Fannie Mae 2006 Annual Report Download - page 287

The following table displays nonqualified stock option activity for the years ended December 31, 2006, 2005
and 2004.
Options
(1)
Weighted-
Average
Exercise
Price
Weighted-
Average
Fair Value
at Grant Date Options
(1)
Weighted-
Average
Exercise
Price
Weighted-
Average
Fair Value
at Grant Date Options
(1)
Weighted-
Average
Exercise
Price
Weighted-
Average
Fair Value
at Grant Date
2006 2005 2004
For the Year Ended December 31,
Beginning balance, January 1. . 21,964 $68.93 $22.39 24,849 $67.10 $21.65 26,077 $62.78 $20.71
Granted ............... — — — 16 65.03 16.97 2,595 78.04 20.83
Exercised.............. (1,172) 39.71 11.68 (1,356) 30.24 7.98 (3,263) 39.63 12.52
Forfeited and/or expired . . . . (1,043) 73.10 23.58 (1,545) 73.19 22.99 (560) 76.53 25.54
Ending balance, December 31. . 19,749 $70.44 $22.97 21,964 $68.93 $22.39 24,849 $67.10 $21.65
Options exercisable,
December 31 .........
18,305 $70.18 $23.19 18,858 $68.19 $22.75 18,760 $64.73 $21.74
Options vested or expected
to vest as of December 31,
2006
(2)
.............. 19,720 $70.44 $22.98
(1)
Options in thousands.
(2)
Includes vested shares and nonvested shares after an estimated forfeiture rate is applied.
The intrinsic value for options exercised during 2006 was $21 million. As of December 31, 2006, the intrinsic
value of in-the-money options outstanding was $16 million, and the weighted-average remaining contractual
term was 3.8 years and 3.6 years for options outstanding and exercisable, respectively. The total fair value of
options vested in 2006 was $30 million.
Employee Stock Purchase Program Plus
The Employee Stock Purchase Program Plus consists of two parts: (i) an opportunity to purchase shares of
common stock pursuant to the 1985 Purchase Plan (the “ESPP Component”); and (ii) a contingent stock bonus
award pursuant to the provisions of the 1993 Plan for the 2003 offering and the 2003 Plan for the 2004
offering (the “Plus Component”). Under the ESPP Component, employees could purchase shares at 95% of the
stock price on the grant date. Under the Plus Component, employees were granted a stock bonus contingent
upon meeting our predetermined corporate thresholds. There was no offering for 2006 or 2005.
In 2004, we issued 2,568 shares of common stock to employees who retired during the year under the 2004
offering of the ESPP Component. No additional issuances were made under the 2004 offering as the stock
price was less than the purchase price at the end of the year. Additionally, eligible employees purchased
1,764,983 shares of common stock in 2004 at $61.28 per share under the 2003 offering. All shares vest
immediately upon purchase by the employee.
We did not award any stock grants for the 2004 offering because we were unable to determine whether the
performance criteria had been met because we did not have financial data on which we could rely to make the
determination. Instead, the Compensation Committee of the Board of Directors replaced the Plus Component
of the offering with a cash payment of $2,500 to each eligible employee. Under the Plus Component for the
2003 offering, employees received 177,475 shares in 2004.
The ESPP and Plus component under the program are compensatory. Therefore, we recognized compensation
expense for grants under both programs of $1 million and $14 million in 2005 and 2004, respectively.
F-56
FANNIE MAE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)