UPS 2008 Annual Report Download - page 93

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UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
upon the achievement of certain performance measures, including growth in consolidated revenue and operating
return on invested capital, each year during the performance award cycle, and other measures, including growth
in consolidated earnings, over the entire three year performance award cycle.
As of December 31, 2008, we had the following nonvested 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, 2008 ........ 9,982 $74.34
Vested .......................... (2,839) 74.06
Granted ......................... 6,238 46.56
Reinvested Dividends .............. 314 N/A
Forfeited / Expired ................ (255) 73.11
Nonvested at December 31, 2008 ..... 13,440 61.77 2.23 $741
RSUs Expected to Vest ............. 12,647 62.13 2.16 $698
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 2008, 2007, and 2006 was $46.56, $74.94,
and $74.87, respectively. The total fair value of RSUs vested was $141, $145, and $82 million in 2008, 2007, and
2006, respectively. As of December 31, 2008, there was $633 million of total unrecognized compensation cost
related to nonvested RSUs. That cost is expected to be recognized over a weighted average period of 3 years and
7 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 Incentive Compensation 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 Incentive
Compensation Plan prior to 2008 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. Beginning in 2008, option awards will be made to a
more limited group of employees, and options granted will generally vest over a five year period with
approximately 20% of the award vesting at each anniversary date of the 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.
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