Wells Fargo 2007 Annual Report Download - page 115

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As of December 31, 2007, there was $126 million of
unrecognized compensation cost related to stock options.
That cost is expected to be recognized over a weighted-
average period of 2.1 years.
The total intrinsic value of options exercised during 2007
and 2006 was $588 million and $617 million, respectively.
Cash received from the exercise of options for 2007 and
2006 was $1,026 million and $1,092 million, respectively.
The actual tax benefit recognized in stockholders’ equity
for the tax deductions from the exercise of options totaled
$210 million and $229 million, respectively, for 2007
and 2006.
We do not have a specific policy on repurchasing shares
to satisfy share option exercises. Rather, we have a general
policy on repurchasing shares to meet common stock
issuance requirements for our benefit plans (including share
option exercises), conversion of its convertible securities,
acquisitions, and other corporate purposes. Various factors
determine the amount and timing of our share repurchases,
including our capital requirements, the number of shares we
expect to issue for acquisitions and employee benefit plans,
market conditions (including the trading price of our stock),
Number Weighted- Weighted- Aggregate
average average intrinsic
exercise remaining value
price contractual (in millions)
term (in yrs.)
Incentive Compensation Plans
Options outstanding as of December 31, 2006 223,116,682 $26.85
Granted 44,279,645 34.53
Canceled or forfeited (2,183,078) 32.81
Exercised (33,390,005) 23.27
Acquisitions 6,806,680 31.92
Options outstanding as of December 31, 2007 238,629,924 28.87 5.8 $654
As of December 31, 2007:
Options exercisable and expected to be exercisable (1) 236,589,775 28.83 5.8 654
Options exercisable 174,612,827 27.15 4.8 654
PartnerShares Plan
Options outstanding as of December 31, 2006 38,010,790 $23.18
Canceled or forfeited (727,972) 23.74
Exercised (12,917,257) 22.53
Options outstanding as of December 31, 2007 24,365,561 23.50 3.2 $163
As of December 31, 2007:
Options exercisable and expected to be exercisable (1) 24,365,561 23.50 3.2 163
Options exercisable 24,365,561 23.50 3.2 163
Director Plans
Options outstanding as of December 31, 2006 794,611 $26.16
Granted 103,516 35.78
Exercised (70,842) 22.04
Options outstanding as of December 31, 2007 827,285 27.72 5.4 $ 3
As of December 31, 2007:
Options exercisable and expected to be exercisable (1) 827,285 27.72 5.4 3
Options exercisable 827,285 27.72 5.4 3
(1) Adjusted for estimated forfeitures.
and legal considerations. These factors can change at any
time, and there can be no assurance as to the number of
shares we will repurchase or when we will repurchase them.
Effective with the adoption of FAS 123(R), the fair value
of each option award granted on or after January 1, 2006,
is estimated using a Black-Scholes valuation model. The
expected term of options granted is generally based on
the historical exercise behavior of full-term options. Our
expected volatilities are based on a combination of the
historical volatility of our common stock and implied
volatilities for traded options on our common stock. The
risk-free rate is based on the U.S. Treasury zero-coupon
yield curve in effect at the time of grant. Both expected
volatility and the risk-free rates are based on a period
commensurate with our expected term. The expected dividend
is based on the current dividend, our historical pattern of
dividend increases and the market price of our stock.
Prior to the adoption of FAS 123(R), we also used a
Black-Scholes valuation model to estimate the fair value of
options granted for the pro forma disclosures of net income
and earnings per common share that were required by
FAS 123.
The table below summarizes stock option activity and
related information for 2007. Options assumed in mergers
are included in the activity and related information for
Incentive Compensation Plans if originally issued under an
employee plan, and in the activity and related information
for Director Plans if originally issued under a director plan.