Western Union 2006 Annual Report Download - page 94

WESTERN UNION 2006 Annual Report 92
The conversion factor for the number of shares and
exercise price for the information displayed above is the
ratio of the First Data pre-distribution closing stock price
with due bills ($42.00) to the Company’s when-issued
closing stock price on the date of the spin-off ($19.13).
The total intrinsic value of stock options exercised
during the year ended December 31, 2006, 2005 and 2004
was $42.1 million, $6.9 million, and $7.6 million,
respectively.
Restricted Stock Awards
and Restricted Stock Units
During the first quarter of 2006, First Data issued restricted
stock awards or restricted stock units to certain employees
which were contingent upon the achievement of certain
performance criterion which were met on the date of the
Distribution, subject to continued service requirements.
The awards vest at a rate of 33% per year on the
anniversary date of the grant. The fair value of the awards
granted in February 2006 was measured based on the fair
market value of the shares on the date of grant and is
being amortized over three years.
In February 2005, First Data awarded to two of its
executives, who are currently executives of Western Union,
an aggregate of 85,000 shares of First Data restricted
common stock. The unvested balance was converted to
139,963 shares of Western Union restricted stock based
on the conversion ratio at the date of and in connection
with the spin-off. The stock awards vest at a rate of
25% per year on the anniversary date of the grant if the
executives are still employed by the Company at the time.
The fair value of the 2005 grant of $3.4 million was recorded
based on the fair market value of the shares on the date
of grant and is being amortized over four years.
In February 2004, First Data awarded to two of
its executives, who are currently executives of Western
Union, an aggregate of 100,000 shares of restricted
common stock, which was subsequently converted to
219,550 shares of Western Union restricted stock based
on the conversion ratio at the date of and in connection
with the spin-off. The stock awards vest if the executives
are still employed on the earlier of (i) February 25, 2009
or (ii) at any time after February 25, 2007 if on each trading
day during the previous 30-day period the highest intra-day
trading price of Western Union’s common stock on the
New York Stock Exchange is equal to or greater than
$31.8833 per share. The fair value of the 2004 grant of
$4.1 million was recorded based on the fair market value
of the shares on the date of grant and is being amortized
over five years.
Stock Option Activity
A summary of Western Union stock option activity relating to Western Union and First Data employees for the
year ended December 31, 2006 is as follows (options and aggregate intrinsic value in millions). All awards have been
adjusted to reflect the conversion ratio as of the date of the spin-off, as all stock options prior to the spin-off were options
in First Data stock.
Year Ended December 31, 2006
Weighted-Average Aggregate
Weighted-Average Remaining Intrinsic
Options Exercise Price Contractual Term Value
Outstanding at January 1, 17.3 $16.87
Granted 10.8 19.52
Western Union options issued to
First Data employees on spin-off date 51.2 17.46
Exercised (9.0) 15.39
Cancelled / forfeited (0.8) 20.06
Transfer from First Data, net
(a) 4.3 17.39
Outstanding at December 31, 73.8 $17.84 7 $367.2
Western Union options exercisable at December 31, 54.9 $17.19 6 $316.4
(a) Transfer from First Data, net represents stock options held by First Data employees who became employees of Western Union prior to the spin-off.