Washington Post 2006 Annual Report Download - page 76

average period of approximately 2.1 years. The total intrinsic value Company's 2006 results of operations. In December 2005, the
of options exercised during 2006, 2005 and 2004 was $3.7 mil- compensation committee awarded to a senior manager Kaplan
lion, $3.8 million and $14.8 million, respectively. shares equal in value to $4.8 million, with the number of shares
determined by the January 2006 valuation. In 2006, based on a
All options were granted at an exercise price equal to or greater $1,833 per share value, 2,619 Kaplan shares were issued. The
than the fair market value of the Company's common stock at the expense of this award was included in the Company's 2005 results
date of grant. The weighted average fair value for options granted of operations.
during 2006, 2005 and 2004 was $211.76, $218.62 and
$274.93, respectively. The fair value of options at date of grant Excluding Kaplan stock compensation expense of $8.2 million
was estimated using the Black-Scholes method utilizing the following recorded as a result of the change in accounting under SFAS 123R,
assumptions: Kaplan recorded stock compensation expense of $27.7 million for
2006, compared to $3.0 million for 2005 and $32.5 million for
2006 2005 2004 2004. In 2006, 2005 and 2004 total payouts were $31.1 million,
$35.2 million and $10.3 million, respectively. At December 31,
Expected life (years)ÏÏÏÏÏÏÏÏÏ 777
2006, the Company's accrual balance related to Kaplan
Interest rateÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 4.45% 4.49% 3.85%
Volatility ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 20.35% 19.08% 20.24% stock-based compensation totaled $68.0 million.
Dividend yieldÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1.07% 0.97% 0.73% As of December 31, 2006, total unrecognized stock-based com-
The Company also maintains a stock option plan at its Kaplan pensation expense related to stock options was $23.7 million,
subsidiary that provides for the issuance of Kaplan stock options to which is expected to be recognized over a weighted average
certain members of Kaplan's management. The Kaplan stock option period of approximately 3.43 years. The total intrinsic value of
plan was adopted in 1997 and initially reserved 15%, or 150,000 options exercised during 2006 was $29.4 million; a tax benefit
shares, of Kaplan's common stock for awards to be granted under from these stock option exercises of $11.0 million was realized
the plan. Under the provisions of this plan, options are issued with during 2006.
an exercise price equal to the estimated fair value of Kaplan's Information related to stock options outstanding and exercisable at
common stock and options vest ratably over the number of years December 31, 2006 is as follows:
specified (generally 4 to 5 years) at the time of the grant. Upon
exercise, an option holder receives cash equal to the difference Options Outstanding Options Exercisable
between the exercise price and the then fair value. The fair value of Weighted Weighted
Average Average
Kaplan's common stock is determined by the Company's compensa- Shares Remaining Shares Remaining
tion committee of the Board of Directors. In January 2007, the Outstanding at Contractual Exercisable at Contractual
Exercise Price 12/31/2006 Life (yrs.) 12/31/2006 Life (yrs.)
committee set the fair value price at $2,115 per share. Option
holders have a 30-day window in which they may exercise at this $ 190 1,750 1.0 1,750 1.0
375 338 3.5 338 3.5
price, after which time the compensation committee has the right to
526 14,910 4.7 14,910 4.7
determine a new price in the event of an exercise. Also in the first 652 2,000 5.0 1,600 5.0
two months of 2007, 5,202 Kaplan stock options were exercised, 861 487 5.0 292 5.0
and 3,262 Kaplan stock options were awarded at an option price 1,625 13,500 5.0 8,100 5.0
1,833 29,785 5.5 Ó 5.5
of $2,115 per share.
2,080 10,582 5.0 2,646 5.0
Changes in Kaplan stock options outstanding for the years ended 73,352 5.0 29,636 4.6
December 31, 2006, January 1, 2006 and January 2, 2005,
At December 31, 2006, the intrinsic value for all options outstand-
were as follows:
ing, exercisable and nonvested was $46.6 million, $34.4 million
2006 2005 2004
and $12.2 million, respectively. The intrinsic value of a stock option
Average Average Average
is the amount by which the estimated fair value of the underlying
Number Option Number of Option Number of Option
of Shares Price Shares Price Shares Price
stock exceeds the exercise price of the option. The estimated fair
value of Kaplan's stock was $2,115 at December 31, 2006. At
Beginning of year ÏÏÏÏ 62,229 $ 944.63 68,000 $ 596.17 68,000 $596.17
December 31, 2006 there were 43,716 nonvested options related
Granted ÏÏÏÏÏÏÏÏÏ 29,785 1,833.00 10,582 2,080.00 ÌÌ
ExercisedÏÏÏÏÏÏÏÏÏ (18,662) 257.73 (16,153) 225.14 ÌÌ
to the plan with an average exercise price of $1,837 and a
Forfeited ÏÏÏÏÏÏÏÏÏ ÌÌ(200) 652.00 ÌÌ
weighted average remaining contractual term of 5.3 years. At
End of yearÏÏÏÏÏÏÏÏÏ 73,352 $1,480.11 62,229 $ 944.63 68,000 $596.17
January 1, 2006 there were 23,298 nonvested options with an
average exercise price of $1,623.
In December 2006, the compensation committee awarded to a
senior manager Kaplan shares equal in value to $4.6 million, with The fair value of Kaplan stock options at December 31, 2006 and
the number of shares determined by the January 2007 valuation. In at January 1, 2006, the adoption date of SFAS 123R, was
2007, based on the $2,115 per share value, 2,175 Kaplan
shares will be issued. The expense of this award was included in the
60 THE WASHINGTON POST COMPANY