UPS 2011 Annual Report Download - page 118

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UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
As of December 31, 2011, we had the following Restricted Units 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, 2011 ....... 20,029 $62.46
Vested ......................... (8,329) 64.68
Granted ........................ 3,895 69.53
Reinvested Dividends ............. 631 N/A
Forfeited / Expired ............... (387) 62.20
Nonvested at December 31, 2011 .... 15,839 $62.98 1.62 $1,159
Restricted Units Expected to Vest . . . 15,226 $62.90 1.60 $1,114
The fair value of each Restricted Unit is the NYSE closing price of class B common stock on the date of
grant. The weighted-average grant date fair value of Restricted Units granted during 2011, 2010, and 2009 was
$69.53, $66.36 and $56.33, respectively. The total fair value of Restricted Units vested was $557, $523 and $318
million in 2011, 2010, and 2009, respectively. As of December 31, 2011, there was $577 million of total
unrecognized compensation cost related to nonvested Restricted Units. That cost is expected to be recognized
over a weighted average period of 2 years and 6 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.
Executive officers and certain senior managers annually receive non-qualified stock options of which the
value is determined as a percentage of salary. Options granted 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 vesting 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 be granted annually during the first quarter of each year.
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, 2011 ......... 15,302 $68.62
Exercised .......................... (2,208) 59.81
Granted ........................... 189 74.25
Forfeited / Expired .................. (84) 66.67
Outstanding at December 31, 2011 ...... 13,199 $70.18 3.42 $57
Options Vested and Expected to Vest .... 13,117 $70.18 3.40 $57
Exercisable at December 31, 2011 ...... 10,773 $70.19 2.84 $49
106