DuPont 2007 Annual Report Download - page 99

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Time-vested and Performance-based Restricted Stock Units
In 2004, the company began issuing time-vested restricted stock units in addition to stock options. These restricted
stock units serially vest over a three-year period. A retirement eligible employee retains any granted awards upon
retirement provided the employee has rendered at least six months of service following the grant date. Additional
restricted stock units are also granted from time to time to key senior management employees. These restricted
stock units generally vest over periods ranging from two to five years.
The company also grants performance-based restricted stock units to senior leadership. Vesting occurs upon
attainment of pre-established (i) corporate revenue growth relative to peer companies and (ii) return on invested
capital objectives relative to peer companies (for periods prior to 2007) or attainment of internal absolute targets (for
periods beginning in 2007). The actual award, delivered as DuPont common stock, can range from zero percent to
200 percent of the original grant. During 2007, there were 368,300 performance-based restricted stock units granted
at a weighted average grant date fair value of $51.01. The fair value of time-vested and performance-based
restricted stock units is based upon the market price of the underlying common stock as of the grant date.
Nonvested awards of time-vested and performance-based restricted stock units as of December 31, 2007 and 2006
are shown below. The weighted-average grant-date fair value of time-vested and performance-based restricted
stock units granted during 2007, 2006, and 2005 was $51.00, $39.47, and $47.94, respectively. The table also
includes restricted stock units for the Board of Directors that are settled in cash.
Number of
Shares
Weighted
Average
Grant Date
Fair Value
(per share)
Nonvested, December 31, 2006 3,478 $41.94
Granted 1,767 $51.00
Exercised (1,234) $42.71
Forfeited (138) $45.40
Nonvested, December 31, 2007 3,873 $45.67
As of December 31, 2007, there was $43 unrecognized stock-based compensation expense related to nonvested
awards. That cost is expected to be recognized over a weighted-average period of 1.69 years. The total fair value of
shares vested during 2007, 2006 and 2005 was $53, $23 and $15, respectively.
Other Cash-based Awards
Cash awards under the EIP plan may be granted to employees who have contributed most to the company’s
success, with consideration being given to the ability to succeed to more important managerial responsibility. Such
awards were $163, $153 and $129 for 2007, 2006 and 2005, respectively. The amounts of the awards are dependent
on company earnings and are subject to maximum limits as defined under the governing plans.
In addition, the company has other variable compensation plans under which cash awards may be granted. These
plans include Pioneer’s Annual Reward Program and the company’s regional and local variable compensation
plans. Such awards were $217, $178 and $159 for 2007, 2006 and 2005, respectively.
23. DERIVATIVES AND OTHER HEDGING INSTRUMENTS
Objectives and Strategies for Holding Derivative Instruments
Under procedures and controls established by the company’s Financial Risk Management Framework, the company
enters into contractual arrangements (derivatives) in the ordinary course of business to reduce its exposure to
foreign currency, interest rate and commodity price risks. The framework has established a variety of approved
derivative instruments to be utilized in each risk management program, as well as varying levels of exposure
coverage and time horizons based on an assessment of risk factors related to each hedging program. Derivative
instruments utilized during the period include forwards, options, futures and swaps. The company has not
designated any nonderivatives as hedging instruments.
F-42
E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)