Charles Schwab 2008 Annual Report Download - page 81

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THE CHARLES SCHWAB CORPORATION
Notes to Consolidated Financial Statements
(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)
- 67 -
17. Employee Incentive, Deferred Compensation, and Retirement Plans
A summary of the Company’s stock-based compensation expense and related income tax benefit is as follows:
2008 2007 2006
Stock option expense $ 28 $ 18 $ 16
Restricted stock expense 38 38 23
Employee stock purchase plan expense 3 2 -
Total stock-based compensation expense (1) $ 69 $ 58 $ 39
Income tax benefit on stock-based compensation expense $ (27) $ (23) $ (15)
(1) Total stock-based compensation expense including discontinued operations was $80 million and $52 million in 2007 and
2006, respectively.
The Company issues shares for stock options and restricted stock awards from treasury stock. At December 31, 2008, the
Company was authorized to grant up to 32 million common shares under its existing stock incentive plans.
As of December 31, 2008, there was $143 million of total unrecognized compensation cost, net of forfeitures, related to
outstanding stock option and restricted stock awards, which is expected to be recognized through 2013 with a remaining
weighted-average period of 3.1 years.
Stock Option Plans
The Company’s stock incentive plans provide for granting options to employees, officers, and directors. Options are granted
for the purchase of shares of common stock at an exercise price not less than market value on the date of grant, and expire
within seven or ten years from the date of grant. Options generally vest annually over a three- to four-year period from the
date of grant. Certain options are granted at an exercise price above the market value of common stock on the date of grant
(i.e., premium-priced options).
The Company's stock option activity (including options held by employees of discontinued operations) is summarized below:
Weighted-
Weighted- Average
Average Remaining Aggregate
Number Exercise Price Contractual Intrinsic
of Options per Share Life (in years) Value
Outstanding at December 31, 2007 63 $ 17.30
Granted 8 $ 19.92
Exercised (12) $ 11.10
Forfeited (1) $ 21.04
Expired (2) $ 26.25
Outstanding at December 31, 2008 56 $ 18.48 4.13 $ 90
Vested and expected to vest at December 31, 2008 53 $ 18.35 3.94 $ 90
Vested and exercisable at December 31, 2008 40 $ 17.53 2.80 $ 90
The aggregate intrinsic value in the table above represents the difference between CSC’s closing stock price and the exercise
price of each in-the-money option on the last trading day of the period presented.