Washington Post 2006 Annual Report Download - page 75

change in accounting for Kaplan equity awards ($8.2 million in Stock Options. The Company's employee stock option plan
pre-tax Kaplan stock compensation expense). reserves 1,900,000 shares of the Company's Class B common
stock for options to be granted under the plan. The purchase price
Capital Stock. Each share of Class A common stock and Class B of the shares covered by an option cannot be less than the fair
common stock participates equally in dividends. The Class B stock value on the granting date. Options generally vest over 4 years and
has limited voting rights and as a class has the right to elect 30% of have a maximum term of 10 years. At December 31, 2006, there
the Board of Directors; the Class A stock has unlimited voting rights, were 396,050 shares reserved for issuance under the stock option
including the right to elect a majority of the Board of Directors. plan, of which 109,175 shares were subject to options outstand-
During 2006, the Company purchased a total of 77,300 shares of ing, and 286,875 shares were available for future grants.
its Class B common stock at a cost of approximately $56.6 million. Changes in options outstanding for the years ended December 31,
During 2005 and 2004, the Company did not purchase any shares 2006, January 1, 2006 and January 2, 2005, were as follows:
of its Class B common stock. At December 31, 2006, the Company
has authorization from the Board of Directors to purchase up to 2006 2005 2004
465,500 shares of Class B common stock. Number Average Number Average Number Average
of Option of Option of Option
Shares Price Shares Price Shares Price
Stock Awards. In 1982, the Company adopted a long-term
incentive compensation plan, which, among other provisions, autho- Beginning of yearÏÏÏÏÏ 113,325 $572.36 122,250 $561.05 152,475 $530.81
rizes the awarding of Class B common stock to key employees. Granted ÏÏÏÏÏÏÏÏÏÏ 9,000 729.67 4,500 762.50 4,000 953.50
Exercised ÏÏÏÏÏÏÏÏÏ (12,275) 481.05 (12,800) 533.24 (33,225) 467.68
Stock awards made under this incentive compensation plan are
Forfeited ÏÏÏÏÏÏÏÏÏÏ (875) 803.61 (625) 530.87 (1,000) 621.38
subject to the general restriction that stock awarded to a participant
End of year ÏÏÏÏÏÏÏÏÏ 109,175 $714.79 113,325 $572.36 122,250 $561.05
will be forfeited and revert to Company ownership if the partici-
pant's employment terminates before the end of a specified period Of the shares covered by options outstanding at the end of 2006,
of service to the Company. At December 31, 2006, there were 93,738 are now exercisable, 5,437 will become exercisable in
185,730 shares reserved for issuance under the incentive compen- 2007, 4,375 will become exercisable in 2008, 3,375 will
sation plan. Of this number, 29,105 shares were subject to awards become exercisable in 2009, and 2,250 will become exercisable
outstanding, and 156,625 shares were available for future in 2010. For 2006, 2005 and 2004, the Company recorded
awards. Activity related to stock awards under the long-term expense of $1.3 million, $1.1 million and $0.8 million, respectively,
incentive compensation plan for the years ended December 31, related to this plan. Information related to stock options outstanding
2006, January 1, 2006 and January 2, 2005, was as follows: and exercisable at December 31, 2006 is as follows:
2006 2005 2004
Options Outstanding Options Exercisable
Number Average Number Average Number Average
Weighted Weighted
of Award of Award of Award
Shares Average Weighted Shares Average Weighted
Shares Price Shares Price Shares Price
Outstanding Remaining Average Exercisable Remaining Average
Range of at Contractual Exercise at Contractual Exercise
Beginning of year Exercise Prices 12/31/2006 Life (yrs.) Price 12/31/2006 Life (yrs.) Price
(nonvested)ÏÏÏÏÏÏ 29,580 $819.83 28,001 $644.51 29,845 $643.89
AwardedÏÏÏÏÏÏÏÏÏ 1,300 769.43 16,550 940.96 200 973.88 $472Ó480 8,975 1.3 $472.89 8,975 1.3 $472.89
VestedÏÏÏÏÏÏÏÏÏÏÏ (159) 721.32 (13,830) 609.87 (561) 625.91 503Ó586 69,450 3.8 529.97 69,450 3.8 529.97
Forfeited ÏÏÏÏÏÏÏÏÏ (1,616) 866.07 (1,141) 819.22 (1,483) 683.58 693 500 7.0 692.51 375 7.0 692.51
End of year 729Ó763 22,500 8.2 735.97 10,125 6.3 732.72
(nonvested)ÏÏÏÏÏÏ 29,105 $815.55 29,580 $819.83 28,001 $644.51 816 3,750 7.0 816.05 2,813 7.0 816.05
954 4,000 8.0 953.50 2,000 8.0 953.50
In addition to stock awards granted under the long-term incentive 109,175 4.9 $714.79 93,738 4.1 $564.67
compensation plan, the Company also made stock awards of
At December 31, 2006, the intrinsic value for all options outstand-
2,550 shares in 2004. Also, on January 2, 2007, the Company
ing, exercisable, and nonvested was $17.7 million, $17.6 million
made stock awards of 12,930 shares.
and $0.2 million, respectively. The intrinsic value of a stock option is
For the share awards outstanding at December 31, 2006, the the amount by which the market value of the underlying stock
aforementioned restriction will lapse in 2007 for 13,300 shares, in exceeds the exercise price of the option. The market value of the
2008 for 325 shares, in 2009 for 14,955 shares, and in 2010 for Company's stock was $745.60 at December 31, 2006. At
1,225 shares. Stock-based compensation costs resulting from Com- December 31, 2006, there were 15,437 nonvested options relat-
pany stock awards reduced net income by $3.3 million, $3.5 mil- ed to this plan with an average exercise price of $770.79 and a
lion and $3.6 million, in 2006, 2005 and 2004, respectively. weighted average remaining contractual term of 9.3 years. At
January 1, 2006, there were 12,375 nonvested options with an
As of December 31, 2006, there was $8.5 million of total
average exercise price of $810.70.
unrecognized compensation cost related to this plan. That cost is
expected to be recognized on a straight-line basis over a weighted- As of December 31, 2006, total unrecognized stock-based com-
average period of 1.7 years. pensation expense related to this plan was $3.3 million, which is
expected to be recognized on a straight-line basis over a weighted
2006 FORM 10-K 59