Dominion Power 2002 Annual Report Download - page 83

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Stock-Based Awards
The adjacent table provides a summary of changes in amounts
of Dominion stock options outstanding as of and for the years
ended December 31, 2002, 2001 and 2000. Generally, the exer-
cise price of Dominion employee stock options equals the mar-
ket price of Dominion common stock on the date of grant.
The fair value of the options was estimated on the dates of
grant using the Black-Scholes option pricing model with the
following weighed-average assumptions for 2002, 2001 and
2000, respectively: expected dividend yield of 4.17 percent, 4.22
percent and 5.22 percent; expected volatility of 22.67 percent,
22.19 percent and 21.54 percent; contractual life of 10 years (all
periods); risk free interest rate of 4.38 percent, 5.15 percent and
5.18 percent; and expected lives of six years (all periods).
Weighted-
average Weighted-
Stock Exercise average
Options Price Fair Value
(thousands)
Outstanding at January 1, 2000 7,147 $41.37
Granted—2000 5,389 $43.87 $6.86
Exercised, cancelled and forfeited (2,205) $40.07
Outstanding at December 31, 2000 10,331 $41.77
Exercisable at December 31, 2000 6,967 $41.51
Granted—2001(1)
Exercise price < market price
on grant date 480 $33.21 $23.69
Exercise price = market price
on grant date 11,471 $61.20 $11.24
Exercise price > market price
on grant date 194 $62.27 $ 9.43
Exercised, cancelled and forfeited (1,484) $41.23
Outstanding at December 31, 2001 20,992 $52.90
Exercisable at December 31, 2001 7,955 $42.68
Granted—2002 3,122 $62.28 $10.91
Exercised, cancelled and forfeited (3,057) $44.54
Outstanding at December 31, 2002 21,057 $55.49
Exercisable at December 31, 2002 8,586 $47.95
(1) In connection with the acquisition of Louis Dreyfus, employee stock
options of Louis Dreyfus were converted into employee stock options of
Dominion. Based on the conversion formula, certain converted stock
options had exercise prices that either exceeded or were less than the market
price of Dominion common stock on the date of grant.The fair value of all
converted stock options was included in the purchase price of Louis Dreyfus.
See Note 5.
81
Dominion ’02 Annual Report
The following table provides certain information about stock options outstanding as of December 31, 2002:
Options Outstanding Options Exercisable
Weighted-average
Shares Remaining Weighted-average Shares Weighted-average
Exercise Price Outstanding Contractual Life Exercise Price Exercisable Exercise Price
(thousands) (years) (thousands)
$ 0-$19.99 2 6.0 $19.10 2 $19.10
$20-$30.99 53 5.8 $25.00 53 $25.00
$31-$40.99 75 7.0 $39.25 75 $39.25
$41-$50.99 6,782 6.6 $43.02 5,905 $42.26
$51-$60.99 9,411 6.1 $59.88 1,673 $59.76
$61-$69 4,734 8.4 $65.24 878 $65.94
Total 21,057 6.8 $55.49 8,586 $47.95
During 2002, 2001 and 2000, respectively, Dominion
granted approximately 14,000 shares, 341,000 shares and
171,000 shares of restricted stock with weighted-average fair
values of $60.62, $63.49 and $41.88.