deferred stock awards. These deferred stock awards are granted at market
price, generally vest after three years from the date of grant and are subject to the same conditions as the
restricted stock awards except that the shares are not issued until the vesting criteria are satisfied.