UPS 2006 Annual Report Download - page 94

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UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
As of December 31, 2006, we had the following RSUs outstanding, including reinvested dividends:
Shares
(in thousands)
Weighted
Average
Grant Date
Fair Value
Weighted Average
Remaining Contractual
Term
(in years)
Aggregate
Intrinsic Value
(in millions)
Nonvested at January 1, 2006 . . . 5,104 $72.82
Vested ..................... (1,115) 72.83
Granted .................... 3,706 74.87
Reinvested Dividends ......... 76 N/A
Forfeited / Expired ............ (210) 72.90
Nonvested at December 31,
2006 ..................... 7,561 73.82 2.58 $567
RSUs Expected to Vest ........ 7,205 73.82 2.54 $540
The fair value of each RSU is the New York Stock Exchange (“NYSE”) closing price on the date of grant.
The weighted-average grant date fair value of RSUs granted during 2006 and 2005 was $74.87 and $72.82,
respectively. The total fair value of RSUs vested was $82 million in 2006, and zero in 2005 and 2004. As of
December 31, 2006, there was $437 million of total unrecognized compensation cost related to nonvested RSUs.
That cost is expected to be recognized over a weighted average period of 4 years and 5 months.
Nonqualified Stock Options
We maintain fixed stock option plans, under which options are granted to purchase shares of UPS class A
common stock. Stock options granted in connection with the Plan must have an exercise price at least equal to
the NYSE closing price of UPS class B common stock on the date the option is granted.
Persons earning the right to receive stock options are determined each year by the Compensation
Committee. Except in the case of death, disability, or retirement, options granted under the Plan are generally
exercisable three to five years from the date of grant and before the expiration of the option 10 years after the
date of grant. All options granted are subject to earlier cancellation or exercise under certain conditions. Option
holders may exercise their options via the tender of cash or class A common stock, and new class A shares are
issued upon exercise. Options granted to eligible employees will generally be granted annually during the second
quarter of each year at the discretion of the Compensation Committee.
The following is an analysis of options to purchase shares of class A common stock issued and outstanding:
Shares
(in thousands)
Weighted
Average
Exercise
Price
Weighted Average
Remaining
Contractual Term
(in years)
Aggregate Intrinsic
Value (in millions)
Outstanding at January 1, 2006 . . . . . . . . . . . . . . . . 18,734 $61.84
Exercised ................................. (1,993) 56.55
Granted .................................. 2,433 80.88
Forfeited / Expired ......................... (292) 68.14
Outstanding at December 31, 2006 . . . . . . . . . . . . . 18,882 $64.75 6.23 $208
Exercisable at December 31, 2006 ............. 10,108 $58.63 4.79 $166
Options Expected to Vest .................... 8,487 $71.57 7.85 $ 42
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