Union Pacific 2005 Annual Report Download - page 71

Download and view the complete annual report

Please find page 71 of the 2005 Union Pacific annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 100

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100

The following table summarizes information about our outstanding stock options as of December 31, 2005:
Options Outstanding Options Exercisable
Range of Exercise
Prices
Number
Outstanding
Weighted-
Average
Remaining
Contractual Life
Weighted-
Average
Exercise
Price
Number
Exercisable
Weighted-
Average
Exercise
Price
$37.94 – $55.98 4,352,139 3.45 yrs. $52.27 4,350,039 $52.27
$56.19 – $61.14 4,341,773 6.39 59.05 2,097,623 58.97
$61.44 – $80.55 3,742,297 7.43 68.14 3,640,109 68.22
$37.94 – $80.55 12,436,209 5.67 yrs. $59.41 10,087,771 $59.42
The fair value of each option grant was estimated on the date of grant using the Black-Scholes option-pricing
model, with the following weighted-average assumptions for options granted in 2005, 2004, and 2003.
2005 2004 2003
Risk-free interest rates ............................................... 3.8% 3.3% 2.9%
Dividend yield ...................................................... 1.9% 1.7% 1.5%
Expected lives (years) ................................................ 4.8 5.6 5.0
Volatility .......................................................... 20.6% 25.9% 28.4%
Restricted Stock and Other Stock Incentive Plans – Our plans provide for awarding retention shares of common
stock or stock units to eligible employees. These awards are subject to forfeiture if employment terminates during
the prescribed retention period, generally three or four years. Restricted stock awards are issued to non-employee
directors and are subject to forfeiture if certain service requirements are not met. During the year ended
December 31, 2005, 115,600 retention shares, stock units, and restricted shares were issued at a weighted-average
fair value of $59.35. During the year ended December 31, 2004, 276,575 retention shares, stock units, and
restricted shares were issued at a weighted-average fair value of $64.75. During the year ended December 31, 2003,
380,786 retention shares, stock units, and restricted shares were issued at a weighted-average fair value of $55.99.
The cost of retention and restricted awards is amortized to expense over the retention period.
During the years ended December 31, 2005, 2004, and 2003, we expensed $21 million, $21 million, and $46
million, respectively, related to the restricted stock and other incentive plans described above.
65