Union Pacific 2005 Annual Report Download - page 69

7. Stock Options and Other Stock Plans
We have 2,938,450 options outstanding under the 1993 Stock Option and Retention Stock Plan of Union Pacific
Corporation (1993 Plan). There are 7,140 restricted shares outstanding under the 1992 Restricted Stock Plan for
Non-Employee Directors of Union Pacific Corporation. We no longer grant options or awards of restricted stock
or retention shares and units under these plans.
The UP Shares Stock Option Plan of Union Pacific Corporation (UP Shares Plan)was approved by our
Board of Directors on April 30, 1998. The UP Shares Plan reserved 12,000,000 shares of our common stock for
issuance. The UP Shares Plan was a broad-based option program that granted options to purchase 200 shares of
our common stock at $55.00 per share to eligible active employees on April 30, 1998. All options granted were
non-qualified options that became exercisable on May 1, 2001, and remain exercisable until April 30, 2008. If an
optionee’s employment terminates for any reason, the option remains exercisable for a period of one year after
the date of termination, but no option is exercisable after April 30, 2008. No further options may be granted
under the UP Shares Plan. As of December 31, 2005, there were 2,096,681 options outstanding under the UP
Shares Plan.
We adopted the Executive Stock Purchase Incentive Plan (ESPIP), effective October 1, 1999, in order to
encourage and facilitate ownership of our common stock by our officers and other key executives. Under the
ESPIP, participants purchased a total of 1,008,000 shares of our common stock with the proceeds of 6.02%
interest-bearing, full recourse loans from the Corporation. Loans totaled $47 million and had a final maturity date
of January 31, 2006. Deferred cash payments were to be awarded to the participants to repay interest and the loan
principal if certain performance and retention criteria were met within a 40-month period ending January 31,
2003. Following satisfaction of the various performance criteria during the term of the ESPIP and continued
employment with the Corporation through January 31, 2003, participants received a deferred cash payment equal
to two-thirds of the outstanding principal balance of their loan plus the net accrued interest on January 31, 2003.
Such payments were applied against the participants’ outstanding loan balance pursuant to the terms of the
ESPIP. The remaining loan balances were repaid in three equal installments on January 31, 2004, January 31,
2005, and January 31, 2006. At December 31, 2005 and 2004, the total outstanding balance of the remaining loans
was $0.4 million and $1 million, respectively. All remaining loan balances were repaid as of January 31, 2006.
In April 2000, the shareholders approved the Union Pacific Corporation 2000 Directors Plan (Directors
Plan) whereby 550,000 shares of our common stock were reserved for issuance to our non-employee directors.
Under the Directors Plan, each non-employee director, upon his or her initial election to the Board of Directors,
receives a grant of 1,000 shares of restricted shares or restricted stock units. Additionally, each non-employee
director receives annually an option to purchase at fair value a number of shares of our common stock, not to
exceed 5,000 shares during any calendar year, determined by dividing 60,000 by 1/3 of the fair market value of one
share of our common stock on the date of such Board of Directors meeting, with the resulting quotient rounded
up or down to the nearest 50 shares. As of December 31, 2005, 5,000 restricted shares were outstanding under the
Directors Plan and 155,800 options were outstanding under the Directors Plan.
The Union Pacific Corporation 2001 Stock Incentive Plan (2001 Plan) was approved by the shareholders in
April 2001. The 2001 Plan reserved 12,000,000 shares of our common stock for issuance to eligible employees of
the Corporation and its subsidiaries in the form of non-qualified options, incentive stock options, retention
shares, stock units, and incentive bonus awards. Non-employee directors are not eligible for awards under the
2001 Plan. As of December 31, 2005, 5,007,628 options and 880,526 retention shares and stock units were
outstanding under the 2001 Plan.
The Union Pacific Corporation 2004 Stock Incentive Plan (2004 Plan) was approved by shareholders in April
2004. The 2004 Plan reserved 21,000,000 shares of our common stock for issuance, plus any shares subject to
awards made under the 2001 Plan and the 1993 Plan that were outstanding on April 16, 2004, and became
available for regrant pursuant to the terms of the 2004 Plan. Under the 2004 Plan, non-qualified options, stock
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