Xerox 2004 Annual Report Download - page 81

Download and view the complete annual report

Please find page 81 of the 2004 Xerox 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

79
Note 16 – Common Stock
We have 1.75 billion authorized shares of common
stock, $1 par value. At December 31, 2004, 131 million
shares were reserved for issuance under our incentive
compensation plans. In addition, at December 31, 2004,
90 million common shares were reserved for the con-
version of the Series C Mandatory Convertible Preferred
Stock, 48 million common shares were reserved for
debt to equity exchanges, and 2 million common shares
were reserved for the conversion of convertible debt.
Stock Option and Long-term Incentive Plans:
We have a long-term incentive plan whereby eligible
employees may be granted non-qualified stock options,
shares of common stock (restricted or unrestricted)
and stock appreciation rights (“SARs”). Stock options
and stock awards are settled with newly issued shares
of our common stock, while SARs are settled with cash.
We granted 2.5 million, 1.6 million and 1.6 million
shares of restricted stock to key employees for the years
ended December 31, 2004, 2003 and 2002, respectively.
No monetary consideration is paid by employees who
receive restricted shares. Compensation expense for
restricted grants is based upon the grant date market
price and is recorded over the vesting period, which is
generally three years. Compensation expense recorded
for restricted grants was $22, $15 and $17 in 2004, 2003
and 2002, respectively.
Stock options generally vest over a period of three
years and expire between eight and ten years from the
date of grant. The exercise price of the options is equal
to the market value of our common stock on the effec-
tive date of grant.
At December 31, 2004 and 2003, 33.9 million
and 21.4 million shares, respectively, were available
for grant of options or awards. The following table
provides information relating to the status of, and
changes in, stock options granted for each of the three
years ended December 31, 2004 (stock options in
thousands):
2004 2003 2002
Average Average Average
Stock Option Stock Option Stock Option
Employee Stock Options Options Price Options Price Options Price
Outstanding at January 1 97,839 $21 76,849 $26 68,829 $ 29
Granted 11,216 14 31,106 10 14,286 10
Cancelled (8,071) 32 (6,840) 21 (5,668) 34
Exercised (9,151) 7 (3,276) 6 (598) 5
Outstanding at December 31 91,833 $21 97,839 $21 76,849 $ 26
Exercisable at end of year 65,199 58,652 45,250
Options Outstanding Options Exercisable
Weighted
Number Average Remaining Weighted Average Number Weighted Average
Range of Exercise Prices Outstanding Contractual Life Exercise Price Exercisable Exercise Price
$4.75 to $6.98 8,058 5.97 $ 4.86 7,348 $ 4.82
7.13 to 10.69 34,920 7.34 9.09 21,342 9.30
10.70 to 15.27 11,507 6.97 13.66 396 13.06
16.91 to 22.88 12,545 5.00 21.77 11,310 21.77
25.38 to 36.70 7,830 2.93 31.58 7,830 31.58
41.72 to 60.95 16,973 2.72 52.60 16,973 52.60
91,833 5.62 $20.98 65,199 $ 24.93
Options outstanding and exercisable at December
31, 2004 were as follows (stock options in thousands):