UPS 2005 Annual Report Download - page 88

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UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following table summarizes information about stock options outstanding and exercisable at
December 31, 2005:
Options Outstanding Options Exercisable
Exercise Price Range
Shares
(in thousands)
Average Life
(in years)
Average
Exercise
Price
Shares
(in thousands)
Average
Exercise
Price
$ 16.60 - $50.00 ............................ 2,052 3.85 $49.90 2,052 $49.90
$ 50.37 - $56.90 ............................ 3,953 5.22 56.85 3,953 56.85
$ 57.45 - $60.22 ............................ 4,831 6.26 60.19 4,831 60.19
$ 60.38 - $70.70 ............................ 5,253 7.81 66.43 28 61.94
$ 71.88 - $116.48 ........................... 2,645 9.28 72.43 29 94.85
18,734 6.64 $61.84 10,893 $57.13
Restricted Performance Units
Beginning in 2003, we issued restricted performance units under the Incentive Compensation Plan. Upon
vesting, restricted performance units result in the issuance of the equivalent number of UPS Class A common
shares after required tax withholdings. Persons earning the right to receive restricted performance units are
determined each year by the Compensation Committee. Except in the case of death, disability, or retirement,
restricted performance units vest five years after the date of grant. All restricted performance units granted are
subject to earlier cancellation or vesting under certain conditions. Dividends earned on restricted performance
units are reinvested in additional restricted performance units at each dividend payable date. Restricted
performance units also allow for bonus shares to be issued, comprising 10% of the original award, if certain
company-wide performance goals are attained in the year of vesting. During 2005, 2004, and 2003, the Company
issued 1.076, 1.083, and 1.164 million restricted performance units, respectively. As of December 31, 2005, we
had the following restricted performance units outstanding, including reinvested dividends:
Year of Award
Units Outstanding
(in thousands)
Remaining Vesting
Period (in years)
Average Fair Value
at Grant Date
2003 ............................... 1,129 2.33 $62.40
2004 ............................... 1,067 3.33 70.70
2005 ............................... 1,068 4.33 72.07
3,264 3.31 $68.28
Discounted Employee Stock Purchase Plan
We maintain an employee stock purchase plan for all eligible employees. Under the plan, shares of UPS
Class A common stock may be purchased at quarterly intervals at 90% of the lower of the NYSE closing price of
UPS Class B common stock on the first or the last day of each quarterly period. Employees purchased 2.0, 1.8,
and 1.9 million shares at average prices of $64.54, $62.75, and $54.08 per share during 2005, 2004, and 2003,
respectively.
Deferred Compensation Obligations
We maintain a deferred compensation plan whereby certain employees may elect to defer the gains on stock
option exercises by deferring the shares received upon exercise into a rabbi trust. The shares held in this trust are
classified as treasury stock, and the liability to participating employees is classified as “Deferred compensation
F-32